Sure, coming off the holiday there were probably very few of us that gave thanks for blockchain but it has been a big year to think about. It’s been nothing less than epic for blockchain, the distributed ledger technology that is being used to facilitate direct value exchange over the internet. Why is it fast-becoming the system of choice for business transactions? I’ll let the benefits speak for themselves.
1. Security: Unquestionable
The method by which transaction records are validated and added to a blockchain is inherently more secure than other record-keeping systems. In order for a transaction to be approved, participants must agree on it through consensus. Then the transaction is encrypted and linked to the previous transaction. This creates an immutable chain that is virtually impossible to modify retroactively since it would require the alteration of all subsequent blocks and the collusion of the entire network.
When goods are exchanged on a blockchain, the transaction record provides an audit trail that shows the provenance of the asset. This is especially useful in a supply chain, where components can be tracked along their journey. Information relating to the component can then relayed to or from the new owner for possible action. The historical transaction data can also help to verify the authenticity of assets.
3. Transparency: See data in context
On a blockchain network, data is complete, accurate and consistent across participants. Through the distributed ledger structure, transaction information is accessible to all relevant users. And you can see it in relation to relevant data in other streams such as location, time, temperature and transaction type. This makes it possible for network members to build stable business relationship based on transparency rather than negotiation.
4. Documentation: Compliance and clarity without costly clutter
Traditionally, keeping accurate records of monetary and asset transactions is a paper-heavy, time-consuming process that is prone to human error and often requires third-party mediation. With blockchain, record-keeping is performed using a single digital ledger that is shared among participants. This reduces the clutter and complications of using multiple ledgers that must be reconciled.
5. Effectiveness: More than efficiency
Along with better organization, blockchain provides increased effectiveness driving the right type of work at the right time which is greater than simple efficiency, as doing suboptimal process more efficiently is not the best method. With better process there is less time spent on administrative tasks and more opportunity to streamline and automate. Tasks such as clearing and settlement can occur much quicker without numerous intermediaries, and transactions can be processed around the clock — this frees up time and most importantly capital for the business.
6. Intermediaries: Fewer needed with less friction
Blockchain is decentralized, which offers the promise of nearly friction-free cooperation between participants of business networks. Enhanced security makes it possible for these users to interact directly with each other because trusted intermediaries and middlemen aren’t needed to confirm transactions.
7. Costs: Reduced from labor, time and process
For a business, reducing costs is important. Though initially setting up a blockchain network won’t be cheap, with better organization, increased efficiency and fewer intermediaries you can reduce everyday costs such as third-party fees, administrative costs and overheads for exchanging assets.
For all those who joined me at the Blockchain Expo in Silicon Valley, you had the opportunity to explore blockchain use cases and see how the technology is being implemented in a wide array of industries. It was standing room only at our booth demonstrations both days of the event, and for my keynote on using blockchain to unlock new markets in areas such as financial services, supply chain, risk management, digital rights management and healthcare.
Some of the more advanced use cases of blockchain technology can be found in banking and supply chain. Learn more about how cryptocurrencies, smart contracts, decentralized identity and automation of transaction processes have the potential to change financial markets.
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