How Blockchain Technology can Benefit Businesses
When people hear the word blockchain, they typically think of Bitcoin, the world’s first decentralized cryptocurrency enabled by blockchain technology. The possibilities of blockchain technologies go far beyond cryptocurrencies. In fact, blockchains can benefit businesses by providing greater automation, security, and transparency.
The term ‘blockchain’ refers to a decentralized ledger that enables a record of transparent, secure, and immutable transactions. Originally documented by researchers Stuart Haber and W Scott Stornetta in 1991, blockchain technology has led to the innovations of cryptocurrencies, smart contracts, and more.
According to research published by Deloitte in 2019 that surveyed 1,300 senior executives globally, 53% of respondents said that blockchain had become ‘a critical priority’. In this article, we’ll look at the ways blockchain technology can benefit and revolutionize businesses, regardless of the size or industry.
Improved transparency
One of the main benefits of blockchain technology is that all transactions on the network are unchangeable, and everyone has the ability to view them. This means that for businesses, the technology can enable true transparency between each department, helping ensure that all parties act with integrity.
Automation
Another incredible benefit of blockchain technology is the implementation of ‘smart contracts’. Smart contracts are programmable, decentralized code on a blockchain that automatically runs when specific conditions are met. Smart contracts have the potential to radically innovate processes in nearly every niche. They can allow near-instantaneous payments when details of a contract are met, making payments to contractors seamless. In the future, smart contracts can enable financial institutions to perform instant Know Your Customer (KYC) processes through decentralized identities. Currently, smart contracts are being used by a large number of NFT (Non-Fungible Token) projects to automatically collect and distribute royalty payments to the creators, in addition to other use cases.
Frictionless International Payments
Cryptocurrencies enabled by the blockchain can allow businesses to conduct frictionless borderless payments with vendors, clients, and contractors. Since cryptocurrency payments don’t require the use of a centralized entity like a bank or payment processor, they typically incur far lower transaction fees. Additionally, they’re also typically much faster than most wires and payments processors.
Cryptocurrency payments also don’t require conversion to a foreign currency, as a result, there is much less friction involved in dealing with vendors and clients located in foreign countries. Because these payments are recorded on the blockchain, they are also far more transparent and secure than traditional payment systems. With all the transactions on the blockchain visible to any party, there is typically less need for complex third-party audits to ensure business funds are being appropriated correctly.
Overstock.com has accepted payments for its goods in BTC since early 2014, in collaboration with the cryptocurrency exchange Coinbase. In the first 24 hours of accepting the digital currency, the company reported that it took in over 800 orders, netting the company a total of $126,000 worth of the digital currency.
Supply Chain and Logistics
Companies like Modum have begun using blockchain technology to seamlessly and accurately track the distribution of physical goods throughout the supply chain. Blockchain also enables more transparent and verifiable recordkeeping in the logistics of goods, since transactions cannot be modified or deleted after they have been settled. In the future, it’s possible that blockchain could be utilized by high-end luxury manufacturers to confirm the authenticity of the goods they produce. This can help reduce or eliminate the sale of counterfeit goods, as well as improve customer confidence in the items that they purchase.
Agriculture and Food Distribution
Through its Food Trust program, IBM is using their proprietary BlockChain Platform to enable food cultivators, processors, transportation, and merchants to improve shelf life, decrease waste, and improve the safety of their food. Should a potential contamination be identified, blockchain can be used to quickly trace the distribution of affected products, as well as help identify the source of the contamination.
Healthcare
Blockchain technology can be used to help improve the safety of patient data in the healthcare industry. Through the use of a decentralized identity system, patients will be in control of their sensitive data with an encrypted digital wallet. Private patient information can be shared with healthcare providers, with the ability for the patient to revoke access at any time, at their discretion. This will greatly reduce the risk of healthcare businesses becoming the target of cyber attacks in an attempt to gain access to private patient data, as they will no longer be in charge of managing this data. Blockchain technology can also be used to ensure that medications requiring temperature-controlled transportation arrive in a safe manner by keeping accurate, reliable records which can be shared between multiple parties.
Insurance
Insurance companies can benefit from blockchain technology by automating underwriting with smart contracts, automating claims and verifying data accurately, and greatly reducing the risk of fraud with increased accountability and traceability. As vehicles become equipped with an increasing number of sensors, it’s plausible that insurance claims could be automated in the future through the use of smart contracts.
Decentralized Cloud Storage
Companies spend massive amounts of money on cloud storage; Airbnb reported plans to spend over $1 billion on cloud storage through 2027. Centralized cloud storage solutions can experience downtime or become the target of cyberattacks, leading to difficulties in access or the loss of business data. Decentralized cloud storage options like Storj Labs offer an alternative option where files are encrypted and stored in pieces across a global network of nodes. This greatly improves security and eliminates the risk of downtime, since files are stored across multiple locations – even in the event that one should fail, another node can step in to take its place.
The Future of Blockchain
While blockchain technology has been around for quite some time, the technology is still very much in its infancy. Many developers from the traditional tech space have begun migrating to blockchain development, and are creating new innovations and use cases for the technology with each passing day. Over the coming years, an increasing number of corporations will begin implementing blockchain technology into their business strategies. By getting ahead of the curve and incorporating this technology now, businesses have the opportunity to gain an edge over the competition.
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