Tag: applications

ESMA dismisses rumors of Blockchain ban and refrains from premature regulation

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The greatest hindrance to the development of innovation into a full-fledged functioning concept is the chain of regulation that hampers it. Blockchain enthusiasts and major tech giants have heralded ledger based technology as path breaking and something that holds great potentiality in terms of applications. This has resulted in a host of Fintech startups taking interest in Blockchain and developing applications that can replace the existing legacy modules. Europe has been one of the central hubs of such innovation and the growing turmoil involving various Geo-political-economic issues has only helped the cause. Recently, Bitcoin.com reported on European Securities and Markets Authority (ESMA) opinion to ban blockchain platforms. However on Feb 7th, ESMA released  a report contradicting the post. Let’s dive into further details of the report:

ESMA considers Blockchain regulation premature:

The European market regulatory agency has revealed that Blockchain Technology is in its nascent stages and regulating it would be premature. This could be deduced owing to the news that EU itself is thinking of launching crytpotcurrency wallets based on ledger technology. With Blockchain Technology facilitating for transactions in quick time and easing the way transactions can be verified across borders, EU considers regulation at such an early stage might hurt the innovation.

Building the framework for later stages of Regulation:

The Distributed Ledger based technology is currently being used for rewriting financial transactions in the most simple and efficient way. Apart from transactions, many firms have already employed Blockchain in post trade processing as it offers reduced costs. Since financial transactions and trade processing do require good amount of compliance, monitoring such support framework has to be made easy. Hence major efforts would be directed towards building a framework that supports Blockchain technology and also ensures regulation in financial transactions.

Why regulation would be important in the future:

It is true that regulation cannot understand or catch up with the speed of innovation but at the same time, it is very important to respect the safeguards that are put in place for every system in the form of regulations. Looking forward it is evident that Blockchain would play a major role in Transactional economics, post trade processing, identity verification and tracking of resources on a broader scale. With good amount of disruption to come, it is imperative that regulation that will monitor the technology is to be in place. Hence ESMA believes that the industry should work towards solutions to address the challenges posed by technology for keeping in mind the future consequences.

What makes Blockchain the future of Databases

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Bitcoin is a form of digital currency designed to replace the existing monetary system. Owing to the low transaction fee, non-requirement of a third party and ease of transaction it is being looked as a really good alternative for fiat currencies. It is powered by ledger based technology that depends on high computing power to enable transparency, speed and decentralization.  While the fate of the currency is still in question, the underlying technology has received wide reception for its applications. Technology enthusiasts were quick enough to understand the disruptive nature of Blockchain and immediately hunted for real time applications. Let’s look into the characteristics that make Blockchain so disruptive:

Decentralization:

decentralized

On a holistic level, Blockchain technology can be termed as a collection of databases. The only difference in this network is that unlike traditional databases, each database can be operated by different entities. To be more specific, independent nodes can access this network and operate on it. Traditional databases have few limited users who have complete control over the database.  Blockchain network is completely decentralized with the operations requiring approval from each node, making it transparent and democratic at the same time.

Few variations of the same ledger based technology find numerous applications in the field of financial services, ecommerce, supply chain and wholesale industries. With right constraints and access Blockchain is sure to revolutionize many fields in the near future.

Immutability:

fed-governor-emphasizes-blockchain-security-immutability

Blockchain has gained quick reputation for applications in Finance owing to its immutability. Data written to a Blockchain is literally data etched in stone. Owing to this immutable or irreversible property, Blockchain can be used to track transactions of an account, products in supply chain and land registries in real estate.

Exchange of Assets:

iex-to-create-new-gold-exchange-with-blockchain

A decentralized network that is immutable certainly forms a strong foundation for the development of an exchange platform. That is how Blockchain has served with Bitcoin and it can be extrapolated to serve as an exchange means for other digital assets. Most of the major banks are looking into this aspect to enable quick cross border transactions and trade settlements.

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