Blockchain as a technology trend is becoming increasingly widely used, and several sectors have successfully utilized it for a variety of applications. According to Statista, 45 percent of businesses use the technology to provide safe information transmission, 44 percent use it for virtual currency, 40 percent for asset management and tracking, and 36 percent use it for compliance with regulations.
Blockchain: from cryptocurrency-related to a flexible solution
When Blockchain first emerged, only cryptocurrency-related businesses and investors had a clear vision of how to leverage this cutting-edge technology for their business growth. Today, Blockchain has grown into a flexible solution that helps businesses in a variety of industries in improving their customer experiences and operating procedures.
Blockchain’s decentralized nature ensures its strong transparency and security while maintaining the privacy of its users. Because of all of these features, the first Blockchain adopters were able to successfully use the system for bitcoin trading. Later, Smart Contracts were added to Blockchain, which eased its implementation for a variety of companies.
Smart Contracts are self-executing contracts that are kept on a Blockchain as programs. When specified criteria are satisfied, they carry out pre-programmed activities. Businesses can use Smart Contracts to create chains of activities in which one fulfilled action triggers another, eliminating the need for intermediaries and making the process self-contained.
Blockchain fosters openness in business/customer interactions, improves financial operations’ stability, speeds up data administration, and much more. It improves company efficiency by removing repetitive processes, breaking down administrative barriers, and lowering operational expenses, in addition to improving customer experience.
What Is Blockchain?
Blockchain is a sophisticated data structure made up of a growing list of items known as blocks. Satoshi Nakamoto originally unveiled blockchain technology in 2008 with his Bitcoin cryptocurrency concept. And since, blockchain technology has found applications in a variety of fields, including trade, finance, and healthcare. Blockchain technology can protect patient records in the healthcare sector. Businesses in a variety of industries can use Blockchain to improve their productivity in many ways.
As the name implies, a blockchain is essentially a chain of blocks. Instead of a physical chain, digital data (the block) is saved in an irreversible database (the chain). When a block stores new information, it is permanently stored in the blockchain.
Blockchain is a collection of data that is stored in small databases called blocks in a sequential manner. Each set of data is encrypted in the block, resulting in a permanent record that can be viewed by anybody who has access to the technology. As more blocks are added to the chain, a chronological record of all interactions is built, resulting in a digital ledger of information. The data collected is only accessible to authorized users. The owner of the data can grant or restrict access to the data block.
Spending on blockchain will reach $18 billion – Statista
Businesses can benefit from blockchain because it provides safe access to data, more transparency, and intrinsic validation, as well as increased efficiency and security. Blockchain, as a fundamentally decentralized collection of information, also allows for trusted data transfer without the control of any governing authority.
According to Statista, by 2024, spending on blockchain technologies is expected to reach about $18 billion. The blockchain has transformed the way we think about challenges. It addresses crucial challenges such as network trust. Any business can focus on fixing the problems at hand by adjusting the crucial criteria, trust. Let’s see the top blockchain technology benefits.
How Can Blockchain Help Your Business?
Businesses in a range of industries can profit from the blockchain. The value of blockchain comes from its ability to quickly and securely move data between parties without requiring any institution to take responsibility for data security or transaction support. Let’s take a closer look at why so many companies are integrating Blockchain technology into their digital offerings.
Any Blockchain user can keep track of their transactions. This improves system accountability and reduces operational barriers. As a result, Blockchain is widely used in industries such as finance and banking, advertising, shipping, stock trading, and other sophisticated systems that require several stakeholders to monitor the state of each transaction. Incorporating blockchain technology into the architecture of an e-procurement system provides a tamper-resistant ledger that can be updated and shared in real-time among network members to increase reliability and traceability.
The decentralized nature of Blockchain enables speedy restoration of all transaction records in the event of any failures or disruptions, as each user has an updated version of all transactions done. Companies can use Blockchain technology to make a significant transformation in utility systems. They can develop more effective resource management systems and better prevent any losses or leaks across the network by transforming them into globally distributed networks, such as monitoring electricity data from smart detectors to guarantee its rational utilization.
Smart Contracts on the blockchain eliminate the need for middlemen in a variety of transactions. In real estate transactions, negotiating parties do not need to use real estate brokers to reach a deal. In addition, compared to traditional banking services, digital money exchange is quicker. By providing a single location to store transactions, the digital ledger enables all this feasible. Blockchain technology brings process simplification and automation, making everything fast and efficient.
Blockchains can be used to protect against cyberattacks and to assist military operations. Instead of having separate copies of documents, since blockchain is a distributed ledger, all multiple users have access to that material. The shared version can be updated only by a consensus, where everybody must agree on it. To update a single transaction record, all subsequent records must be changed as well, and the entire network must approve the change.
The consensus mechanism is required for every operation which is recorded. Every transaction is encrypted and includes a hashing algorithm that connects it to the one before it. Each block in a Blockchain record is encrypted and assigned a unique number that is derived from the preceding block and current block numbers. These unique numbers are calculated and verified by a network of users. This makes removing or corrupting any block in Blockchain nearly impossible, making the information in the blocks difficult to hack.
Companies may maintain full control over the data they exchange with other Blockchain participants thanks to strong encryption and decentralization. These networks make it difficult for cybercriminals to extract or modify data. As digital ledger networks allow for the traceability of data origin, they can increase trust in the processes, eliminating any illegal market trading activities.
It is significantly harder to eliminate or edit data after it has been registered on the blockchain. Blockchain is an ideal alternative for keeping financial information or any other data that requires an audit record since every change is tracked and constantly kept on a distributed and public ledger.
A business can use blockchain to build a decentralized network and improve system transparency. Through decentralization, the consensus approach is employed to provide validation. Each node preserves a backup of the record of transactions once it has been validated. The blockchain network ensures transparency and allows data to be shared among organizations in an ecosystem where no single entity is in charge.
For example, vendors, transportation firms, producers, distributors, and retailers all seek information from others in the supply chain under traditional supply chain management, but nobody is responsible for making it happen. This issue is addressed by the blockchain’s decentralized nature.
By offering more visibility and communication between source and destination, blockchain technology works as a trusted facilitator across procurement ecosystems. Manufacturers, merchants, and transoceanic shipping businesses deploy blockchain-based “track and trace” systems to ensure the integrity of product or service components from their roots to the final consumer.
Participants in the blockchain can view all transaction records dating back to the first transaction. This functionality is extremely beneficial to businesses to improve their supply networks. They can track the current position of their items as well as their transportation routes with pinpoint accuracy. Furthermore, Blockchain makes it simple to authenticate delivered goods and eliminate faked products from the market. Experts say blockchain can assist track the origins of products, including pharmaceuticals to ensure they are genuine rather than counterfeit and verify if they are truly organic products.
The final industrial benefit of blockchain is increased speed. Since it eliminates middlemen and replaces residual human operations in transactions, blockchain can handle transactions much faster than traditional methods. A transaction on the blockchain can be executed in seconds in some scenarios. However, the speed with which a blockchain-based platform performs transactions is determined by several factors, including the size of each data block and network traffic.
Traditional banking institutions took a long time to process and execute transactions before the invention of Blockchain. After this technology emerged, transaction speed increased dramatically. Previously, the entire banking process took three days to complete. With the arrival of Blockchain, the time was reduced to seconds.
Blockchain’s nature can also help firms save money. It increases the speed with which transactions are processed. It also reduces manual tasks like data aggregation and amendment, which streamlines reporting and auditing procedures. In addition, blockchain can save money by removing unneeded middlemen that provide little value. Minimizing or eliminating manual processes can all help to cut costs and improve efficiency. The use of blockchain technology helps lowering data reconciliation costs.
Contractors and third-party providers traditionally performed the tasks that blockchain can do. By utilizing blockchain to lower costs associated with third-party providers, businesses can make significant savings. Since there is no inherited centralized player, there are no vendor expenses on the blockchain. Furthermore, there is less contact required when verifying a transaction, reducing the need to waste money or time on repetitive operations.
Does your company need blockchain technology?
Many businesses believe that incorporating Blockchain technology into their applications has significant potential. It enables them to better protect their information, streamline their operations, and enhance the client experience. Here are several scenarios in which Blockchain could be a feasible option for your application.
Keeping a detailed accounting of all transactions
It’s simple to maintain track of and trace all of your business partners’ and workers’ activity with Blockchain. You’ll always be up to date on the most recent transactions, and you’ll be able to monitor each agreement and activity back in time.
Faster transaction performance
If your company has several business partners who must deal with one another, Blockchain can assist speed up the process. A decentralized Blockchain system reduces the need for any head node to approve or verify transactions, while still guaranteeing that each operation is completed correctly.
For several businesses, having a trustworthy gatekeeper to conduct financial transactions or sell items is vital. It is feasible to exclude the gatekeeper from the transaction process while maintaining transaction process dependability using Blockchain. This allows businesses to cut costs while providing a consistent experience for their customers.
Businesses can use Blockchain to legislate the long-term execution of agreements. They do this through Smart Contracts, which are pieces of code that run when specific circumstances are met. It could be paid when the assignment is proven to be finished or a deposit upon placing an order, among other things.
Increase app security
Because there is no single place for hackers to target, blockchain is a system that is immune to hacker attacks. Furthermore, no one in the system can make modifications to the Blockchain network on their own. Therefore, Blockchain is viewed as one of the most secure data-storage technologies.
Track secure transactions
When you need to track secure transactions, especially when there are multiple parties involved. While a traditional database may suffice for monitoring simple transactions between two parties, as interactions get more complicated, blockchain can remove obstacles and simplify connections. Blockchain is a better, safer way to keep track of activity and data updates while still preserving its past. You get a historical data trail as well as an instantly up-to-date record, and the data can’t be corrupted or unintentionally erased.
When companies should not use blockchain?
First, while blockchains are amazing transaction platforms, they aren’t ideal for ultra-fast digital transactions that require milliseconds to complete. Because blockchains consume a lot of computing power, a centralized database should be a cheaper and faster way to process and store the data for ultra-fast transactions.
Second, blockchains are open information chains by definition. So, if privacy is vital, a private database is the better choice (at least in the meantime).
Sectors that have benefited from blockchain technology
Almost every industry can profit from blockchain technology. Energy, Logistics, Finance, Real Estate, Healthcare, and Government are the four industries that we believe would profit the most out of all of them. Let’s take a quick look at how various industries are using blockchain to their benefit.
Clearing and settlement become faster and less expensive for financial organizations and their consumers. Healthcare organizations are discovering that blockchain can secure the integrity of medical records and safeguard patient privacy while also allowing for the sharing of a patient’s data only if the patient consents. Smart contracts and other blockchain technology applications have been embraced by nonprofits and government entities to generate immutable records that execute agreed-upon terms.
Blockchain in Energy sector
The energy industry is strongly reliant on technology, and companies in this sector successfully implement different technological breakthroughs. So, many processes can be effectively streamlined and automated. According to Deloitte’s recent report, the industry’s transactional ecosystem remains complex and costly, and Blockchain has the potential to be one of the game-changers in this space.
Blockchain technology helps the energy industry to become more ecologically friendly. It aids in the resolution of legacy energy industry efficiency challenges by creating a network that allows for more efficient energy production, storage, and distribution. Individual customers can now buy and store energy for their homes or businesses thanks to the advancement of battery storage technologies.
It entails greater flexibility in power purchase or consumption, leading to much more resource-efficient resource utilization and improved electricity pricing policy. Consumers may now pick when and how much electricity they want for their homes, and they can get it at considerably lower prices. Electricity companies can sell their energy on digital marketplaces and compete on pricing. This also eliminates the need for any middlemen in the selling process.
Blockchain in Banking
When blockchain is used as a business network, participants can record and track their transactions in the system. The recorded transactions can’t be changed or removed from the block. In this approach, blockchain enables its users to improve the security, reliability, transparency, and efficiency of banking processes. This method improves data security by making it unchangeable and easily verifiable. It has the potential to improve data security in a variety of businesses to a whole new level, removing fraud and blunders.
The trade finance industry benefits from blockchain in terms of data quality, authenticity, and asset provenance. Due to the possibilities of smart contracts, automation has also become the standard. It increased the efficiency of the process, including the capacity to conduct the real-time settlement. Because there were no intermediates involved, the procedure became error-free. Organizations can now code numerous areas of their business, including data privacy, administration, identity authentication, and so on, using blockchain.
The use of blockchain in banks allows companies to address a variety of security concerns. The technique can be used on a variety of levels, from securing sensitive data to improving user authentication. In the banking industry, blockchain technology improves transaction transparency, making it easier to detect and prevent fraud. Because banks utilize a shared digital ledger to record each transaction, blockchain participants may see more of them. As a result, banks can readily follow and verify the history of each transaction. Money laundering, scams, and other false operations have no place in blockchain banking.
Blockchain in Healthcare
Due to its decentralization, transparency, and traceability, blockchain technology can improve the healthcare data sharing and storing system. Many health systems, on the other hand, are apprehensive to implement blockchain technology because of dangers such as security and authentication issues, interoperability issues, and a lack of technical capabilities.
One of the patient-related benefits of blockchain is security and authorization. Many researchers found that using blockchain to secure medical data across decentralized networks and placing the patient at the center of the system can improve health information security. Furthermore, blockchain has been recognized as an authentication provider for confirming user access to health-related data services with a single identity. Blockchain, according to studies, can help with personalized healthcare by allowing healthcare providers to embrace the concept of shared medical records to create and share customized healthcare plans for patients.
By using timestamps that are recorded for each transaction, the blockchain can help physicians track patient data more easily. With blockchain, drug traceability will also improve. Because everything is tracked in real-time and through a decentralized network, there are almost no risks of it being disrupted.
Consider blockchain disadvantages
Early blockchain implementations have also shown some of the technology’s drawbacks and limitations, according to experts. Blockchain-based applications require the adoption of the system by all the parties involved in the process. Therefore, every player must invest in the technology implementation and process adjustment that come with the transition to the blockchain-based app. Many businesses do not feel that blockchain can deliver a high enough return on investment to justify the cost of upgrading old systems, experts say.
Many blockchain-based solutions also require the assistance of other systems and processes to ensure that the data being added to the blockchain is correct. Consider the usage of blockchain in supply chain management. Such systems could be leveraged by companies to verify if their suppliers have paid all required taxes.
However, if businesses rely on suppliers to validate this without any external verification, the blockchain solution’s value is diminished. Blockchain’s primary weakness is that it assumes that all parties involved follow the same set of rules, but anyone can cheat. As a result, verification checks will be necessary. So, an external mechanism for verifying the data must be developed and used.
Consider power consumption. Because of mining activity, the Blockchain consumes a lot of power. Every time a new node is created, it connects with every other node at the same time, which is highly consuming.
Huge storage. Over time, blockchain ledgers tend to become extremely large. The Bitcoin blockchain currently consumes around 200 GB of storage. The rate of growth in blockchain size looks to be surpassing hard drive capacity, placing the network at risk of losing nodes if the ledger becomes too large for users to download and store.
Lack of scalability. Due to the fixed size of the chain for storing information, one of the greatest downsides of blockchain technology is that it cannot be scaled. Because the block size is 1 MB, it can only carry a few transactions on a single block.
Unemployment. As there will be no need for a middleman once Blockchain technology is adopted and deployed, all of these intermediary sectors for the approval of payments and operations, as well as the jobs that come with these services, will be shrunk to the point of disappearing.
Experts advise executives to carefully assess where they make their blockchain investment in light of these concerns. They underlined that blockchain’s actual worth is revealed when it’s employed in situations where a traditional database won’t function and where there’s no centralization or trust. Combining blockchain-based apps with artificial intelligence, machine learning, or another decision-making layer can help them perform better.
Final thoughts on blockchain
Today, Blockchain is one of the most widely used technologies for improving internal workflows and providing more efficient customer support. It’s achievable because of the Blockchain’s unique features, which make software programs more visible, traceable, safe, and robust.
Many firms from various sector areas are already using blockchain to improve their process, security, and information sharing. The energy business, on the other hand, is only now discovering the technology’s potential.
Nonetheless, for a successful Blockchain implementation, businesses must have a clear understanding of why they want to use it. When your firm handles complex transactions with multiple business partners, sensitive data must be protected, or long-term agreements must be drafted, this technology is the most suited to utilize.
You can make a rational decision over whether or not to embrace blockchain technology now since you understand its relevance, benefits, and drawbacks. Hopefully, this advice will assist you in making the best choice possible for your company. Do not hesitate to contact our experts.