Blockchain – backing the popular cryptocurrency Bitcoin – with the passage of time – has gained substantial momentum. Investors, largely, view it as an efficacious solution to several hindrances including lack of transparency and risk of fraud among others. However, as per a recent BCG (Boston Consulting Group) report, the benefits of Blockchain as far as trading commodities is concerned – has somewhat been exaggerated.
Blockchain: The Immediate Benefits That We Associate This Technology With
Right at the onset – it should be noted – that the “hopes” inspired by Blockchain were not completely unfounded. Often described as a high-tech ledger, this particular technology (Blockchain) employs a shared database that is capable of real-time updates. What more? Even the transactions can be processed and settled in minutes without third-party intervention.
The absence of third-party intervention renders the platform more trustworthy. There is little or no risk of unauthorized intervention or backdoor transaction. The widespread environment makes it difficult to tamper with data. Only when there is a large team working at tandem across several data centers is the modification of historical data possible. The robust system thus entails zero risk of data tampering.
Are Its Benefits Overhyped?
Keeping the aforementioned benefits in view – the report claiming that the system is overhyped – thus comes as a shock to many. In the course of the post, however, we will unearth the reasons behind this claim.
Antii Belt, the co-author of the aforementioned report – offers us the first reason – Belt reasons that there is no dearth of pilot schemes out there but none of them have actually emerged as real production scale systems as yet. One of the major drawbacks of blockchain is that it is not really designed for physical trades. Tracking the physical entity in the virtual world actually remains one of the most daunting challenges. The collision between the virtual and real world is viewed as a perpetual problem.
Why Blockchain Is Not As Beneficial For Commodity As We Thought!
Traders are still not sure whether the decision to shift to blockchain would actually be a wise pecuniary decision or not. The trading world is still skeptical about the reconciling terminologies – that actually act as one of the biggest impediments as far as shoring up the technology is concerned.
The industry is very old and doesn’t really use the same language. In such a scenario defining attributes like shipment schedules or quality of transactions ends up assuming a challenging shape. In order to bring about changes, people actually have to cough up a substantial amount of money for their IT systems. There are instances where individuals have already spent more than $100 million on their IT systems. Keeping that in view, it’s actually difficult to imagine that they will be ready to spend that kind of money once again. A present, they are even perceivably resistant to the idea of embracing a completely new technology which is poised to eliminate the paltry profits made by them. Blockchain with all its transparency will actually take commodity trading much away from bilateral deals between two parties to match buyers and sellers based on the electronic platforms.
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