Why Blockchain Could Be the Miracle Your Business Has Been Waiting for
Blockchain is a data hashing technology used in private networks. It can be described as an automated database which allows users to encrypt any data or transaction, bind it to any particular condition or action (to be fulfilled or not) and publicize the result or keep it completely private.
What is Blockchain?
Not to dive too deep into technical nuances, the very principle of blockchain is quite simple. It can be thought of as an event log that is available to every resident of a city. Every time a resident participates in a unique event, the city’s event log is updated with the details of that event. In this log, you can mark any data or action – from personal information and budget for household supplies to financial transactions with cryptocurrencies and the results of elections.
The pages of this log are simultaneously stored by all residents of the city. The content of every page is constantly updated and kept uniform by referencing older pages. If someone tries to deceive the system by adding or removing a page in the log, the system will immediately reference the tens of thousands of other resident’s versions of this log and the discrepancy in the log’s structure will be immediately detected.
The PROs and CONs
As great of an innovation that blockchain is, it isn’t without its setbacks. In the early years of blockchain technology, its primary usage was considered to be for the financial sector, which can partly be explained by the worldwide reaction to bitcoin. At present, banks, traders, exchanges and other financial regulators can mold the basic principles of blockchain to their liking. Only time will tell how blockchain makes its mark on the world as we’ve only begun to see the impacts it has had on businesses, banks, and governments.
Where is it used?
Most of the first experiments that followed the avalanche-like growth of interest in blockchains were used in IT segments. But now the technology is used in nearly all industries – down to housekeeping. For example, agricultural projects with autonomous sensors for controlling the water supply to their fields were created with the use of blockchain. Washing machines are now capable of ordering laundry detergent when their supply is running low. One of New York’s quarters utilizes what they call the Brooklyn Microgrid – a private blockchain network that allows homeowners to exchange electricity generated by solar panels on the roofs of their homes without any participation involving “Big Brother” (the local power company).
Basically, one can use blockchain technology in any process which:
- can be automated
- suffers from a human factor
- requires fund-cuts
- requires a shorter time-frame for each action or transaction
The most prominent ways to utilize blockchain
In a Forbes article on the difference between blockchain and bitcoin, they discuss when the technology was officially granted legal status, and how it did not make any sense for business purposes. But when blockchain was made legal, everything changed. Enterprises all over the world began to create all kinds of systems and platforms using blockchain technology that was designed to accelerate and optimize their workflows. Sberbank of Russia, one of Russia’s largest banks, recently made their first transaction in Russia using blockchain technology.
It should also be noted that blockchain implementations in IT systems can have a number of implications. For example, many CRM systems that interact with counterparties have been immeasurably simplified by using blockchain algorithms when making payments. The algorithms can be used to eliminate even the slightest chance of losing important documentation that originated from an entire collection – a common mishap that everyone can relate to. At the same time, its potential for solving a number of controversial issues in the areas of cybersecurity and international transactions, such as traceability, “hacking incidents” and transactional fee amounts can’t be understated.
As blockchain continues to gain wider international legal status in more and more countries, conducting international trade for physical goods using blockchain technology may be an inevitable outcome. It will offer companies and entrepreneurs massive reductions in their time frames for completing complex international transactions.
The first international transaction between Ornua and Seychelles Trading Company through Barclay’s became the first deal in an industry of physical goods to be conducted with the use of blockchain. This deal took only a few hours to complete. Any other international transaction between financial institutions operating under traditional means for completing a transaction of this scope would have taken up to 10 business days to complete.
The only really good reasons to avoid joining “the blockchain cult” are the uncertainties of tax and legislative consequences as well as resistance from the usual intermediaries. However, since July 2017, these problems that arose for payment transactions between individuals and enterprises have been solved.
We have already entered into an exciting and unprecedented era of technological advancement. The pace of change and innovation continues to accelerate. Remaining malleable to changes, even for one’s most familiar processes, is a recipe for success in the ever-evolving digital world.