08 Jul What advantages does the blockchain bring to your business?
Blockchain technology has been around for over a decade now, and during that time, it went through some extraordinary changes. It started as nothing more than underlying technology for Bitcoin. Over the years, it received a near-unlimited number of theoretical and practical use cases, such as tracking food, running smart cities, serving as storage for sensitive data, being a method of eliminating corruption and human trafficking, and even all of this is only scratching the surface.
Countless blockchain projects have already been launched, many of which have different roles, and are used for different purposes. Take Ripple and its XRP as an example — the company uses the emerging technology for re-inventing global remittance. Ethereum acts as the world’s largest platform for App development. Binance Chain is connecting the exchange’s subsidiaries and other aspects of the Binance ecosystem all over the world into a single massive network. This is all possible thanks to the power of blockchain technology.
The last several years have brought special attention to this technology, and we are witnessing businesses around the world switching to it, experimenting with it, and integrating it almost on a daily basis. If you are interested in making it a part of your own business, here are a few things that you should know about it.
What is Blockchain?
To put it simply, blockchain operates as a distributed ledger. In fact, it is called Distributed Ledger Technology (DLT) for this exact reason. It works by creating new blocks, which are packets of information that are immutable, decentralized, and safe.
Basically, blockchain is a library that contains all information that was ever stored on it, and processed by a decentralized network of nodes. The nodes are all connected to one another through a P2P (Peer-to-Peer) network.
The most common use case for blockchain is the processing of transactions, where each transaction generates a hash. If a transaction is approved by the majority of the existing nodes, it is written into a new block. Meanwhile, each block refers to the one that came before it, and together, they make up the blockchain.
How can blockchain be used to optimize business processes?
One of the main advantages of using blockchain in business is that it enables the execution of collaborative business processes that involve untrusted parties. That can include anything from sharing information, supply chain, logistics information, and more. However, the key detail is that it can do this without needing any central authority.
All that the parties require are smart contracts, which are self-executable, and immutable, like the rest of the blockchain.
The way this works is that participants create a smart contract, containing all the details of their collaboration. Once all parties agree to the terms, the contract is created, and it will bind all the parties to the original deal. Due to the consensus mechanism that governs the blockchain, all parties have a guarantee that the process model is followed by every other party.
There are some requirements, however, such as dependence on the volume of recorded data, as well as the frequency of updates by smart contracts.
Blockchain can also be used to improve processes within a single company, for example, by connecting software. It brings transparency to the table, and it eliminates issues such as corruption. Not to mention that the blockchain speeds things up in multiple ways, and especially by eliminating the need for paperwork and lengthy verification and confirmation processes.
What are the pros and cons of Blockchain?
So far, we have mentioned plenty of blockchain advantages, but are there any flaws in using this technology? Let’s quickly list them both up.
Blockchain is distributed
It brings stability
Blockchain technology enables a trustless system
It is very difficult to hack
Almost 100% immutable (one needs to control 51% of all the nodes to make a permanent change)
It improves the speed of various processes
It offers smart contracts and full transparency
In danger of 51% attacks
Users need to keep the private keys secret
Depending on its design, it can be inefficient, especially if it uses Proof-of-Work (PoW)
Data modification is very difficult
Blockchain has its strengths and weaknesses, but in essence, this is still a technology that is seeing constant and rapid development. Blockchain is changing, but its use cases only continue to grow. In theory, it already has a near-unlimited number of different use cases that can make it useful to every business and industry out there.
It is true that it will take time for blockchain to mature and reach its final form, at which point it will probably evolve into several different directions. However, integrating it early will give businesses an edge over the competition, and make them more competent, transparent, and trustworthy, whether it comes to clients, partners, or investors.
If you would like to know more about the possibilities of Blockchain in your business, contact us we would be happy to assist you.