Blockchain for business
There’re numerous circles where blockchain can be useful, and one of them is the circle of business. The best way to appreciate the blockchain’s potential and determine its value for your business is to look at possible use cases. Although the blockchain technology landscape can be confusing and is constantly changing, it is a technology that is almost certain to impact the business in the next five years. Whether due to the adoption of blockchain by a competitor or the necessity to participate in a blockchain network, you can’t afford to ignore this powerful technology.
Dealing with finances
Since a blockchain is a digital and tamper-proof ledger, it becomes an alternative to banks and traditional methods of financial transactions. It brings even more accuracy into the financial services ecosystem.
Once banks realized the blockchain’s potential, they started adopting this technology. For example, Swiss UBS and UK-based Barclays apply blockchain technology to expedite their back-office operations and settlements.
According to the Financial Times, implementing blockсhain technology in banking will cut up to $20 billion in third-party costs. Another cost-efficiency forecast has been laid down in the Santander FinTech study, which suggests that by 2022 banks should expect yearly reductions in infrastructure costs of between $15 billion and $20 billion.
The term Smart Contract is misleading. They are neither “smart” nor a “contract” typically understood as a legal document. Smart Contracts were first introduced as a term by cryptography researcher Nick Szabo in 1994. They are basically computer codes that can be built into the blockchain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions that users agree to. When those conditions are met, the terms of the agreement are automatically carried out. This eliminates the need to manage time-consuming and costly manual business processes.
While you rely on smart contracts to agree on anything, there’s no need to rely on any lawyer, broker, or legal body. Using smart contracts also eliminated the chances of unapproved manipulation of the contracts or any kind of fraud in the agreement. Everything about the agreement is on the network and is being watched by the whole blockchain community.
Public and corporate governance
The public sector and corporate governance might be the most affected by the blockchain. At the nation-state level, due to decentralization and transparency, blockchain technology can help to eliminate corruption globally. Besides, it unleashes the enormous potential for citizens worldwide. Along with digital identity opportunities, the blockchain can completely change how we vote, pay taxes, and implement many government services.
Regarding corporate governance, blockchain adherents are struggling to eliminate the centralized involvement of governments in business, improve the security of companies’ assets, and facilitate and accelerate business transactions.
Blockchain’s nature also can cut costs for organizations. It creates efficiencies in processing transactions. It also reduces manual tasks such as aggregating and amending data, as well as easing reporting and auditing processes. Specialists highlighted the reserve funds that monetary organizations see when utilizing blockchain, disclosing that blockchain’s capacity to smooth out clearing and repayment makes an interpretation of straightforwardly into process cost investment funds. More broadly, blockchain helps businesses cut costs by eliminating middlemen — vendors and third-party providers — that have traditionally provided the processing that blockchain can do.
Immutability simply means that transactions, once recorded on the blockchain, can’t be changed or deleted. On the blockchain, all transactions are timestamped and date-stamped, so there’s a permanent record. As such, blockchain can be used to track information over time, enabling a secure, reliable audit of information. (That’s in contrast to error-prone paper-based filing and legacy computer systems that could be corrupted or retired.) Omar pointed to Sweden’s use of blockchain to digitize real estate transactions to keep track of property titles even as they change hands as an example of this benefit’s potential.
Tokenization is the process where the value of an asset is converted into a digital token that is then recorded on and then shared via blockchain. Tokenization has caught on with digital art and other virtual assets, but tokenization has broader applications that could smooth business transactions, said Joe Davey, director of technology at global consulting firm West Monroe. Utilities, for example, could use tokenization to trade carbon emission allowances under carbon cap programs.