Key blockchain risk considerations to both providers and users and how to navigate the coming disruption responsibly.
By now, most people have heard of blockchain, the breakthrough technology underlying the digital currency Bitcoin.
Blockchain is poised to disrupt the third-party trust model that underpins traditional transactions. Blockchain's distributed ledger technology is protected by advanced cryptography and authenticated by a peer-to-peer consensus system, rather than a central clearing house. As a result, proponents believe it can provide a more transparent and secure means of recording and transmitting transactions.
It is no wonder that businesses across the world are increasing their interest in the blockchain.
Such bold predictions for future use cases and adoption have led venture capitalists to invest an estimated half a billion dollars in blockchain companies in the last year alone. Meanwhile, financial services companies are exploring ways to adapt blockchain for uses far beyond currencies, such as smart contracts, supply chain operations, and infrastructure transformation.
As more global enterprises adopt blockchain technology, corporate leaders must evaluate and address the associated risks. While blockchain will not eliminate the need for internal controls, it is likely to alter their design and operation. Legacy risk frameworks and control environments must evolve. And organisations must strengthen governance models to mitigate risks posed by regulatory actions in response to blockchain technology.
In this paper, we explore key risk considerations to both providers and users (i.e. participants) in the blockchain ecosystem and offer considerations for navigating the coming disruption responsibly.