Blockchain is an ingenious technology that can make the entire Internet more efficient and secure. The premise of blockchain is that digital data is distributed and not copied. Initially, the digital data was in the form of a cryptocurrency, namely Bitcoin. However, blockchain can be used to distribute any thing of value. These assets can be digital currency, land deeds, titles to a car and so much more. The way blockchain is developed prevents fraud because the transaction is not corruptible. When an asset is sent the receiver receives it and not a copy.
Blockchain transactions also eliminate the need for an intermediary such as banks. This alone can save a person or company a tremendous amount of money because intermediaries charge fees. Additionally, blockchain is decentralized so there is no risk of hacking and data breaches. Companies and the financial industry lose billions of dollars annually because of large scale data breaches. Despite the benefits of blockchain, many companies still don’t use it because of four main reasons.
Many companies are enthusiastic about blockchain and want to incorporate into their business model, but regulation prevents them. Senior executives were polled and asked why they haven’t adopted blockchain. An astounding 61 percent replied that complex regulation impedes adoption of the technology. This is especially the case in the financial sector that is highly regulated. Financial institutions don’t want to risk violating securities laws. They are therefore waiting for approval from regulators before implementing it. Further complicating the matter is that regulations vary from one jurisdiction to the next. This complexity further causes companies to be hesitant.
Integrating the modern blockchain with legacy systems is deemed challenging and potentially risky. The existing systems of many companies have been in place for many years and outdated. Integration is not simple and requires a great deal of expertise. Many institutions simply do not have the capability to modernize their systems. It will take time before institutions are confident that they can securely integrate and modernize their systems.
It’s Not A Priority
Institutions are not under pressure to adopt blockchain technology. They are content with the status quo because it’s not affecting their revenue. As more people start using blockchain technology and cryptocurrencies, companies will be more compelled to adopt blockchain.
Modernizing systems, websites and training employees to use blockchain is costly. Many companies simply don’t have the resources for this kind of modernization. Some companies don’t even know where to begin. With time, companies will realize that benefits of upgrade will outweigh the costs.
Blockchain technology offers businesses significant benefits. Unfortunately, adoption of this technology has substantial obstacles. Regulations and legacy system integration are two main factors. It’s also not a priority for many companies, and is also deemed too costly. Sooner rather than later, companies will awaken to the benefits of blockchain and will accordingly adopt it.
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