To evaluate challenges associated with implementing blockchain technology within the financial services industry
What is blockchain?
Blockchain uses digital currency. In this technology it is allowed to distribute digital information, but not copied. It is stored in the form of a digital ledger. There is no Government Interference. It is an instant transaction. Financial Efficiency gets better with this technology. It is extremely volatile. It requires trained staff to handle it.
Challenges faced by blockchain: –
- New technology: – As the technology is new, there is a lack of knowledge of its use. Also, there I a lack of trained staff. This is creating problems for the investors.
- Capability to handle: – – As it has to be handled by different nodes, it becomes difficult to handle the everyday transactions. The transaction networking systems process thousands of transactions in seconds whereas this system is comparatively slow. There is no interaction between blockchain projects.
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- Safety: – As the ledger is public, it is difficult to make changes secretly for anyone. Thus, it should always be supervised.
- Culture: – Blockchain tech is a new concept of asset transaction. In spite of digitization, as it is a new concept it’s difficult to handle it. It takes time to get familiarised with the technology.
- Standardization: – The lack of uniformity across blockchain protocols have an effect on new developers. There is no consistency from basic processes like security, adoption. It is a very difficult task. This restricts the entry for professionals as well as investors.
- Limited Developer Supply: – There is a lack of an adequately trained and skilled workforce for managing the complexity of networks. There is a gap between the demand and availability of adequately skilled resources which results in higher salaries within the industry. This makes the implementation difficult.
- Rules: – Working of the technology relies on a set of policies and regulations. But there are no set rules. Different countries have different regulations for this technology.
- Finances: – Initial infrastructure is expensive. It doesn’t hold a promising future, so it is difficult for banks or small businesses to invest in it. These will need to be taken into consideration for future proceedings.
Blockchain is an innovative technology, but it has its own set of challenges which are not very user friendly. So different measures should be taken to make it popular.