You’ve probably heard of cryptocurrency; it’s a hot topic, and some say it’s revolutionizing the way we think about money. Just as important, though, but less talked about, is the blockchain revolution.
What Is Blockchain?
Blockchain is a type of distributed ledger—basically, a record of transactions spread across multiple computers, or nodes. The ledger records every transaction, and each new transaction is appended to the existing ones. Once recorded, it can’t be altered. If the system detects the ledger has been changed, the whole thing comes to a screeching halt.
Since the system must be validated by multiple computers and can’t be edited, blockchain is essentially a foolproof public record of the history of a Bitcoin (or whatever cryptocurrency you like). It prevents users from simply creating as much Bitcoin as they like and keeps the system honest. And because of this high level of security and inalterability, blockchain has several business-based uses outside of cryptocurrency.
How Blockchain Can Benefit Your Business
From smart contracts and easy payments to increased logistical transparency, blockchain is being used in dozens of unique ways in business settings, with services such as Hyperledger Fabric making these systems simple for businesses to implement. Let’s look at some of blockchain’s uses and benefits.
Widespread use of blockchain tech could mean the end of serious data breaches—especially at the small-business level, where security measures tend to be less airtight than with larger enterprises (though even those aren’t foolproof, as we’ve seen). The fact that all nodes in the chain have to agree on the data for it to work means any breach or false entry into the chain will render the whole thing invalid.
Blockchain transactions occur directly over a peer-to-peer network—they cut out the middleman completely–so there’s no need to involve banks or other institutions to transfer currency or perform financial services. This means no fees, no delays, and fewer headaches to process payments.
It works so well that even some major financial institutions, including JPMorgan Chase, Citigroup, and Credit Suisse, are building blockchain solutions to streamline processes and lower security risks.
A small but growing subset of consumers and businesses feel cryptocurrencies are the future, and they’re already jumping on the bandwagon by accepting this form of payment. Adding your business to that list could yield new customers and open new doors for growth while giving existing customers more options to pay for your products or services.
Smart contracts are one of the best applications of blockchain. These transactions are contracts between two or more entities that are automatically validated with blockchain. Since blockchain is so secure, companies can authenticate these contracts themselves and be certain of their legitimacy before moving forward with a transaction or service.
Blockchain can be used to track transactions in the supply chain the same way it can track digital transactions, solving for logistics problems such as internal theft and human error. Even miscounting inventory will likely be impossible in a system that uses blockchain to verify counts. Small businesses can greatly benefit from this aspect of blockchain, since resources are often limited and human error could lead to business losses.
In a similar vein, some big businesses around the world are using blockchain to track fake goods and keep counterfeits off the market. In China, companies such as Alibaba are planning blockchain solutions to track supply of items. Goods for sale can then be checked against that public record of supply. With this secure feature, counterfeits can’t pass as legitimate because cracking the blockchain-distributed ledger to add the fake item to the list would require significant resources that many counterfeiters aren’t likely to have.
While blockchain is still a young technology, it’s already proving itself among large and small businesses. The next few years are likely to be exciting as more companies develop novel ways to use the technology. You definitely want to stay tuned for this one.