The definitions of blockchain technology, bitcoin, and cryptocurrency
Blockchain is an emerging technology that has gained considerable attention in the recent past due to its advantages (enhanced security and transparency) because it embodies a public leger whereby all dealings made on the ledger can be viewed and publicly audited. It is the underpinning technology or basic building block that enables cryptocurrencies to exist. A cryptocurrency is a digital asset designed to work as a medium of exchange much like regular currencies but uses cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. The most famous cryptocurrency is Bitcoin, which is also the reason why blockchain was invented.
Getting technical: understanding how blockchain technology works
A blockchain is an open electronic register that is constructed on a P2P(peer to peer) platform that can be simultaneously used by different individuals to generate a fixed record of dealings on the system (Saberi et al. 2019). Each transaction on the blockchain is associated with the previous transaction and is also time imprinted. A blockchain is typically updated only after consensus between individual participants in the system. New data incorporated into the blockchain cannot be deleted—the above nature of the blockchain warrants that each transaction within the platform can be audited and verified.
Blockchain embodies spread ledger, which fundamentally ensures that any previous movement of a digital asset cannot be changed and is also freely viewable by the public. The above attribute of blockchain is aided by the alleviation of a central authority and cryptographic hashing. The expansion of the blockchain is facilitated by the mining process, which essentially generates novel blocks on the chain. The node is a significant factor in blockchain technology since the system is operated through a network of electronic devices. The amalgamation of public information with a scheme of checks for accountability preserves the integrity of the blockchain system and subsequently enables its users to trust the technology.
Why blockchain technology has a tarnished image
- Strongly linked with cryptocurrencies and fraudulent activity
Blockchain technology has an image issue since, according to the perceptions of most people the technology is strongly linked with cryptocurrencies, which in turn are associated with malicious hackers, fraudsters, and drug traders who use the technology for criminal dealings. The association of blockchain technology with the primary facilitation of digital coins creates the impression that blockchains promote nefarious activities. This association deters enterprises from readily adopting the technology owing to fears of a decline in their reputation.
- Blockchain’s ‘perceived’ technological issues
Technical issues that have undermined the image of the blockchain technology include size issues, complexity, and the challenge experienced when incorporating it into legacy schemes. Inadequate awareness and comprehension among people regarding the technology, inadequate experience, and expertise among the users, and the absence of decent governance over the use of the technology. Furthermore, the image of blockchain technology is undermined by privacy issues such as insufficient regulation of the technology.
- Immaturity, inadequate awareness, and understanding of blockchain technology
Inadequate awareness and comprehension regarding the adoption of blockchain technology, especially among corporates, has significantly jeopardized the reputation of the technology (Treleaven, Brown, & Yang, 2017). Essentially, industries such as banking are categorized by an extensive inadequate understanding of the technology and thus have a poor perception of the technology. The latter not only hinder investment into the banking sector but also inhibits the development of novel ideas in the banking sector.
How blockchain’s image issue can be resolved
- Spreading awareness and educating consumers about the fundamentals of blockchain
The image issue associated with blockchain technology can be rectified by creating adequate awareness and understanding regarding the technology in enterprises. Corporate leaders ought to be equipped with adequate knowledge regarding the complex process of adopting blockchain technology within their organizations. In turn, the leaders could train their employees on the adoption process, and subsequently, effectively manage change within the organizations to promote positive outlooks towards blockchain technologies. Training on the adoption of the new technology in the workplace and the new operational procedures is important since employees are typically resistant to change.
- Mass adoption of blockchain technology to understand industry benefits
The blockchain image issue could be resolved by improving the scalability of the service. As of today, we have pockets of blockchain companies using the technology for their operations. But because the technology is not used by all stakeholders or at the inter-enterprise level, the benefits cannot be determined. Companies need to invest time and resources into building digital skills. Government bodies, central authorities, and leaders, all need to collaborate and introduce new rules/governance regulations around the technology.
- Delinking blockchain’s only use from cryptocurrencies to broader industries
While the adoption of blockchain in companies is hindered by considerable challenges, the technology has been successfully implemented by particular companies. #dltledgers is a prime example of using blockchain technology. While companies had an overwhelming choice of enterprise software to help them create efficiency WITHIN their businesses, there was no break-out solution for solving INTER-enterprise friction. #dltledgers set out to streamline and digitise the processes occurring between enterprises, and to enable integration and seamless data transfer between parties, which could reduce effort, errors, and delays, and increase transparency and trust. Fairly early in the company’s development, it was decided to tackle one of the world’s most inefficienct, trustless, and sizeable sectors – cross-border trade. Our technology has been developed specifically with that market in mind. The platform now incorporates 16 different modules, each focused on a key issue within global trade: trade finance digitisation, transparency and auditability, digitised trade documents, blockchain APIs, financial institution connectivity, and so on. International trade is laden with archaic, manual processes, a lack of trust between parties, and inefficiencies like the transfer of physical documents. #dltledgers’ blockchain platform has been developed to tackle these issues holistically, taking into account the points of view of each trade participant: buyers, sellers, finance providers, carriers, inspectors, auditors, and regulators.
As well as focusing on a transaction between two parties, this platform has extended automatically further into the supply chain. This has allowed us to power different types of supply chain financing, second and third-tier suppler integration, as well as goods and provenance tracking (which is growing in importance as public sentiment around sustainability continues to gain force). What probably makes us stand out is the fact that our platform has now powered over $3 billion-worth of trade and supply chain transactions, connecting more than 25 countries on 4 continents, and involving a range of different commodities and merchandise.
One of blockchain’s use is cryptocurrencies (like Bitcoin), but it has the potential to transform almost all industries
Blockchain’s ill reputation is primarily driven by its association with illegal dealings perpetrated by hackers and charlatans for cryptocurrencies like Bitcoin. Additionally, blockchain’s image issue is instigated by its perceived low level of maturity, size issues associated with the technology, as well as its complexity. Most corporations are reluctant to adopt the technology since the rate of the transaction processing is low compared to other technologies such as Visa. However, blockchain’s image could be salvaged through widespread education and awareness. The technology has been successfully adopted and used by firms around the world like #dltledgers for cross-border trade digitisation, trade finance digitisation and supply chain finance digitisation.