Demerits Of Implementing Blockchain Technology In Commodities Market

Demerits Of Implementing Blockchain Technology In Commodities Market
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The blockchain is proving to be a highly disruptive technology having the capability of doing things which were earlier deemed impossible.

The Blockchain technology can offer the highest levels of transparency, high speeds and efficiency as compared the present payment networks. Some of these benefits of blockchain have made it highly popular among developers, corporations, and investors etc. who are placing their bets on the blockchain technology going big.

The Blockchain Technology is a decentralized database which stores a ledger of assets and transactions across its peer-to-peer network and utilizes its system to authenticate transactions.

The transaction is stored and recorded in such a manner wherein the records cannot be changed or altered, and transactions can be monitored, enforced and verified without the use of an intermediary or a central authority.

In the last couple of years, there are multiple projects which are either under development or have been developed using the blockchain technology.

One of the proposed ideas doing rounds also includes the introduction of blockchain technology in the commodities market in India. It is deemed that using the Blockchain technology can aid in providing transparency within the market, develop trading channels for sellers and buyers who were viewed as a credit risk and also provide liquidity to a market which has been losing the favor of banks and other financial institutions.

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Further, many industry analysts also feel that the security features of the blockchain technology along with its transparency and a high degree of traceability of shipments in every stage can aid in encouraging a mass scale migration from the unregulated Indian commodities market towards a large scale adoption of the blockchain technology.

This can revolutionize the commodities market and also has the potential of including metals, energy, grains and much more.

However, as of July 2018, it was found that almost 90% of the blockchain related ventures are on the route of being abandoned or put on hold by the end of the year.

The Forrester Research discovered a drastic drop in the adoption of the Blockchain technology worldwide and the Boston Consulting Group have indicated on similar lines that the blockchain technology has minimal potential in the Indian commodity trading industry.

According to a recently released BCG report, the blockchain report is overhyped, and the volume of trade conducted on the blockchain based platforms is insignificant when compared to existing trade been conducted on trading and payment platforms presently utilized globally.

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The BCG report has raised serious questions about blockchain being a leading technology and have also raised concerns about its applicability and mass adoption for the commodities market in India.

As per the report issued by the Boston Consulting Group, the blockchain is not suitable for adoption and implementation in the commodity industry, and the time-sensitive nature of commodity trading makes it difficult for the blockchain technology to be useful in stock exchanges, commodity exchanges price-reporting agencies etc.

Implementing Blockchain Technology

Further according to the said report, the blockchain technology in its current form might not be capable of handling the pressures and requirement of the existing commodities market in India. It will require further development for increasing its capabilities and enhancing the possibility of integration of the blockchain technology into the commodity sector or any other sector within the Indian economy.

Also, according to other experts, blockchain technology might not be the solution for everything as claimed as the technology is still suffering from many drawbacks. For instance, blockchain technology has a very specific usage.

Though the blockchain has witnessed successful projects using the blockchains smart contracts to resolve cases of internal frauds, it still has a drawback of limited scalability in its current form.

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According to the reports of both the Boston Consultancy Group and the Forrester Research, allude towards the lack of financial viability and mass adoption of blockchain projects.

Another drawback of the blockchain technology which was pointed out by many industry experts is a requirement of all players in the blockchain community to standardize and reconcile systems and terminologies across the board as presently; the blockchain industry is suffering for a high degree of lack of standardization.

Nonetheless, on a positive note for the blockchain technology, investors and industry experts are often skeptical regarding new technology. For instance, the case of the internet, e-commerce etc., these technologies took time to develop and move towards mass adoption.

Similarly, the blockchain technology can be refined and developed over time and made suitable for the commodities markets and other application, though it might not be suitable to be integrated into the commodities market in its current form. For trading account details visit this website.

If you love and like this post then make sure to share with friends so they some useful knowledge about Bitcoin and blockchain.

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