This column is authored by Prashanth Reddy, Technology Consultant, NuitcoNuit
Blockchain technology minimizes the risk of identity theft because of the fact that the data is encrypted at the transaction level for example in a financial transaction thereby minimizing the amount of information available in blockchain.
When a third party stores an individual’s data, it could be a risk for identifying the information and compromised. Hence, the encryption protocol used by blockchain technology to limit cyber liability. This data is centralized as per the current process in a central location and protect against hackers. Whereas blockchain can be verified independently through separate notes without having the encrypt the underlying data since the whole transaction is carried as a chain.
Though this technology may not change the whole manner of transaction and the way the data is stored it will surely affect the process of how the client interacts with the bank as well as provide heightened security technologically versus the current processes in place. Which is good news for finance companies looking at the amount of dollars that can be cut down as part of cost savings with increased viability and stability.
But, what about Scalability?
It would take a huge infrastructure make over for the finance industry to implement blockchain technology which could limit the scalability because of the amount of limited computing power available.
When the participants participating in transactions running on blockchain technology each such transaction will have to create a separate node to process the requested data in a decentralized manner. Which requires heavy scalability creating limitations in the architectures of how to implement blockchain technology and the amount of monies it would involve. When you put all of this together then talk about ROI, seems like dropping the idea. But, hold on! Nothing said and done is not what we do in the world of technology. Heavy investments right now are happening in the world in the world of blockchain technology. There are consortiums who have formed to run live POCs, many banks in Asia, Dubai and elsewhere are running POCs. I am one among them running POCs helping companies implement, architect solutions to test successful output with blockchain.
Finance industry definitely need a lot more scalability and computing power to meet the demand in transactions given so many users in this particular industry which is connected to almost all the THINGS in life. Up until last year the implementation, architecture, development and design of blockchain technology was at its infancy. But, not anymore, every day there’s growing talent and breakthroughs in how you can scale this technology to meet the demand. And I’m pretty sure, in a few years we would have a full blown blockchain implementation running with scalability as needed specifically talking about the finance industry.