Blockchain and cryptocurrency are sometimes used interchangeably. Although blockchain is used to make cryptocurrency a reality, it is in fact not the same thing as cryptocurrency.
The technology can be used in various ways from facilitating identity management, to fast and more affordable transactions, and more ways to use it are still being discovered. But, is this technology regulated, and how do sectors work around the regulations to ensure the best possible outcome?
First, what is blockchain?
What is blockchain technology?
Blockchain technology is a database that stores encrypted blocks of data and links them together to form a chronological, single source of the data. It is occasionally referred to as Distributed Ledger Technology (DLT).
The technology is distributed, not copied or transferred, creating an unchanged record of an asset. The asset is decentralised, meaning that it allows full access and transparency to the public. A list of the changes made on the document is stored and can be accessed at any time. Blockchain technology is an asset to almost any sector as it allows for transparency.
Blockchain helps reduce risk, lowers the risk of fraud and allows for transparency that can be used in many ways. Because of this, blockchain is a promising technology that can make new and exciting inventions a reality.
How it is regulated in different regions
Blockchain faces many challenges, globally. The biggest challenge they face is the global regulations implemented towards the use of blockchain.
Each region has different regulations and laws on the use of blockchain technology. This sometimes causes confusion for those who want to expand to new markets.
Have a look at the different regulations of the three biggest regions in the world: EU, UK, and the USA.
The EU is the number one supporter for the use of blockchain technology. The EU is home to many platforms, applications, and companies who use blockchain technology.
The European Commission designed a gold standard for the use of blockchain technology in Europe. The gold standard advocates for environmental sustainability, digital protection, digital identity, cybersecurity, and interoperability.
This helps the EU achieve its goal of being a leader in this space by embracing their values in its legal and regulatory framework. The EU also supports rules for blockchain to avoid legal and regulatory fragmentation.
The UK government has taken a generally flexible approach to blockchain technology. The government recognises that blockchain has the potential to deliver significant benefits. This can only be achieved through managing risks and keeping the UK financial markets safe.
The Financial Conduct Authority (FCA) supports tests of the technology within its regulatory sandbox. The Kalifa review highlighted the importance that blockchain technology has for the UK fintech market.
The same regulations aren’t implemented nation-wide in the United States. There are several different policies on the blockchain. State governments implement their own policies and regulations, according to what they see fit.
This causes the USA to be behind on regulating blockchain. The reason for this is because blockchain is a global technology that is growing rapidly. But, because of the lack of regulations in the USA, the growth of blockchain is slow.
The future of blockchain technology
The future of blockchain technology is bright. It can help solve many problems in different sectors once it has been implemented. The technology is diverse and can allow for faster transactions, storing digital personal information.
Here are some ways that blockchain technology can and will be used in the near future:
Non-fungible tokens (NFTs)
The blockchain has seen a new emergence: NFTs.
Non-fungible tokens (NFTs) are a way of buying and selling digital assets, similar to crypto currency. They are all unique and can’t be replaced or swapped. The only way to own a NFT is through purchasing, selling, trading. A NFT can also be given away by the original owner or creator.
Potentially, NFTs can drive a new wave of collectibles. Just like collecting rare art or building up a sneaker collection.
The year 2021 has seen an increase in gross sales for collectible NFTs, such as artwork and cryptocurrencies.
These NFTs likely have an impact on the future of digital ownership. Possibly, within a few years using NFTs to purchase goods could be a reality – just like cryptocurrency.
Blockchain is secured and decentralised. This means that it is almost impossible for hackers to tamper with transactions.
Transactions can be processed much faster with Blockchain-verified data, due to it being secure and trustworthy.
It is the reason why banking and financial services are moving towards a completely digital landscape. The future of blockchain in finance has displayed the opportunity to process transactions at any time. Blockchain transactions aren’t interrupted by banking hours. This enables businesses, governments, and consumers to carry out transactions anytime, anywhere.
Passwords and authentication questions are currently used for security on online platforms. There is a potential that blockchain can replace this security system with digital identities that are safe, secure, and manageable.
There will be no need to remember passwords and arbitrary information. Instead, a digital identity will be assigned by making use of a random set of numbers on a blockchain network.
Identities cannot be hacked or changed without access to a private key. This means that it is far more reliable to identify users.
This could lead to other improved aspects like buying a house faster, or being able to easier treat health problems. This is due to personal information being stored in a secure fashion, but can still be viewed easily.
Blockchain has already made the financial sector more diverse and reliable, imagine what it can do for other sectors!