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Written by: Kimberly Maceda | BSV Devcon
Since its inception in 2009, blockchain technology has come a long way. While it began as the innovative concept behind cryptocurrency, blockchain has entered many industries like finance, healthcare, and gaming. The past decade has created many opportunities for businesses, organizations, and individuals to leverage the technology in multiple ways.
The Basics of Blockchain
Blockchain technology refers to a wide range of processes done through a distributed ledger or database. This database stores information online and makes it available among many computers in a network. The data is then linked together in a form that resembles a “chain,” thus the name “blockchain.”
Blockchain technology's decentralized nature makes it different, meaning no one party has complete control over the entire system. This system decreases the need for trust between users because the information is not vulnerable to alterations.
Many users refer to blockchain technology as “trustless,” referring to how each user does not need to trust another to exchange information successfully. Because many users will verify the transaction, each activity is well-documented and complicated to fake.
Blockchain technology can provide several business advantages.
1. Increased Efficiency
Blockchain technology is valued in a wide range of industries because of its potential to boost revenue and speed up processes.
For example, financial transactions benefit from increased efficiency because blockchain-based currency removes the need for intermediaries. Thus, payments using blockchain can be faster than traditional transfers.
This efficiency can apply to many businesses and stakeholders who struggle with paper-heavy administrative work. These activities are also vulnerable to human error, which can be avoided by streamlining these processes through innovations like smart contracts.
Blockchain can change how businesses conduct their daily operations with fewer errors and unnecessary paperwork.
2. Decentralized System
People and business organizations typically create backups of their files and systems on their local hard drives or in the cloud. Some people might not even back up their files, making this information vulnerable to accidental deletion or corruption.
Storing essential data in a local hard drive involves the risk of losing these files. The files can get corrupted when the drive is broken or rewritten. And even when backed up online, files can go missing or inaccessible in case of tampering and loss of connection.
For instance, if the power goes out in a particular server location, you may not be able to access your business’s inventory or updated financial records.
With blockchain, records are stored multiple times in many different nodes. This functionality allows users to retrieve them anytime and from any source. If one node loses their information or the user cannot connect to a particular network, several more copies of the same data exist.
3. Better Security
Security is a significant concern, especially when dealing with sensitive information like credit card numbers, signatures, and currency.
Blockchain’s approach to data provides more security because of its distributed nature. Each block of information is recorded multiple times, making it extremely difficult to alter. This immutability is a big factor in improving security in financial transactions.
Such information is also encrypted and not attached to any user’s personal information. A user is only identifiable by a long series of characters known as a public key.
Blockchain-based technology is described as “trustless” because two people don’t need to trust or even know each other to transfer currencies.
4. Availability
More people worldwide are attracted to blockchain and cryptocurrencies than ever before. Not only are people interested, but they are also continuing to learn and apply their knowledge of blockchain. In fact, 81 of the world’s top 100 public companies have adopted blockchain technology.
Benefiting from blockchain technology is very feasible for any business, government, or person. There are countless sources of information readily available to anyone interested. Many successful blockchain investors and developers have set the foundation for the widespread use of blockchain across industries.
A few use cases include the following.
- Cryptocurrency – The cryptocurrency industry arguably began the global interest in blockchain technology. It encompasses many sectors like crypto exchanges and games.
- Tokenization – While tokenization is a cryptocurrency feature, it also enables one to own, exchange, and invest in non-fungible tokens (NFTs).
- Finance – More specifically, the industry of decentralized finance developed from the concept of removing any third parties in financial transactions. It includes peer-to-peer transfers through digital wallets.
This wide-scale access makes it easier to become your own boss through blockchain-based technology, whatever industry you are in.
5. Traceability
Traceability becomes easier with blockchain technology. Through smart contracts and provenance tracing, businesses can easily organize and access their records. Retailers can manage their inventories in digital ledgers, and manufacturers can better track stocks.
This feature also reduces the risk of fraud and hacking on a blockchain. If an amount of currency is stolen, the thief cannot discreetly spend this money because that particular currency will contain its history. The stolen currency can be identifiable once spent or stored somewhere. If such an event occurs, immediate action can be taken based on the blockchain’s tracking system.
6. Direct Transfers
With blockchain, there is no need for intermediaries or go-betweens. This setup is beneficial for businesses involved in finance because financial institutions often charge a premium for intermediary services.
However, many companies can take advantage of the direct peer-to-peer connection provided by a blockchain.
For example, a marketing agency works with a client from another country, but the client may pay a hefty fee on top of the total payable because cross-country institutions charge higher. Through cryptocurrency, there would be a reduction in costs because there is no need for such intermediaries between the two relevant parties.
Innovations like smart contracts take this process further by automating activities like insurance payouts and loan approvals. Once certain conditions are met, smart contracts will automatically process these activities and resolve concerns immediately.
The Impact of Blockchain
At first, the concept of blockchain may be challenging to understand. However, many businesses worldwide benefit from this technology, which could work well for you, too.
Whether you are in finance, marketing, retail, or any business, there are many ways for you to benefit from the systems and communities behind blockchain technology.