It is fashionable to declare that blockchain will change the world and kick-start the next industrial revolution. It’s highly likely you have heard such claims from friends or the media, but many gloss over how blockchain can actually be a game changer in business. In this article, we will explore some of the ways that blockchain technology could completely revolutionize business.
Put simply, blockchain is like a database of records that are stored on a large network of computers, instead of being stored centrally by a company such as Google or a bank. Records and data are verified as being correct by getting consensus from multiple computers with a copy of the database.
Each ‘block’ comprises of a number of different records and a new block is created after a preset amount of time or when the current block has reached its memory capacity (e.g. 2 MB). These blocks are then linked together in a digital chain and when a new block is created it is simply added to the bottom of the chain. This means that the more data that is stored on a blockchain, the bigger it is.
Firstly, blockchain is perhaps the safest way to store records. Indeed after 9 years, the Bitcoin blockchain has never been breached. The blockchain is also a very transparent way to store data and no single entity holds control over a public blockchain. This means the data being stored on public blockchains is trustworthy. The records stored on the blockchain are on an entire network of computers. This means, unlike traditional businesses that store data on a server, there is no single point of failure.
Records stored on the blockchain cannot be changed once they are stored. This property has advantages when it comes to bad actors wanting to alter the records stored. Blockchain means they cannot do this and the record cannot be brushed over or hidden.
The truth is that there are many ways that blockchain could revolutionize business that we cannot even conceive of right now. However, we will dive into our 6 favorite applications of blockchain technology in business:
Accounting is not a glamorous application of blockchain technology, but every business owner understands that ensuring the integrity of their businesses financial information is important. Storing financial records on a blockchain essentially eradicates human error and stops employees from tampering with financial data. Accurate records mean there is a transparent audit trail and that is what regulators like to see.
By deploying blockchain technology, businesses can increase the efficiency of their accounting process, security of financial data and comply with regulators more easily. Instead of having financial information on multiple different systems or forms, all data can be accessed in a single blockchain.
Globalisation has given rise to businesses that buy raw materials in one country, manufacture different parts in different countries and sell the product elsewhere. Materials, components, and products all need to be tracked to ensure that businesses continue to operate efficiently. Blockchain can be used to track physical components and products throughout the world, whilst maintaining standards of transparency that current systems cannot afford.
Blockchain enables the streamlining of supply chain management which saves businesses money. Tracking supply chains on the blockchain can also reduce counterfeiting. The reason is that a product can be tracked from the point of creation all the way to the point of sale. If a product isn’t where it should be, then it’s highly likely that it’s been tampered with or compromised.
On the customer side of things, blockchain technology could be used to show the journey of the product the customer is holding in their hands. The benefit is that customers can be assured that the product they are buying is from the genuine manufacturer and is not counterfeit.
In business, there are a lot of contracts with other businesses, customers, and suppliers. All this is time-consuming, expensive and can hamper business growth. Blockchain solutions such as Ethereum allow smart contracts to be created by businesses. This means digital contracts can be drawn up, agreed upon, executed and enforced through the security of blockchain. Not only is this faster, but it enables businesses to significantly reduce legal fees.
There are many instances in which stock market listed companies may have to hold a shareholder vote. Traditionally this was not only slow but pretty expensive to hold as well. Blockchain technology can be used to enable digital voting in a secure and fast way. The NASDAQ actually has implemented a blockchain voting solution themselves and the technology could even replace traditional political voting.
Illegal activities such as insider trading and money laundering by bad employees can result in reputational damage and huge fines from regulators. Financial trading companies can benefit from using blockchain based systems which simply do not allow the covering up of financial crime. The deployment of blockchain technology could act as a major disincentive for bad actors who might look to act dishonestly.
Blockchain enables fast, secure and cheap transactions. Cryptocurrencies using blockchain technology e.g. Ethereum can be transacted anywhere in the world in seconds and for tiny fees. The traditional banking system may take 7 days to process an international payment and credit cards like American Express can charge prohibitively expensive fees.
Most businesses are interested in fast and cheap transactions, meaning blockchain powered cryptocurrencies could change business.
There is little doubt that any business can benefit from blockchain technology. After all, every business is required by law to file annual accounts. The different ways blockchain technology can be leveraged to improve business efficiency will depend on the type of business. However, all entrepreneurs are interested in ways of increasing the bottom line and cutting costs. Blockchain offers business owners across the world to do exactly that and that is why blockchain and cryptocurrency technology is truly kick-starting a Worldwide business revolution.