In recent years, the term “blockchain” has gained immense popularity. Initially, it was considered to be a complex and niche technology. However, Blockchain has now become a household name, thanks to the introduction of the first cryptocurrency called Bitcoin. This cryptocurrency was created by a person or a group of developers under the pseudonym of Satoshi Nakamoto.
With the rapid rise in popularity of Bitcoin, blockchain technology has also become increasingly visible to the general public. This is due to the fact that blockchain serves as the foundation upon which Bitcoin operates. Blockchian’s secure nature has piqued the interest of developers and businesses alike, who are now looking to incorporate it into their operations.
In the past decade, blockchain technology has revolutionized the business world, and in this blog, we will explore some benefits that blockchain technology has to offer.
The Benefits of Blockchain Technology and Its Impact on Business:
1. Security: The impact of blockchain technology on business security has been significant. By utilizing blockchain, businesses have been able to develop decentralized systems that are not controlled by a single entity. This decentralized nature of blockchain technology provides a layer of extra security, making it more secure and transparent than traditional centralized systems.
Blockchain technology operates as a digital ledger that records transactions. It creates multiple copies of its ledger (Blocks) to ensure the authenticity of each transaction. All copies are equally important and are interconnected with each other. Whenever a valid change is made in a block, this information is passed on to other interconnected blocks. Once the change is approved by a majority of the blocks, the transaction is recorded.
Blockchain technology offers an extra layer of security to important data. Any attempt to modify any information in the block for personal gain requires a hacker to alter more than 50% of the blocks, a practically impossible feat. This exceptional level of security is what sets blockchain technology apart from current technology in terms of security.
And this additional layer of protection and security that Blockchain technology offer is very beneficial to various industries, including healthcare, finance, government and retail.
2. Fraud prevention: Blockchain technology offers a significant advantage in reducing fraudulent activity by recording the date and time of each transaction in real-time, without the ability for any party to tamper with the data. This eliminates the potential for backdating or falsifying information for financial or other forms of fraud. The ability of blockchain technology to prevent fraud is an invaluable feature that can be used in future auditing efforts or any other place where money or important assets is involved.
Blockchain technology can be utilized to create certificates that securely store important information, preventing any party from altering the data for their own benefit. Currently, Bosch’s IoT lab is testing a system that records vital information about a car, including its build year, mileage, maintenance history, accidents, and services. The system aims to prevent fraudulent activities, such as odometer fraud, by ensuring the accuracy and transparency of the recorded data.
3. Disintermediation: We rely on intermediaries like property dealers or banks because we trust them with our money and personal information, and they assist us in obtaining what we desire in exchange for a fee. However, blockchain technology has reduced our reliance on intermediaries by providing a secure platform where we can trust our money and personal information to be safe. Consequently, there is no need to pay intermediaries fees for their services.
A prime example of this is a cryptocurrency, which has eliminated the need for banks in financial transactions. This is just the beginning, as blockchain technology continues to improve and evolve, our dependence on intermediaries like insurance companies, stockbrokers, and real estate agents is expected to diminish entirely.
4. Increased trust and transparency: Thanks to blockchain technology, smart contracts have been introduced, which have enhanced trust and transparency. Smart contracts are essentially computer code embedded within the blockchain that executes the terms of agreements or contracts from outside of the blockchain. For instance, if 50% of the work mentioned in the contract is completed by the promisor, the agreed amount will automatically be paid after the claimed work completion has been evaluated.
This is just the tip of the iceberg and smart contracts have the potential to revolutionize the way agreements are made and executed in the foreseeable future. The application of smart contracts is set to boost trust, efficiency, and transparency across all sectors where they are employed.
5. Improved traceability: Blockchain technology is being leveraged by numerous companies to track the entire journey of food items, right from their origin on the farm to their destination on the dining table. A case in point is Walmart, which has implemented blockchain to trace the origin of leafy greens. Similarly, IBM is collaborating with multiple food suppliers to create a blockchain-based food tracking system.
Blockchain technology has the potential to revolutionize the way products are tracked and record data in real time, from the production stage to consumption. By linking only genuine products to the blockchain and backing them up with data, this technology ensures their authenticity and eliminates the issue of counterfeit goods. Users can easily trace a product’s origins and even use it to track parcels and orders during delivery.
Businesses can leverage blockchain technology to monitor their products and gather vital information such as the date of sale, the shop where it was sold, and the customer who made the purchase. By analyzing this data, companies can improve their products and services and enhance the overall customer experience.
Although blockchain technology is still in its infancy, its potential is enormous. In the future, it will be extensively used in supply and distribution chains to track everything from raw materials to finished products. This will help businesses to maintain transparency and efficiency, while also minimizing the risk of fraud and errors in their supply chains.
6. Creation of new business models: Blockchain technology has given rise to new business models such as non-fungible tokens (NFTs), decentralized finance (DeFi), and smart contracts. The recent craze around buying NFTs has resulted in rich people investing millions of dollars in digital art pieces, such as The Merge ($91.8 million) and The First 5000 Days ($69.3 million). In the future, blockchain technology is poised to create even more new business models that will potentially render some existing ones obsolete.
Blockchain technology has come a long way from being a complex and niche technology to becoming a household name. Its impact on business has been significant, with benefits such as increased security, fraud prevention, disintermediation, increased trust and transparency, improved traceability, and the creation of new business models. As blockchain technology continues to evolve, it is expected to play an even greater role in shaping the future of business and transforming the way we conduct transactions and agreements. The future holds exciting possibilities for businesses as they continue to embrace and incorporate this technology.