Bitcoin didn’t arrive in the markets alone; it brought Blockchain technology with it. Why is this important? Besides the fact that it is the technology that underpins virtual currencies, some companies have put their eyes on it.
What is it? In simple terms: a spreadsheet (digital ledger or database) that is shared thousands of times and it is regularly updated-reconciled.
-It can’t collapse: because it is hosted by millions of computers simultaneously.
-It can’t be hacked: since it is not centralized.
-It shows transparency: by allowing digital information to be distributed but not copied (incorruptible) and since it isn’t stored in a single location; the information it keeps is public and easy to verify.
-It can’t be manipulated: once a transaction is added it can’t be altered or changed retrospectively. It doesn’t allow repeating payments and requires several parties to authenticate the transactions.
Disadvantage: it has become slower in transactions due that the network has become more congested.
This technology can be copied by companies interested in improving their technology platforms; in fact, there are in the market several companies that have developed platforms to help other companies installed them. Examples: Ethereum, Ripple, IBM.
The financial sector has experimented with Blockchain and to differentiate it, has renamed it “distributed ledger technology” (DLT). BBVA has used it for its loan processes, saving between 40%-50% of the time versus traditional loan process.
It has also been used for tracking assets. De Beers, a diamond producer, has used the technology to trace stones in its supply chain. Even in elections in the U.S. it has been used.
Although Blockchain technology is being experimented it can have many uses. It can be used in government accounts for transparency and reduce corruption. And for companies that want to improve their processes (faster and traceable) and reduce costs. Yes, Blockchain it is!
By Mónica Ramírez Chimal, Partner of Asserto RSC, Mexico City