Dr. Johnny Hon, Chairman – The Global Group
Although Blockchain was a technology first discovered in 1991, it did not become well-known until the phenomenon of cryptocurrency popularised it. However, blockchain now has a far greater purpose beyond simply cryptocurrency, with many and growing applications for businesses and consumers across different services and products. This is particularly true of the world of finance which has the potential to be transformed by blockchain.
Blockchain records digital ‘blocks’ of information in different locations that can be controlled by multiple people. This ensures all parties can review previous entries and record new ones making it easy to manage, quick to distribute, cheap to operate and most importantly nearly impossible to corrupt. Hence, blockchain lends itself incredibly well to economic transactions making it the perfect tool to use within financial corporations.
Industry experts have high expectations for the capabilities of blockchain technology within smart contracts. These contracts are computer programs which help accelerate and secure contract negotiations or agreements, and in theory, should be more secure than traditional contract law.
Smart contracts eliminate the middleman – saving an immense amount of time. They help exchange anything of value such as money or property shares in a transparent and conflict free way. Like traditional contracts, smart contracts still define rules and penalties around agreements, but they also enforce the obligations automatically, speeding up the process.
Following the incident involving the Decentralised Autonomous Organisation (DAO)’s Ethereum blockchain, which was hacked in 2016, smart contracts have come a long way and will surely continue to improve.
Simplifying cross-border transactions
Traditionally, global trade has been a process which not only requires time, but also one that generates an immense amount of documents which are often difficult to track, as well as being prone to human error, fraud or smuggling.
Blockchain provides a great way to both speed up and simplify the process of cross-border payments. The International Chamber of Commerce (ICC) launched the Intelligent Tech & Trade Initiative (ITTI) in 2017, which aims to concentrate on how global trade can benefit from AI and blockchain. As a result, companies are becoming increasingly confident that faster and more efficient methods are possible.
Companies across the world including IBM and shipping giant, Maersk, are now using AI and blockchain technology to introduce new supply chains. This means they are minimising costs, using a more economical system with the elimination of paper contracts and protecting digital systems from cyber-attacks.
Our motto at the Global Group is “Bridging the new frontiers”, and I firmly believe that technology is a key way to help us achieve this. Blockchain is free of currency constraints, making it a more collaborative method for international business.
Our current online identity management systems are far from being sustainable, and many pose the risk of having personal data sourced from the internet and cloned. Online identity management has become a very time consuming and costly process.
Blockchain technology can help solve these problems by giving users a single, re-usable online identity, replacing the multiple usernames and passwords we use and that are increasingly difficult to keep track of. This will pave the way to help protect individuals from identity theft.
The future of share trading
The future of share trading is also likely to be impacted by blockchain technology. It will allow for both a shorter settlement process and for greater accuracy when trading. Share trading has always involved many middlemen, including brokers and the stock exchange itself.
By using blockchain, you can lessen the need for a third-party regulator, keeping costs low, speeding the process up, and minimising the chances of human errors such as double trading. Blockchain’s automated technology also eases the amount of paperwork involved in trading.
Blockchain is also hugely important in providing a world-wide, independent registrar of assets from art to jewellery to properties. I believe this can be one of the most significant uses for this technology.
It is clear that there is still a long way to go with blockchain technology, but this is what makes it so exciting. If we have already discovered these fantastic benefits of the technology, what else might it be capable of? We have truly only just scratched the surface of its capabilities.
Global collaboration is key to developing a well-functioning financial system. With blockchain already showing signs of revolutionising global business transactions, and with more corporations adopting the technology for a variety of purposes, we will hopefully see even more international businesses and financial institutions reaping the rewards.