A simple bank transaction could involve 30 different books in 10 countries. It is an intricate maze of cross-border payments made via fiat currency. Blockchain offers an alternative to the status quo that could save banks billions of dollars a year. The website’s Bitcoin era app provides bitcoin traders with fast deposits, withdrawals, and trading strategies. These financial transactions are executed instantly and at close to zero cost, making them very attractive to businesses whose priority is operational efficiency.
The problem with using blockchain is that it needs to be more scalable to handle the number of nodes needed for financial and tech companies to conduct transactions at any scale. Also, the technology is very young and still in its early stages of evolution. As a result, it will be years before major tech companies can use blockchain and start to see the benefits.
Famous examples of companies that have integrated blockchain solutions include eBay, Amazon, Verizon, Citibank, HSBC, and many more. However, hundreds of other companies are only using blockchain for testing and development purposes instead of implementing more tangible solutions to enterprise-level problems. In addition to these high-profile examples, a handful of startups are implementing enterprise-grade blockchain solutions. Blockchain technology still has a long way to go before it can match the speed and scale of transactions that take place today.
Most financial companies still use centralized systems for their back-office functions because the blockchain still needs more computing power to process transactions at a significant rate. However, over time, blockchain will eventually become scalable and most financial companies will start using decentralized technology. If these predictions are correct, major financial institutions must update their back-office systems to keep up with new technology trends, or their competitors could be left behind. Let’s explore the reasons why companies should not use blockchain.
1. Blockchain is expensive
The most prominent use of blockchain is for financial transactions, but financial companies will need more time to adopt it. It is a new technology, and the costs associated with its implementation will be substantial.
Many startups in the industry are using blockchain to test and develop their products before starting to implement their solutions commercially. However, it requires a lot of computing power, so they have started using cloud computing platforms to reduce the cost of implementing blockchain technology.
The cost of cloud services has skyrocketed of late, as businesses now pay monthly fees, which would have been more affordable if they had used them earlier. Blockchain expenses are also high, at least compared to the costs of traditional computer systems.
Cloud services are much more affordable than they used to be, and there are many options available. For example, companies like IBM have already started offering blockchain solutions for a fraction of the cost that it would have cost them if they had implemented the technology earlier.
2. Blockchain is slow
Blockchain is capable of processing network transactions much faster than centralized solutions, which means it would save banks in terms of transaction costs over time. However, this still does not mean that companies will opt to use blockchain right away because it is not yet suitable for most enterprise-level transactions and processes. 3. The blockchain is complex:
Blockchain is an established technology that people can use to develop new products that streamline business operations. However, for any business to integrate blockchain into their workflows, it will require substantial development time and resources.
Businesses need a product or service that gives them a clear return on investment and solves their problems without adding more challenges. Blockchain is at such an early stage of development that it would be more effective for companies to wait until better solutions are available on the market before considering using blockchain themselves.
Most of the blockchain solutions are closed systems. It means that if a company wants to use a new platform for its transactions, it needs to work with other companies that will use the same technology or risk compatibility issues.
4. Lack of regulation
Some governments have taken steps to regulate their financial regulations, while others have done nothing to improve existing regulatory frameworks. It has created confusion among companies, so they cannot trust blockchain in their operations at the moment. Many countries around the world are still developing their national blockchain strategies, and most still need to agree on how blockchain should be regulated internationally.
5. Blockchain is difficult to use
The technology behind blockchain is yet to be fully mature, and many of the services are still in their early testing phases. It means companies must spend additional resources on staff training and back office operations, such as maintaining the security of their private keys, developing new policies, and configuring the entire system from scratch.
6. Lack of awareness
Most of the companies should be aware of how they can use blockchain to optimize their processes at a business level and improve their results. Most of the companies that have started using blockchain solutions on a large scale are either tech companies or startups funded by venture capital firms with a strong interest in high-tech startups.
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