Important Blockchain Applications & Uses for Businesses in 2020
Outside of Bitcoin and other cryptocurrencies, talk about blockchain has flown under the radar. While some business leaders are actively learning all they can about this new technology, most aren't aware of its potential. But it's a game-changer for many industries. As a result, as blockchain becomes more pervasive in areas like finance, security, supply chain, and smart contracts, business leaders who can integrate it into strategy will have a distinct advantage.
So how do you develop your knowledge base so you're ready to innovate using blockchain? New educational providers offer in-depth courses targeted toward business professionals. Here's a snapshot of what you need to know and where you can go next when you're ready to upgrade your blockchain skill set.
Blockchain: Revolutionizing Business in 2020
Blockchain is a simple concept. In its most basic form, it is a distributed ledger system. It is simultaneously updated by multiple machines, which confirm each transaction. The blockchain is a connected series of transactions that are coded and never erased. In other words, everything that's ever happened on the blockchain stays there.
Because it is transparent to the entire network, there's less chance of hacking or disruption. It is peer to peer, which means it does not rely on a third party to confirm the validity of a transaction. Security and trustworthiness are built into the nature of the system itself. Decentralization means that even if the blockchain is damaged in one location, identical information should exist across the network—therefore it's never lost.
There are a number of ways this technology is already changing how businesses and industries innovate. It's most prevalent in the areas of finance, cybersecurity, supply chain, and contracts.
Perhaps the best known application of blockchain is cryptocurrency, the grandfather of which is Bitcoin. This was the first famous occurrence of a currency not connected to any government and that which flowed unimpeded across international borders. But finance isn't just about currency; it's about the movement of assets.
What makes blockchain revolutionary for financial transactions is its decentralized nature. Individuals are so used to banks that few think twice about the role they play. In effect, banks are middlemen, confirming that a transaction is valid and that party A has money to give to party B. This means banks can invalidate a transaction and control its processing.
With blockchain, crypto moves directly from party A to party B. The transaction is confirmed by the blockchain's own network. If money has to go back to party A from party B—say, there's need for a refund—the original transaction cannot be deleted, even if it's in error. Another transaction simply takes its place. The result is that assets move from one party to another without having to be shuttled through a bank.
In theory, blockchain can handle the changing of hands of virtually any asset, from land to stock options. Of course, those both have other legal regulations that may come into play.
Data is increasingly important in modern business. Many business owners work diligently to prevent the hacking or accidental exposure of the personal data they control. That's to protect their business intelligence and to meet their legal obligations. But current data storage systems are imperfect. They typically hold all data in one place.
Blockchain's decentralized setup, however, means that it is almost impossible to corrupt or delete all data. There are just too many copies to contend with. Further, because of the continual updating of the data, the system can tell quickly whether there's been a modification that might signal nefarious activity.
Blockchain is also a potential added layer to boost other security protocols in messaging systems, chat apps, and interconnected devices.
Food is another big beneficiary of blockchain technology. Most consumers don't think too deeply about the long road their groceries take from farm to table. Typically, that involves development, transport, and final sale. The current supply chain gives a general idea of where goods come from and where they end up.
However, there are still gaps in the information. Blockchain allows for a seamless, precise record. That has implications for public health and security. For example, if there is a food-borne disease outbreak in a community, blockchain can trace it back to the original source. There's less need for blanket product recalls or large-scale testing.
There is a number of supply chains that benefit from this process. It may include everything from pharmaceuticals to intellectual property.
Some blockchains have smart contract capability. This is an evolution of the peer-to-peer transaction, where transactions are self-executing once certain conditions are met. In one example, the terms of a sale between a buyer and seller are agreed upon and then written into the blockchain code. The blockchain knows when those terms are met and proceeds to complete the contract. A buyer may contract to purchase shares in a company once they reach a certain price. Once that price is hit, the blockchain finalizes the sale.
This is another way that blockchain takes out the middleman. No lawyers to interpret the contract or investment advisors to make the trade.
Reorganizing the Business Landscape with Blockchain
The possibilities of blockchain are huge. There's no surprise, therefore, that businesses are exploring its use in a number of different ways. Those who do can become the first to improve efficiency, raise profits, and outpace competitors in many key areas. Even those businesses that aren't ready to implement blockchain in their own operations should expect to interact with this technology and to use it to its full potential.