Every emerging technology goes through a hype stage. It takes a while to get it right and integrate it into existing infrastructures to shift the curve to broad adoption. The power and disruption of blockchain is something everyone talks about, yet people are still struggling to understand how blockchain distributed ledger technology works. With more banks and FinTech companies posed for the adoption of blockchain technology to transform the way transactions are executed and documented in the financial sector, it is becoming apparent that the technology has a long way to go before it becomes mainstream.
There is still a lot of confusion about the nature of the new technology, mainly how Blockchains differ from traditional shared databases and how those differences inform the set of suitable use cases. In its current form, blockchain technology is very difficult to use. Users must know how public and private keys work, then go through dozens of steps to acquire and use cryptocurrencies. On top of that, only public chains can guarantee the properties that make Blockchains unique and different from standard databases. The immutability and resistance to collusion thanks to consensus at scale are, by far, the two main factors that lure financial companies towards the adoption of the technology. Unfortunately, the same public chains have multiple drawbacks when it comes to privacy and scalability. The lack of structured manuals and standardized courses is also a barrier to transformation and change through the adoption of blockchain technology.
Misunderstandings of the technical abilities of blockchain alongside the lack of general awareness about what it does, currently forms some of the most significant barriers to mainstream adoption. Many companies still don’t really understand what Blockchain is, or what it can do. Though they may have heard about Bitcoin, and even accept it as a form of payment, they might not necessarily understand how it works or what else the technology is capable of doing.
If we have to summarize all the pressing issues with Blockchain and its application in the FinTech industry – it all comes down to confusion of terminology and unrealistic expectations. A lot of people and businesses simply lack a profound understanding of what the technology is and what it can do. This may very well be due to the fact that Blockchain itself came from the digital currency Bitcoin.
Overcoming the obstacles to adoption
The primary challenge to adoption for the FinTech sector remains the fact that blockchain is still a nascent technology. Still largely unregulated and lacking standardization, there are unknown factors and vulnerabilities. But these won’t stop it from being widely adopted. Trust is bound to grow, regulations will be enacted and standards will be adopted. Xrucial changes will occur over the next few years that will shape the way blockchain is applied in the financial industry and also make it easier to implement.
FinTECHTalents 2018
FinTECHTalents is the only global platform focusing on the TECHNOLOGY side of Fintech – the origin of ideas, cutting edge innovation and the development of new products and services. This allows a view into a key stage during product innovation; the point at which regulatory frameworks should be considered and that knowledge hard-wired into product development.
The first step towards achieving this is deciphering and demystifying the differences between the underlying technology (Blockchain) and the digital currency (Bitcoin). As this becomes less of an issue for most businesses, it is still a demonstrable riddle for users who are new to the technology. Additionally, there has been a lot of hype with regards to the utility that Blockchain can realistically provide for the FinTech industry and use cases. This is mostly due to the fact that Blockchain can mean different things to different people. For example, some companies rely on Blockchain as a storage methodology, while others view it as a platform. Collectively, these fundamental challenges give rise to unsubstantiated claims and hypes, which are contradictory and ultimately lead to widely overblown and unrealistic expectations.
Ultimately, Blockchain will evolve. Its potential disruptive power across multiple industries, many companies will take an active role in furthering the adoption of the technology.
When considering applying blockchain to create new value in your business, it’s important to ensure you allow the business to drive the investment. This means to first look at the problem or needs that could benefit from the adoption of blockchain and then proceed to applying the technology.
FinTECHTalents 2018
FinTECHTalents is the only global platform focusing on the TECHNOLOGY side of Fintech – the origin of ideas, cutting edge innovation and the development of new products and services. This allows a view into a key stage during product innovation; the point at which regulatory frameworks should be considered and that knowledge hard-wired into product development.
