If you are part of a company that’s always looking to gain a competitive edge through innovation then you probably have heard about blockchain and its benefits. And if your company has a knack for minimizing risks and costs, then you might already have thought about potential blockchain application. But it’s not always simple to evaluate the return on investment, especially when it comes to a technology that is still at its infancy.
Our task for this article would be to outline the major benefits of blockchain and its most efficient applications in business.
But before we start let’s clarify what is Blockchain?
By definition, blockchain is a ledger that can be shared across a network where all transactions are recorded and consequently. The blockchain itself operates as a historical record of all the transactions that have occurred – from the first to the most current one. Here is what Wikipedia says about it.
Just as most new technologies, the terminology behind blockchain and crypto is constantly evolving, with new phrases being coined (almost) as we speak. So in another article about blockchain terminology, we’ve put together a glossary of terms that will give you a better understanding of the language of blockchain.
Now, let’s start by laying out some sections and a corresponding question about those. And if you hear yourself yelling a “YES”, then you’ll know whether your company needs blockchain integration in this area. So let’s start with the first of many blockchain benefits …
Does your company collect a lot of data (sensitive as well), resulting in constant stress of a possible loss, leak, manipulation or misuse?
When all of the information is stored in one place, i.e. it is centralized, it always provokes gloomy thoughts no matter how secure your data storage solution is. With blockchain technology, companies can benefit from trusted databases on a decentralized, encrypted, and non-editable ledger without revealing any data. This means that it is stored not on a single, but on multiple devices, connected in a peer-to-peer network. The participants in a certain network are called nodes. If one of them is down all of the information will still remain intact in the rest of the computers.
Some of you may ask – “Isn’t it even more insecure if the data is so wildly spread?”. No, it isn’t! The cryptographic nature of blockchain allows us to keep whatever input we want without disclosing any piece of it.
And even better – when your data is stored at multiple devices you eliminate the risk of manipulations. If one of the sources tries to cheat the rest of the nodes will reject the faulty information. Your data will be “protected” until at least 51 % of data keepers unanimously decide to tamper it which is almost impossible.
Does your business depend on people’s/partners’ goodwill? What would happen if someone didn’t complete their work as promised or you didn’t receive what has been negotiated?
To the next of the blockchain benefits:
Blockchain technology can 100% guarantee that everything on the way will be done as expected no matter what the process is. The relationships between the parties are ruled by the so-called smart contracts (the instrument that manages the blockchain system). They are immutable and up to this moment, they are the most secured data operation structure. Whether to establish business rules or to prove identity, smart contracts can arbitrate the process honestly.
One of the most common applications of blockchain in business relationships is establishing payment terms. The revenue is pre-locked in the smart contract and the amount is only released when the work is done as expected. Both parties have a warranty that no one will mislead in the payment process.
How can we prove the quality of data or product originality?
One of the greatest blockchain benefits is it can provide both – traceability and assurance, within its transparent essence. The technology allows trustless storage of precise data whatever its nature.
Distributed ledgers can be very helpful when it comes to verifying product origin or quality. A permanent history of a product can be easily created, making it very suitable for the supply chain industry. Other critical areas such as investors voting and decision making can also benefit from the immutable and publicly viewable ledger (You may want to check out our article on Decentralized Organizations).
Cutting off middlemen and third parties
Is your company dependent on a third party for a good chunk of its operations? Do you have the feeling that this third party robs you?
Maybe this is the most widespread understanding of blockchain use cases because it is usually connected with Bitcoin and cryptocurrencies. And this is correct because money transferring through the blockchain ecosystem eliminates the banks and their monstrous fees. Another blockchain benefit is that the sent amount is delivered immediately to the recipient.
Well, designed blockchain platforms can also kill the need of intermediation, brokers, lawyers and different types of agencies, and so on. In short – blockchain is meaningful for your business if it depends on information and goods transfers between two parties.
Is manual verification a significant part of your business?
If it is then it probably takes a lot of time, money and slows down the process as a whole. Think about the smart contacts again and their arbitrating functionality. They can arrange agreements between parties by holding as much restrictive logic as you need, including money value requirements (Check out the Claim Management Solution we built for P&G).
Due to the cryptography, smart contracts can assure certain functionality can only be called by the eligible participants. They can be used to unlock a variety of services like bikes or apartments for rent or other Internet of Things style approaches.
By now there’s a good chance that you’ve seen some potential in applying blockchain into your company. It sounds very attractive with all those blockchain benefits, we know. But then why doesn’t everyone do it? As big of fans, we are of the technology, it is still in the development stage. Aspects like scalability and interoperability need to be improved to reach widespread adoption.
To explore relevant use cases and even have a solution developed, it makes sense for enterprises to partner up with blockchain consulting companies. At LimeChain, we’ve done both blockchain consulting and blockchain development for companies like P&G and Raiffeisen Bank. We don’t consider blockchain to be relevant for every business, however, we’re happy to help businesses stay on the cutting edge of innovation through exploring relevant applications and building Proof of Concepts. For more detail on blockchain benefits, you may want to check out our article on how enterprises can experiment with blockchain or directly contact us at [email protected].