JAKARTA (TheInsiderStories) – The sharing economy continues to expand, necessitating evolution of traditional financial institution business models, particularly with digital payment systems.
Today, blockchain is the world’s leading software platform for digital assets, offering the largest production platform in the world with new technology to build a radically better financial system.
Blockchain can help energize and unlock the sharing economy by making it cheaper to create and operate an online platform.
For example, transactions can be coordinated by self-executing smart contracts or performed at a lower cost by other small competing providers. The next phase of the sharing economy can emphasize today’s inequalities or ease them, depending on the way the technology itself is set up.
In a conventional financial system, transactions conducted by both parties require intermediation by third, ‘trusted’ parties, such as banks. With blockchain technology, transactions can be carried out directly between two parties without an intermediary – who can in fact be a single point of failure.
As an illustration, blockchain technology is like a large, distributed and open book that can record transactions between two parties efficiently and in a verifiable and permanent manner.
The blockchain, which is also the technology behind Bitcoin, a rising digital currency today, has a number of characteristics that can be exploited for various purposes, predictably capable of disrupting various industries.
These characteristics come along with its technology; they are transparent, decentralized, immutable, free from the risk of downtime (high availability), safe, easy and cheap.
Anything with an internet connection can hook up to a blockchain, which means anything with an internet connection can have a perfect record of who owns what.
Apart from the financial sector, blockchain has also been applied in the healthcare industry, as three healthcare companies in the United States use it to store medical records, monitor prescription drugs, design more detailed treatment plans and create a more open medical research market to help the healing of chronic diseases.
Accenture’s research notes blockchain technology can reduce infrastructure costs by 30 per cent in eight of the world’s top 10 investment banks, or about US$8 billion to US$12 billion of annual bank fees.
Meanwhile, according to Transparency Market Research, the market value of blockchain is predicted to increase to US$20 billion in 2024 from US$316 million in 2015 with an annual compound growth rate of 58.7 per cent.
The ability of blockchain to eliminate third parties and thus create fast, easy and cheap transactions is the reason for increasing market demand for this technology, in addition to the security factor in online transactions.
PricewaterhouseCoopers outlined several forces shaping the finance industry’s evolution in a 2016 report called “Financial Services Technology 2020 and Beyond: Embracing Disruption.”
The sharing economy is one of the most important transformative factors influencing the industry, primarily impacting the finance industry in two ways.
The first involves how financial counterparties can locate and interact with one another. Secondly, innovations have reduced fees associated with digital payments and transfers, enabling the proliferation of many popular goods and services that rely on background services provided by institutions.
However, in Indonesia, Bank Indonesia (BI) is still hesitant, as it studies the uses of blockchain.
BI is calculating the impact and risk mitigation efforts if such a policy is implemented. Its study will also cover certain sectors that will be expedited by the use of blockchain and digital currency.