We reckon that you’ve probably heard of blockchain, which is the cutting-edge database technology that’s synonymous with the cryptocurrency market.
However, blockchain boasts a broad and ever-growing range of potential applications, with this borne out by its total market size. More specifically, the blockchain market size reached $2.01 billion in 2019, and is projected to grow at a CAGR of 56.1% before reaching $69.04 billion in 2027.
But what exactly is blockchain and its core advantages in fields such as finance, and what does the future hold for this cutting-edge technology?
What is Blockchain?
In simple terms, blockchain is a decentralised ledger that stores data in individual blocks, which can be validated by individual network participants to create a completely transparent store of records.
These blocks remain chained together and augmented by new entities as and when they’re created, establishing a chronological and visible chain to provide genuine accountability for all parties involved.
This is just one of the benefits of utilising blockchain technology in financial and technological applications, which now manifests itself in a variety of different networks. In fact, we’re now seeing third-generation blockchains enter the marketplace, many of which have been designed to facilitate intuitive smart contracts, safely harvest off-chain data and correct the issues of scalability synonymous with most first-generation iterations.
Another key advantage is blockchain’s capacity for producing immutable records, which remain outside the control of a central authority. This minimises the risk of market and price manipulation, while making it incredibly difficult to adjust information that has been committed to the blockchain.
On a similar note, the deployment of blockchain technology is synonymous with improved efficiency, as it eliminates the need for middleman and third-party interaction in lucrative fields such as payment processing, real estate procurement and financial trading.
What Does the Future Hold for Blockchain?
Of course, blockchain also offers anonymity to network participants, who can also take part in the validation of transactions in exchange for rewards.
For all of its immense benefits and diverse range of applications, however, the question that remains is what does the future really hold for blockchain?
There’s no doubt that blockchain is becoming too powerful to ignore, at least according to David Bartlett from business consultancyRSM Global. However, Bartlett argues that the full commercial exploitation of the technology relies on the resolution of certain regulatory and tech issues, including the configuration of distributed ledgers to comply with EU data laws and the so-called “right to be forgotten”.
This may require a global regulatory framework in which finance and tech firms can safely leverage blockchain technology, but such an objective appears to be in its infancy at present.
The good news is that banks are increasingly keen on the idea of incorporating blockchain technology into their existing infrastructures, creating a widespread global demand and potentially making digital currencies a mainstream concept in the future.