Blockchain technology is gaining popularity in various fields – from logistics to banking. Its popularity is due to its automation of processes and its ability to solve security problems within a network. Blockchain, with its decentralized network, is already being considered as a new alternative to traditional currencies, centralized banking services, and transaction methods. In particular, blockchain is a new way to manage and organize a business. We have already talked about the possibilities of blockchain usage with our Lead Architect. Now, let’s go deeper into detail.
How Businesses Can Benefit from Blockchain
Globally, blockchain solutions have the potential to save billions of dollars, increase global trade and have a positive impact on the economy. Because blockchain technology is a secure digital registry, many startups hope to implement it in various areas, such as voting, lotteries, identification, verification, payments of benefits, job searches and insurance payments. For example, at Archer Software we have already created a blockchain-based app for escrow operations.
Today, blockchain's market value is $885 million, and is expected to reach more than $2 billion by 2021, according to Statista. The results of a survey by the World Economic Forum also suggests that 10% of global GDP will be stored on blockchain by 2027. Taking into account all the benefits of blockchain for business, these figures are rather justified. William Mougayar, blockchain industry insider, described all the blockchain business opportunities in his book. Here are some of the most important opportunities.
Blockchain Promotes Business Transparency
Blockchain is a decentralized technology in which everyone contributes to the development of a network. Its work is based on three principles: immutability, consensus, and transparency. Thanks to encryption, each operation is packaged in a block that stores information about the previous block. Elements are inextricably linked with each other, so the chain is immutable. Consensus means that each member of the network has verified all transactions and confirms the integrity of the data. After the information is synchronized in the decentralized network, it is possible to trace its history down to the first transaction. This ensures transparency and security of operations.
For example, the English company Everledger has created a blockchain registry for the certification of diamonds and a history of related transactions. Each diamond is endowed with a kind of “digital passport”, in which its characteristics are described and transactions are recorded. The passport serves to confirm the authenticity of transactions with each gem. This approach may also serve as another example of blockchain value for business, since it allows the buyers of diamonds to be sure that that the gems are authentic and were not involved in criminal schemes.
Blockchain Allows Businesses to Get Rid of Bureaucracy and Mediation
Blockchain's ability to automatically check, record and store large volumes of digital transactions has created many possible applications of technology in business. These include money transfers, accreditation, transparent exchange of documentation, and simplification of business processes in conjunction with the Internet of Things.
The use of blockchain in long chains from suppliers, distributors, manufacturers, and contractors eliminates the risk of error. Each member of the network can verify the accuracy of the data. If something goes wrong, it becomes clear at which of the stages the error occurred.
For example, a number of CRM systems that implement interactions between parties can simplify payment algorithms using blockchain, while simultaneously solving a number of disputed issues on payments at a technical level. ERP and WMS systems using blockchain will be able to offer automated transactions with counterparties. It is possible that blockchain will be able to simplify the operations of small e-commerce by offering simple solutions for implementing and tracking transactions across various platforms.
Smart Contracts as a Way to Automate Computer Operations
The concept of a smart contract is inseparably linked to blockchain technology. Smart contracts run on the Ethereum network and allow the facilitation of digital contracts. For example, a smart contract could find the best price offer in a bid and automatically announce its winner.
A lawyer or real estate agent would normally legally enforce a signed contract for the sale of real estate, while smart contracts are legally enforced by crypto mechanisms encrypted in the code. With the legislative recognition of a smart contract, it will become much cheaper and easier to enter into any contract.
Through smart contracts, using blockchain in your business could help automate many computer operations and perform the function of mutual settlements between companies without the participation of third parties.
Blockchain Will Help Businesses Become More Progressive in Paying Employee Salaries
Since blockchain is directly related to cryptocurrencies, it makes sense to use it to pay company employees. In particular, if your firm constantly pays wages to employees located in different parts of the world, the use of digital currencies in the payroll process will significantly reduce costs by saving time spent on transferring currencies. It will also save all the necessary data in a distributed registry.
Blockchain Supports Cloud Data Storage
Cloud storage is one more of the blockchain uses in business. Enterprises will be able to use the capabilities of secure cloud storage while significantly reducing their dependence on a central server. Considering that cloud storage is not free of charge, the use of blockchain technology will reduce company costs of storing data on central servers.
Blockchain Will Make the Decision-Making Process Fair and Not Falsifiable
Falsifying votes, forging signatures, and holding meetings without notifying all members are among the main problems in corporate and government bodies. All of them are solved if blockchain in business is used for voting. It can track and count votes, eliminating the likelihood of voter fraud. Each voting participant will receive a unique key with which he or she can vote for each specific matter.
Blockchain Will Allow Faster Transportation of Goods
Any logistics business needs to properly organize the transport of goods. Blockchain provides the ability to track cargo throughout the supply chain. Thanks to blockchain, this process will become much safer and more transparent – continuous recording in decentralized registries will reduce the role of human error and the likelihood of delays.
The Main Limitations of Blockchain
Blockchain is not as picture-perfect as it seems. The growing occurence of blockchain in business can lead to data security problems. How can you protect sensitive data, a medical file for example, in a decentralized system accessible to all? There are different mechanisms for restricting access with key identification, but they cannot be compared to the simplicity and reliability of centralized storage. With blockchain, the rest of the network would still be able to store information on their hard disk and access it at any time.
In addition, the blockchain technology allows linking the execution of a transaction to a business condition (for example, delivery) and, most importantly, making the fulfillment or non-fulfillment of this condition public. This can be an advantage in certain situations, but can also be a disadvantage because publicity is not in the best interest of all businesses.
The potential of blockchain, like any powerful information technology, is just beginning to unfold. It is very likely that over the next few years we will witness the mass emergence of new ideas regarding the use of blockchains in the most unexpected areas of our lives, as well as changes in the regulatory status of this technology. The technology itself operates on the principle of “value”, and therefore can be applied to any processes that, in one way or another, utilizes its value for a good cause.
Our team is ready to help your company to deliver value to your customers by creating innovative blockchain solutions and implementing them into your business processes! Let’s get in touch!