Earlier this year, Coin Rivet reported that lawmakers in Germany had started talking to start-ups about the technology and where they see it heading. Start-ups and companies in Europe’s largest economy got invited to submit their recommendations with the aim to promote the country’s current strategy.
Why this move toward blockchain technology?
Berlin, the country’s capital, is a hub for start-up companies looking at developing blockchain technology. There is also great interest from other investors and companies from a range of industries including car manufacturers, energy, pharmaceuticals, and the public sector.
All of these sectors are hoping to use blockchain to transform mass market processing. However, blockchain start-ups have stated that without a legal framework, there will be large hurdles to overcome. This has been a major wake-up call for the government to urge caution toward cryptocurrencies that run on the technology.
Countries such as the UK and Singapore have allowed companies to have limited freedom when experimenting with blockchain in the financial sector. Meanwhile, smaller jurisdictions including Malta and Gibraltar have lured a number of companies to their shores by creating laws that are designed to encourage the growth of these firms.
What blockchain in Germany will achieve
It is imperative for companies to start experimenting with blockchain if they want to stay ahead of the game. With Germany aiming to implement a new blockchain strategy, hopefully Germany-based companies will be able to do exactly that.
This new blockchain strategy will aim to bring about more knowledge of the technology to sectors that are not yet experimenting with it. However, it is important that these sectors understand what blockchain can bring to their companies before they will be happy to accept the technology.
Realising the benefits
Blockchain has the potential to disrupt every sector including finance and trade finance. At its core, blockchain relies on a decentralised database, which is known to be more secure and robust than the propriety of centralised models which are currently being used in finance sectors.
This decentralisation means blockchain can create a much more safe and reliable system at a lower cost. The technology is also able to create a decentralised record of all transactions, meaning there is no longer a need for one single master database. As a result of this, blockchain leads to the ultimate simplification of trade finance, including cost reduction, security, and reliability.
However, there are many barriers preventing companies from accepting blockchain technology. Many businesses are still working on evaluating the technology’s feasibility or comparing different blockchains instead of focusing on actually developing practical ways it could be put into practice to improve business operations.
Companies are experimenting with private (permissioned) blockchain models rather than open (public) blockchains. This is due to public blockchains being seen as a bigger data security risk.
Germany to bring about change
Whether Germany will be able to bring about change and drive the mainstream adoption of blockchain technology is still to be seen, but it is definitely heading in the right direction to do so.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.