How Blockchain Can Revolutionize Your Business Operations

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Blockchain technology has been the buzzword since the time Bitcoin and other Cryptocurrencies gained popularity. It is the technology that enables the functioning of cryptocurrency as a mode of payment, and Bitcoin is just one of the many cryptocurrencies out there in circulation.

As a business, you might be under the impression that learning about Blockchain is not really relevant for you since it deals with a currency that is not even that popular as a mode of payment in our country. But it is important to stay abreast with the latest technological developments to see what opportunities it can unlock, especially for making more money, and also for solving your problems. In this article, we look at blockchain as a technology and explore its various applications for businesses.

What is Blockchain

Blockchain is also called Decentralised Ledger Technology or DLT. And as this name indicates, it is a decentralised or distributed ledger or record of transactions. It is based on the idea that information or records can be altered, modified or falsified by a malicious entity if they are stored in a single place (centralised setup). Hence, it works by distributing the information to not one but several stakeholders, who jointly get access to the information on every new transaction taking place in the system (decentralised setup). In addition to that, each transaction is protected with a mathematical cryptographical code to ensure that this data cannot be falsified.

To put it simply, this is a system of information sharing where the record of all the transactions is shared with all persons within the network, who get updates on new entries being made, and each new entry is protected with a complex code. This ensures that only the people within the system can access the transaction record, and no change can take place without authorisation.

Suppose a malicious entity were to try and tamper with this data by fabricating records. In this case, they would have to begin by breaking a complex encryption code to get access to posting the data publicly. As soon as the data has been made public, other entities in the network will easily be able to compare past records against the new entry and verify their validity. If a majority flagged the entry as inappropriate, all the hacker’s efforts would have been for nothing. Obviously, the way to tackle this would be to simultaneously attack about 51% of the entities in the network, but that kind of computing power would likely drain more resources from the hackers than return them.

So from this discussion, it is clear that Blockchain is a very secure information sharing system that is designed to be impossible to break. The question is, how does it benefit businesses? So let’s address that in a bit more detail.

Blockchain Applications in Business

Blockchain technology has found a niche in facilitating financial payments on a global scale already. Cryptocurrency is the biggest example of blockchain and offers the benefit of reducing the cost of international transactions by removing the intermediaries called banks. In a normal transaction involving the banks, fund transfers would attract bank charges which could take about 7% of the total amount. But cryptocurrency removes them from the process and makes the transaction free of these intermediary charges.

The next major benefit has been established in the field of Supply Chain Solutions. As the world went global, supply lines have gotten increasingly complex, and it becomes difficult to determine where exactly along the entire supply chain did the product develop a defect. This has been made easier with blockchain, which enables a complete digital record of every step of the product along the entire supply chain, allowing businesses to track and trace the individual components of the product right to the extraction of the raw materials. Walmart has a famous case study on how they integrated blockchain in their supply chain network to reduce the time for tracking components from 6 days to a mere 2.2 seconds.

Another popular benefit of the Blockchain technology is in developing smart contracts. These can be understood as automated contracts, which are drafted based on codes rather than legal terms, and execute payments only upon the fulfilment of the conditions of the contract by both parties. This ensures faster, secure payments and delivery of results.

In addition to these applications, blockchain technology is being applied to other areas that involve maintaining records, such as accounting practices and real estate. In the former, this increases the accuracy of records and simplifies auditing procedures. In the latter, it can facilitate the sharing of the history of ownership of a particular property and other relevant details.

Concerns about Blockchain Technology

Every technology comes as a double-edged sword, and there is no reason why blockchain should be an exception. So while the technology involves making things more reliable and secure, the encryption algorithms that go behind them require some heavy computational powers, which are a drain on our energy sources as well as our budgets. Additionally, since the system is so robust that data cannot be altered once it has been entered, this means that if mistakes have been made in recording then they cannot be rectified.

As mentioned earlier, the threat of amassing a majority of entities in the network, also known as a 51 attack, is a possibility in smaller blockchain networks. Finally, as the number of transactions keeps on increasing, so do the storage requirements, causing difficulties in data handling.

Parting Note

Blockchain technology, just like many of the other inventions of the 21st century, has opened several opportunities for businesses. A sound leader is one that identifies the scope to adapt to the new technology, and does it quickly. Brydgework Consultants can help you assess your Business’s strengths and weaknesses and explore the options of implementing Blockchain or other technology solutions for maximising your efficiency as well as profitability. To learn more about the full suite of our Business Consultancy Services, click here.