The business world is continuously evolving and the competition is increasing as well. It is, therefore, crucial for businesses to keep adopting new technologies to stay afloat and competitive in their respective marketing.
The blockchain is one such technology that has shown real potential to change the way we do business. In this article, we will discuss the reasons why modern businesses should adopt the blockchain and the benefits this technology can offer, along with some examples.
Most of the business transaction today involves the transfer of good and digital data. The information of these transactions is stored by both transacting parties in separate ledgers on their ends. That means the information of transactions performed by a particular company is stored in their respective centralized ledger. Now, there are multiple disadvantages of using a centralized ledger by each company, as explained below.
- The cost of maintaining a separate registry is high since each company has to dedicate hours updating the network and processing the transactions.
- It is inefficient as the same action has to be replicated by different companies in the network.
- The security of ledgers must be maintained separately by each member at their own end which again raises the cost as well as the risk factor.
If the same network (of companies) uses the blockchain instead, they will have to maintain only one ledger for the entire network. A copy of the same registry will be maintained by all members of the network. All copies are updated simultaneously each time a new transaction or block is added to it. It saves the time and cost and ensures the security of the network. Here are a few other advantages blockchain can offer to your business.
The decentralized nature of blockchain ensures that all members of the network always have the same information through their respective copies of the ledger. This also makes sure that no transaction or block in the chain can be modified without all members knowing about it. This increases security and trust in the network.
Since most of the tasks are performed automatically, verification of transactions and block adding process is relatively faster in a blockchain network.
Since blockchain transactions are stored in an immutable database which cannot be modified without proper authorisation, this adds trust and security.
The network maintains a chronological order of transactions where new transactions are added in a particular order, which makes it easy to check the history in case of any issues.
The blockchain allows multiple members to add transactions simultaneously and instantly in the ledger which increases the speed and reduces the time of transactions.
The risk of cyber attacks is lower since each member in the network has a copy of the same ledger, which makes it impossible to modify the ledger without anyone knowing. Besides that, blockchain employs a strong cryptographic mechanism to protect its transactions.
Blockchain saves businesses a lot of money in operational and human costs. Since all members agree and trust each other with the transactions, it avoids the need for external audits.
The smart contracts feature of the blockchain ensures that all the transactions are verified by the network itself without seeking the help of an external contract or third-party authority.
Now, in order to properly use the blockchain for the benefit of your business, you must understand the various types of blockchains and their differences.
Private and Public Blockchain
Most of us came to know about the term ‘blockchain’ in reference to popular cryptocurrencies like Bitcoin and Ether (ETH(). However, the thing to note here is that most of the cryptocurrencies out there, including BTC and ETH, are based on a public blockchain. Companies, on the other hand, use private or closed blockchain which is different from a public one in the following aspects.
Members in a private blockchain are chosen manually and only through a verification process. Such networks are not open to all. New members are selected by the existing members of the network based on their identity and other information. This ensures high trust level and removes the need for employing strong mechanisms.
In a private blockchain, all transactions are private and confined with a centralized authority which manages the control of the entire network. This is important for businesses which cannot afford to compromise the network security or privacy. Private blockchain can be customized to give specific access to specific members, whereas a public blockchain is public to all the members.
The process of adding new blocks to the blockchain in a private network can only be performed by chosen and verified members, while in a public network, any member can participate in the block verification process.
Example of Real-World Blockchain Applications for Businesses
If you are wondering whether there are any actual companies making use of the blockchain technology for the better of their businesses, here are some examples for your consideration.
Decentralized Medical Database
There are one or two companies working in this area. The concept is that a decentralized shared database is created on the blockchain which can be accessed by anyone for specific purposes. The information in this database can be added by any member (hospitals, doctors and medical institutions) of the network. This medical information can be accessed by patients and doctors as and when they need it.
One such project based on this exact concept is Medipedia which is a decentralized database of medical information and services powered by the blockchain technology.
There are many other companies in a variety of industries that are using projects based on blockchain technology for the growth of their respective businesses. If you are also planning or considering to employ blockchain into your own business, the process for the same is quite easy. All you have to do is find or create a project that uses this functionality. You can always take the help of the internet for ideas.