It’s not uncommon for many business owners to think of cryptocurrencies and blockchain technology as being the same. The main problem with that thinking is that it is completely incorrect.
Cryptocurrencies are used mainly for peer-to-peer exchanges of value (i.e., purchases) and trading. Blockchains are used to help make business processes more efficient through automation, removal of overhead, and saving of time to name a few of the blockchain’s benefits.
Blockchain has far more uses than cryptocurrencies. Many businesses are utilizing the blockchain technology to help them grow. In this article, you’ll learn what blockchain is, how it is benefiting businesses and if it is right for you.
An Audit Trail for Any Business for Blockchain Implementation
The blockchain is a ledger that cannot be modified. Cryptocurrencies sit on top of the blockchain. Each cryptocurrency transaction is appended to the blockchain. Every cryptocurrency transaction is basically an unmodifiable audit in the blockchain.
To better understand how the blockchain works, it can be compared to a traditional database. Client-server databases are often housed on a single server and maintained by an admin. Trust is given to the admin that he will not alter records outside of policy. For the admin, there isn’t anyone looking over his shoulder to be sure database integrity is not violated.
Blockchains don’t have trust or integrity issues like traditional databases do. The blockchain gets around trust issues by distributing its database to many nodes (people). When a transaction is appended to the blockchain, it is also verified by other nodes. These nodes must reach consensus on the transaction. Only then is the transaction committed to the blockchain. In this scenario, it’s virtually impossible for one person to try and modify a transaction since this will cause consensus to fail.
Businesses require the utmost integrity in their transactions. Clearly, blockchain can meet this requirement.
How Are Businesses Benefiting from Blockchain Technology?
A large number of businesses have been benefiting from blockchain for years now. More and more are integrating blockchain technology into their business every year. In fact, Gartner predicts that business value-add will grow to $176 billion by 2025. This growth will come regarding increasing scale, scope and complexity.
A few examples of blockchain in use now include:
- Maersk (world’s largest shipping company) - uses blockchain to track its cargo
- Walmart - tracks how pigs move from China all the way to your kitchen table.
- Edge (Cybersecurity company) - uses advanced client-side blockchain encryption to eliminate large-scale data breaches.
Working with an intermediary can often slow down business processes. For example, contract negotiations, escrow-based transactions, supply chains, notarization and many more common business tasks. The blockchain provides business solutions in all of those areas. The results are a reduction in costs, time and increase overall inefficiency.
Is Blockchain Right for Your Business?
How to figure out whether blockchain is right for your business?
If you do any of the following, blockchain can certainly help you:
- Contracts In blockchain terminology, contracts are called “smart contracts.” That’s because they can be customized to specific business needs. As a negotiation is worked out over several days, months or even years, the smart contract will lock in each transaction until all parties have satisfied the full agreement. Since the blockchain and hence the contract can’t be modified, the opportunity for disputes are greatly reduced. Plus, there is a complete audit of the entire chain of transactions for every party to view.
- Supply Chain Supply chains are made up of multiple vendors from many locations. Using components from these various vendors, a final product is assembled by one company at the end of the supply chain. When something goes wrong at any point in the chain, it is often the vendor who pays. With an unmodifiable audit trail, any vendor can see exactly where the failure occurred and depending on the sophistication of the specific blockchain in use, the reason for the failure.
- Notarization Unless you have an in-house notary, which most of us don’t, you have to find one and travel to their location. This of course takes time and adds costs. With blockchain notarization, you can do it online and often for less. stampd.io is just one example of a company offering this type of service.
How to Get Started with Blockchain
The simplest way to get started with blockchain is to offer bitcoin payments as an option for your merchandise or services. This doesn’t require building out any new infrastructure or development of your blockchain. This is also the cheapest option to get started.
Another route is the use of non-bitcoin implementations such as smart contracts. Since smart contracts need to be programmed, you’ll need a developer who is familiar with the specific language that the type of smart contract you want to implement uses. Budgeting less than $10,000 is feasible.
The third and most involved way to implement blockchain is actually to build your own blockchain. This option provides for the broadcast flexibility in a blockchain solution. It will require developers familiar with how to build a blockchain and skills in the specific language it will be written in. It also requires different environments (staging, test, production) to test the blockchain before it is made public. The budget for such a large project will likely be a few $10,000s.
Can You Afford Not to Integrate Blockchain?
One question to ask yourself, as more and more businesses offer blockchain based solutions, can you afford not to? Will customers choose blockchain-based solutions over businesses that aren’t offering such solutions? The more well-known and integrated blockchain solutions become, the more customers will choose them.