Blockchain and its Benefits for Businesses
Business

What is Blockchain and its Benefits for Businesses?

Over the last few decades, the Internet and software have made the money transactions convenient. Now, you can simply make the online purchase, as well as trade securities. However, the financial assets move through antiquated systems connecting correspondent banks and central depositories. Therefore, sometimes this takes several days for funds to reach a stock trade to settle or an account. These systems are not only slow but expensive and insecure too. Blockchain has the capability to resolve these issues by transforming the fundamental business transactions. The technology facilitates different types of transactions, including money, documents, images, etc.

Blockchain: A Brief Introduction

Blockchain is known as the underlying technology behind Bitcoin. It utilizes a peer-to-peer network of computers for the validation of transactions. The technology shares a distributed ledger of transactions (it can be in any form) amidst a network of devices. Blockchain enables you to do and validate the transactions instantly with no central authority. Recently, the use of Blockchain is predominant in the finance and banking sector. For instance:

  • US Federal Reserve: Building a digital cash system using Blockchain technology with IBM’s help.
  • Citigroup: Implementing a distributed ledger technology with Blockchain and ‘citicoin’, a test currency.
  • Deutsche Bank: Examining the use-cases of Blockchain in trade processing, currency settlement, derivative contracts, etc.

Two Types of Blockchain

Public Blockchain: It is a fully decentralized platform where everyone is allowed to read and send transactions. Only the valid transactions are included in the ledger. These kinds of Blockchains are secured via cryptoeconomics. It is a combination of cryptographic verification and economic incentives.

Examples of Public Blockchain:

Ethereum: Offer a decentralized platform, as well as a programming language. It helps in accessing smart contracts and enables the developers to publish distributed applications.

Blockstream: It has the vision to form an ecosystem for resolving issues in the financial system associated with fraud, accountability, counterfeiting, and transparency. Blockstream is a provider of Blockchain, focused on extending abilities of cryptography and distributed systems.

Private Blockchain: All the write permissions are centralized to one company. The access, as well as permissions,  are tightly regulated. Moreover, the rights to modify are restricted to the central authority only.

Examples of Private Blockchain:

Eris Industries: Offer multi-network Blockchain client. It is a smart contract enable, controllable, proof-of-stake based Blockchain design.

Multichain: It gives an open source distributed database, in order to execute financial transactions.

Chain Inc.: Just like Multichain, it is an organization grade Blockchain infrastructure, enabling companies to build better financial services.

Business Benefits of Blockchain

Using this new trading platform can give multiple business benefits. However, the most are centered on offering one or more of 6 competencies:

Benefit 1:  Efficiency

As a matter of fact, transactions are completed directly between the actual parties without any intermediary, settling transactions can be fast. Blockchain has the capability to operate the ‘Smart Contracts’. These contracts trigger the actions automatically based on fulfilling the criteria specified in the contract. This can streamline the processes and even reduces time and cost from transacting.

Benefit 2: Auditability

Each transaction is stored sequentially, providing an unimaginable audit trail for the life of assets even between the parties. It becomes essential if the source data is necessary to verify assets authenticity. One of the organizations, namely Everledgers has recently used this benefit to track diamonds.

Benefit 3: Traceability

This feature of Blockchain technology can directly help in the supply chain management. This is because it is crucial to trace the goods in the supply chain. Implementing Blockchain in this sector not only help to trace the products, but also allow the owner to take possible actions. As the records are immutable in Blockchain, we can fully rely on the information.

Benefit 4:  Transparency

Lack of commercial transparency can at times lead to delays in commerce, which eventually results in a breakdown. By giving transaction details against the commercial construct can enhance the transparency throughout the process. Hence, offer a balanced relationship based on transparency instead of negotiation.

Benefit 5: Security

Because all the transactions are verified within the network in Blockchain by independent cryptography, there is assurance of information authenticity. Guaranteed information is one of the basic keys to unlock the benefits of the IoT (Internet of Things). IoT is an autonomous process of linking assets to the Internet and brings them to actions. The use-case of this is recently being used in the defense industry to verify instructions and protect IP.

Benefit 6: Feedback

With a full and authentic traceability, the assets manufacturers can simply accommodate asset management into their developed products. This can make them more effective and serve their customers in a better way. Moreover, they can have all the information from installation and shipping to maintenance and decommissioning.

All-in-all

No doubt, the supporting tech around the Blockchain technology will rapidly evolve. With its growth, the consumer awareness of its benefits will also increase. In fact, businesses are already calling Blockchain a revolutionizing technology. Therefore, if you are ready to implement Blockchain, you can contact Blockchain development companies.