Blockchain technology is arguably the most disruptive force in the market right now – its disruption is being felt in finances, economics, enterprise, legal, real estate, and entertainment among others.
In the last couple of years, blockchain technology has been unwittingly tethered to Bitcoin such that it was practically impossible for the average Joe to differentiate between blockchain and Bitcoin. Unfortunately, the use of Bitcoin to fund illegal activities (remember Silk Road), claims that it is a fraud, and the stern warnings from governments often end up rubbing off negatively on Blockchain.
However, there’s been a concerted effort by the blockchain community to divorce blockchain from Bitcoin in the last one year – because Bitcoin is just one of the many applications of blockchain technology. This piece provides insight into why blockchain technology is a gamechanger for businesses even though the mass market is still skeptical about cryptocurrencies.
Why All The Fuzz About Blockchain?
The first step towards underlying the latent value in blockchain technology and why it is such a buzzword is to actually understand what blockchain technology means from a business standpoint. Blockchain technology is simply a growing database (ledger) kept and maintained by several thousand individuals who have copies (decentralized) that can’t be modified (immutability) or deleted (eternal). Each block of contains information (records) about transactions as well as a record of the previous block in a continuously repeating cycle of chains.
3 practical applications of blockchain with direct influence on business
1. Smart contracts
Blockchain technology will cause significant changes on how people do business going forward using Smart Contracts or self-executing contracts. Many B2C and B2B interactions are guided by contracts, which list the rights, obligations, terms, and condition of the relationship.
When a party fails to uphold its end of an agreement, the other party can seek legal redress through an arbitration process or law court. The problem, however, is that seeking legal redress could end up being a slow and expensive process hence, most businesses just choose to cut their losses instead of going to court over breach of trust.
With blockchain technology, business contracts can be repurposed to run on blockchain technology. Smart contracts built on blockchain technology contain software code designed to execute predefined actions once certain parameters are met.
For instance, when hiring a graphics designer to redesign your business logo, a smart contract can be designed to put funds in escrow, the funds are automatically released to the designer on the delivery of your logo; hence, you don’t have to agonize over the possibility that the designer might disappear with your money or that you could disappear with the logo.
2. Payment transactions
Businesses are ultimately in business to make money and much of B2B and B2C interactions lead towards an eventual payment for the transfer of value (goods/services). Blockchain technology is one of the drivers of peer-to-peer payments (not necessarily Bitcoin). When businesses need to send money to partners locally or internationally, they usually depend on banks to facilitate such transactions.
The problem, however, is that banks charge a fee to move money from one account to another, such fees tend to eat into profit margins. Apart from the fees, it often takes some time (usually days) for banks to process cross-border transactions. The delay in transaction processing often delays business deals and add to the inefficiency of current business models. With blockchain technology, businesses can expect to run near-instant transfer of money without incurring high charges.
3. Data storage
Most small to medium-sized companies need a measure of data storage solutions and cloud storage happens to be the best offering in the market right now. For large corporations, cloud storage is not even negotiable as the stakes become increasingly higher in the need to keep vital business data secure from unauthorized access.
The problem, however, is that cloud storage is hardly a foolproof method of data storage because each cloud seems to be nested in another cloud – hackers only need to compromise a central server and they can access just about any information stored on the cloud of such servers.
Blockchain technology could, however, decentralize the cloud storage market by providing an avenue to distribute your files across thousands of devices in the different parts of the world. The foolproof security of the blockchain will prevent unauthorized access to data. More importantly, it will help businesses become more trustworthy since it is practically impossible to edit data that has been previously stored on the blockchain.
If you are interested in even more cryptocurrency-related articles and information from us here at Bit Rebels then we have a lot to choose from.