Over the years, the term blockchain has gained quite some popularity on the internet. According to Citrusbits, ”The global Blockchain market is expected to reach $20 billion by 2020”.
So, should you use blockchain technology for your business?
There are many advantages and disadvantages of blockchain but this post will cover 10 ways blockchain technology can help your business grow.
But first, let’s understand what blockchain technology exactly is.
What is blockchain technology?
Blockchain is a type of system which stores transactional information of cryptocurrencies. It is a decentralized database that stores the transaction in several computers in a peer-to-peer network. In this way, the information stays secure and becomes less likely to get hacked.
Each block in the blockchain consists of various transactions with their details. With every new transaction, a transaction record is added to the ledger of every entity that is involved in that transaction.
The blockchain isn’t managed or run by a single authority but is distributed across several computer systems. And since it is managed by multiple entities, the technology is named, Distributed Ledger Technology (DLT).
How blockchain technology was invented:
To further delve into the world of blockchain technology, let’s have a look at their most popular digital currency – Bitcoin.
Bitcoin, in a nutshell, is the first digital currency for which blockchain technology was invented in the year 2008. Though decentralized, the bitcoin transactions are verified through a process known as mining. Mining is the process by which new bitcoins are created by solving arithmetic and mathematical puzzles.
Now you might be wondering how long it takes to mine 1 bitcoin? By setting up appropriate software and hardware, it takes around 10 minutes to mine 1 bitcoin. Nano is known to be the fastest crypto to mine, as it takes just 1 second. On the other hand, Montero is the easiest cryptocurrency to mine, as it can be mined using just a home computer.
Top 10 Benefits of Blockchain Technology for Business
Trust is one of the key factors that contribute to the completion of a business transaction.
While dealing with a business for the first time, we often include a known third party that regulates and verifies the business transaction.
But with blockchain technology, you can transact with any business entity with trust. The very idea of blockchain is based on the factor, that you do not need to build a formal business relationship to share transactional data on the internet.
Blockchain brings forth and connects you to several entities whom you wouldn’t have interacted with during a normal world transaction. Moreover, with blockchain, you would be comfortable exchanging various data and transactional information that you wouldn’t have shared otherwise.
2. Decentralized Platform
Another interesting factor of blockchain is its decentralized status.
Being decentralized, blockchain transactions are not regulated by the central government or another government authority. Sometimes an independent status of a process helps build trust amongst the users.
In the blockchain, no single entity is in charge. The data is passed through a supply chain that consists of suppliers, producers, retailers, and distributors. It is a free flow of information and data between several businesses with no one entity in charge of the process.
3. Improved Privacy
In a setup like a blockchain, you can maintain your anonymity. The blockchain system, unlike the traditional computer system, offers a high level of privacy to all the individuals who are involved in the transaction.
Since the transaction process can’t be edited or tampered with at any step of the way, blockchain gives a great deal of integrity and confidence to the stakeholders and companies. Also, the blockchain system gives out a set of permissions to someone who wants to view a particular detail of your transaction.
4. Enhanced Security
Security has been a cause for concern for businesses around the world for all types of transactions. However, blockchains ensure that your transactions are secure and safe. They have an untraceable record of transactions that are end-to-end encrypted. It makes sure that hackers and frauds can’t lay a finger on your data.
Moreover, in blockchain, transactional information is stored in multiple computer systems. It makes the blockchain-enabled system much more secure than the traditional system, where all the data is stored in a single computer system.
5. More Speed & Efficiency
When compared to conventional transaction methods, blockchain is way ahead in terms of speed and efficiency. Many businesses prefer using blockchain-enabled systems because they save time by eliminating third-party intermediaries.
Sometimes a blockchain can complete a transaction in less than a second. This is where the concept of transaction per second (TPS) comes in. It is the average number of transactions that take place within a second in a network.
To understand the concept of TPS better, let’s take the example of how long a bitcoin transaction takes. A bitcoin transaction generally takes around 10 minutes to process. EOS is yet another fairly popular cryptocurrency that is known to provide a good transaction speed. EOS processes up to 15 transactions per second and aims to achieve a million transactions per second in the future.
To understand it better, here’s a blockchain cryptocurrency transaction speed comparison with VISA: Bitcoin– 7 TPS and VISA– 24,000 TPS
Fact: Tkeycoin is known to have the fastest crypto transaction speed. According to PR Distribution, “Tkeycoin is the world’s most advanced payment system, offering a powerful, blockchain-powered AI system that can handle as many as 50,000 transactions a second, a huge advance over Bitcoin (7), Ethereum (15), and banker’s favorite Ripple (1,500) – it even manages to beat Visa (24,000)”.
6. Better Transparency
Due to the decentralized nature of blockchains, it becomes easy for you to access your transaction details with the entities that share a personal node with each other. Users can use blockchain explorers to view their transactions live.
With the transparent system of blockchains, it becomes quite easy to trace and locate an issue. We can easily get to know if someone tries to tamper with our data. Also, each entity that is involved in the transaction process has a copy of the data.
In traditional transaction procedures, it becomes a bit difficult to trace a product back to its origins. However, with the data being stored in the form of nodes, you could easily trace your transactions in blockchain-enabled systems. With the help of an audit trail, you can find out the origin of an asset.
Also, you can view every step of your transaction process to ensure the authenticity and security of your transaction. The traceability feature of blockchains is a great way to trace a product back to its origin or where it might have faced an issue.
8. Reduced costs
As a business, you end up paying huge amounts of money to third-party intermediaries for basic processes.
On the other hand, a blockchain-enabled system can help you eliminate unnecessary costs. You only need to put faith in your trading partner and do not have to be bound by the usual rules and regulations imposed by a middleman. It also helps you save money on documentation and other formalities.
According to CSO, “By eliminating bureaucratic red tape, making ledger systems real-time and reducing third-party fees, blockchain can save the largest banks $8-$12 billion a year”.
Additionally, blockchain covers other expenses of processes like amending data, aggregating data, and auditing processes.
Apart from being end-to-end encrypted, the transactional data on a blockchain is immutable as well.
Immutability, in the process of blockchain, can be defined as keeping a record of each stage that is involved in the transaction process. Every transaction on the blockchain is properly time-and-date-stamped to maintain immutability.
This makes the process of analyzing data and audit trails over time easy. It can not only help you keep track of all the entities that have been involved in the process but can also help you identify faults in the transaction process at an early stage so that you can fix them quickly.
Blockchain offers you the service to automate your transactions with smart contracts.
Smart contracts can be defined as a type of digital contracts that are stored on a blockchain. The smart contracts automatically move onto the next step of the transaction process once the predetermined conditions are met.
It is a great way to further increase the speed and efficiency of the blockchain process. It also helps eliminate the concept of middlemen taking care of manual contracts between the entities.
Hence, when you have provided your details of documentation in a transaction, you’ll automatically move on to the next part of the transaction.
The Key Disadvantage of Blockchain Technology
Like every other concept, there are some cons of blockchain as well. One of the major disadvantages of blockchains is their network scalability issue.
Scalability, in blockchain, is the ability with which a large number of transactions are handled during a particular time. In a blockchain, the scalability issue mainly arises when an additional node is added during the transaction process.
The conventional methods that a business uses for its daily operations have become a tad bit outdated in this day and age. Blockchain technology has revolutionized the business sector in the last few years. Blockchain technology is here to stay and you too can make the most out of it!
Now that you know about the proven benefits of a blockchain-enabled system, you should integrate it with your own company.