Lines of code replace physical cash. That’s probably a thing to expect in the near future. Soon, stories of widespread cryptocurrency adoption will circulate around. Although the prospects of it may appear worrying, it simply is not. It is just another technology that will transform the way we conduct transactions.
Blockchain constitutes the central element of this radical shift, which already took the world by storm since its unveiling in 2008. Disruption is real with financial technology already on the verge of a major turnover. Blockchain with its novel concept of distributed ledgers have already set in motion or precipitated such a takeover on a colossal scale.
However, the insistence is on fully digital currencies linked to solid cryptography to build the future of cash. The economies of the coming times will reap unique benefits by following the blockchain model. And not just banks or other financial institutions but everything linked to money like enterprises.
Globally, the potential of blockchain is viewed in a much broader sense. Enterprises were the first to realize its possibilities and hence have already set their resources to leverage this future-ready form of transaction. Taking advantage of it for your enterprise does require a brief know-how of blockchain and how it operates. And so, let us start from the very beginning.
The Blockchain Perspective: An Overview
First introduced to assist Bitcoin, a decentralized digital currency, Blockchain has ever since expanded its usage to other domains rather than cryptocurrency-based transactions. So, what is blockchain? You could search on the web, but they bring out a hoard of information that could baffle an ordinary person.
The first thing to understand is that blockchain is a technology made to simplify and make transactions fast, ultra-secure and transparent. There is no single payment platform or provider anymore that facilitates your transactions. It eliminates the authority by establishments, central servers or middlemen by linking you directly with the transactions.
Rather, it is distributed across a large array of computers over the network. The information concerning the transactions is recorded in blocks, which get linked to one another when updates or new transactions occur forming a continuous chain, thus the name.
An exact definition of blockchain goes on like: A decentralized and shared digital public ledger used to register transactions across peer-to-peer networks whether public or private. The ledger is shared among the members of the network that ensures greater transparency among all the transactions combined with robust and tamper proof security measures.
It is a record of a ledger entry represented by a data structure that resembles blocks linked to one another. Every single transaction that takes place, gets automatically recorded in the ledger cryptographically in blocks of information containing a hash. The computers that register this crucial ledger information constitute the ends of the network known as nodes.
Essentially, one can say that the block represents the area where transaction information gets inscribed permanently. And it is incorruptible and protected from any attempts to tamper the data, because of complex cryptography and its distributed nature.
Depending on the number of transactions, the network of blocks will grow to form elaborate chains. Whereas, the authentication of transactions is done entirely by the network of members. This linkage to one other forms the basis of the secureness of this technology.
Distributed Ledger Technology – The Essence of Blockchain
Blockchain is designed to distribute the transaction data across numerous nodes rather than one single centralized platform. The network remains decentralized with a peer-to-peer connection, where the participants can directly carry out, view, replicate and validate transactions on the shared ledger without a central authority or middlemen.
Distributed ledger technology (DLT) remains the underlying method by which blockchain functions. It exists as a form of synchronized digital database where all the transaction information remains shared among the members of the network. The participants validate and respond collectively for each change made to the records in the ledger.
The information gets encoded with a cryptographic signature or keys that makes it foolproof against any tampering or other forms of illegal access and manipulation. Distributed ledger technology is an evolution over the traditional methods of ledger keeping as it was replete with errors, loss of information and was not designed for easy use.
DLT were an advancement from paper into digital mediums that eventually shifted all forms of record keeping into computers spread over a network. The digitization of ledgers led to the advent of DLT where the entire process remains decentralized. Distributed ledgers quickly gained importance and made blockchain a more relevant technology owing to its following benefits:
Ultra Secure – A distributed ledger system does have a major plus point when it comes to security. Since the ledger is decentralized and distributed, the information registered gets stored onto the nodes, which effectively thwarts any attempt at intrusion or tampering.
Swift Transactions – The absence of a central authority or third-party platforms facilitated seamless transactions with zero hurdles. This speeds up the transactions, which also significantly reduces the costs involved in transactions of any sizes.
Multiple Applications – DLT does encompass not only finance but extends its applications to several other fields that involve massive transactions such as enterprises and governments, real estate, tax collection, electoral voting, to name a few.
Simplify Ledger Keeping – Record keeping in the traditional sense can make it prone to errors that lead to disputes among the parties concerned. A digital ledger can reduce the manual intervention required to maintain the records. This can reduce errors or duplication of information thereby simplifying and speeding up the process.
Transparent – In a distributed ledger system, every information and transactions that gets stored in the blocks remain fully transparent to the users. Any changes made to the blockchain system remain accessible to all the users allowing greater control and transparency in the whole process.
Distributed ledger technology has already been a major disrupting force in the financial industry. The increased transparency and accountability of transactions meant organizations can come up with innovative ways to provide rewards or incentives to their customers.
By eliminating the need for centralized authority or servers, it could prove to be of valuable aid in areas like stock trading, crowdfunding as well as facilitating simple transactions.
Blockchain Technology and the Enterprise
With the technology behind blockchain proliferating, what does it hold in the enterprise? Businesses do maintain ledgers that curate all the transactional details that go into executing its process and operations. And by incorporating a technology like blockchain, enterprises can considerably improve on their transaction time, strive for transparency, enhance security and eliminate counterfeit and fraudulent practices altogether.
However, what the studies and reports exclaim may appear pessimistic. Gartner in its 2018 CIO Survey, gives a dim view of blockchain adoption in the enterprise and cross-examines its hype. Only 1 percent of the CIOs actually plans for blockchain deployment in the enterprise. Whereas 8 percent are considering deploying blockchain or experiment with the new technology.
Even though the prospects as mentioned among the reports appear to pinpoint the limitations of blockchain, the technology behind is still revolutionary. It puts forth a new way to transact within an open, transparent yet highly secure environment. The pros of blockchain adoption among enterprises simply outweigh its cons, making it a viable technology to invest in right away.
Companies like American Express, JP Morgan Chase & Co, Apple Inc, Toyota, Tencent Holdings etc. have already begun experimenting with adopting blockchain technology to push forward their business practices. Each of these companies leverages blockchain in a different way.
For instance, BHP Billiton Limited, a mining conglomerate is experimenting with blockchain to refine its supply chain processes. Whereas IBM, the technology behemoth is going forward with multiple blockchain projects using the Hyperledger Fabric.
How Blockchain Aids your Enterprise
Blockchain technology with its transparent and robust digital ledger system will soon transform how enterprises execute their projects and transactions. Experiments are being conducted by companies globally to direct blockchain into use cases that dynamically improve their internal operations.
A disruption is being expected in future and its implications sound positive enough for companies to delve right in without a second thought.
Although the studies of blockchain adoption bring out dim prospects, it is relieving to hear that this incredible technology has backing from several Fortune 500 companies. For businesses that operate across several industries such as finance, retail, automotive, logistics etc, blockchain is all about security and speed that aids in the betterment of their operations.
The capabilities of blockchain are what appeals to most of the businesses operating in both vertical and horizontal markets. This include:
- A considerable reduction in the time taken from transactions
- Stringent security measures across all transaction protocols
- Detection and elimination of fraud, counterfeiting, and phishing
- Better transparency across all processes
- Promotion of customer loyalty
However, since our focus is on the overall advantages of blockchains in the enterprise, we shall cover things from that perspective. This helps to better understand and implement blockchain technology into your enterprise for driving innovation and growth.
Enterprise and Blockchain – A Mutual Coalition
With businesses across the world searching for new ways to shift their practices, blockchain represents an entirely different method to do so. The universal digital ledger with greater accessibility allows a shared consensus that will elevate every bit of an enterprise. Blockchain exists as a secure and reliable trading platform for carrying out transactions in a whole new manner.
And by implementing blockchain, it could really open up new possibilities to do business in ways that you probably never imagined. That is the potential of blockchain, which is set to disrupt not only the financial technology industry but the entire area of business on a global scale.
For some, the hype surrounding blockchain proves too much and have made a setback when it comes to actual implementation.
However, businesses should steer clear of being pessimistic about new entrants in technology and instead ponder over the possibilities that lie in their adoption. The transparency, efficiency, and security that blockchain proposes do, in fact, adhere closely to the crucial requirements of most enterprises.
Alongside that, leveraging a technology like blockchain enable a business to become increasingly competitive in this ever-changing and lucrative market.
Collaboration on a New Level
Inculcating blockchain technology step up how enterprises collaborate their practices and processes daily. Currently, there are collaboration tools specifically designed for the enterprise to coordinate work across its different levels and departments. Even though these office tools enjoy widespread usage and gaining adoption, they still face several limitations, which prevents companies from utilizing their full potential.
Enterprise collaboration tools and software still rely on a centralized administration system, which puts them at a disadvantage. The various intermediaries existing in between the system play a role in validating and coordinating the flow of processes. Such an approach slows down the process and prevents a smooth and linear course that puts numerous constraints.
Blockchain systems get rid of all these central intermediaries and put forth a model where information transfer and storage exist in a highly secure yet transparent manner. Information about employees and company projects could be stored and exchanged seamlessly leading to greater efficiency and speed in the projects.
Reinventing Contract Management
Apart from financial technology and cryptocurrencies, the applications of blockchain extend to numerous other areas. Every industry that depends on and utilizes contracts will tremendously benefit from integrating a blockchain system. The distributed ledger technology used in blockchain systems provides a highly secure and dependable platform, which enables the seamless autonomous, execution and management of contracts on a larger scale.
Digital businesses utilizing smart contracts will find the architecture of a blockchain system more convenient. The absence of a centralized authority or middlemen enables companies to easily facilitate the interchange of terms and other related information within the lifecycle of a contract.
Besides, the way this information is distributed within the ledger ensures that the contracts remain shielded against any attempts at tampering or modification.
Refined Efficiency, Auditability, and Speed
A blockchain system allows carrying out transactions at an accelerated pace. There are no intermediary third party or platforms and the transactions get executed directly. Instead of relying on conventional processes that involve paperwork and even specialized software, a blockchain based system could ratchet up the efficiency by which transactions get done.
Blockchain does this by streamlining and refining these operations from its core so that it would take even lesser time to successfully complete transactions. The use of a single distributed ledger does away with clutter as each information gets simultaneously shared with all the users. This eliminates the need for keeping multiple ledgers, which contributes to less clutter and a dramatic improvement in the efficiency.
Another area where blockchain aids enterprises are in maximizing the auditability. Each of the transaction data when procuring assets could be traced down from its origin thus ensuring a viable way to validate its authenticity. Several companies have already experimented with this technology to come up with accurate auditability.
In the diamond mining industry, blockchain technology is proving as a major disruption. Mining companies like De Beers, Fura Gems, and Everledger are using blockchain to directly track the origins of their diamond imports thus avoiding conflict diamonds and helping in stopping its circulation across the globe.
Into Blockchain Adoption
Reading through this, you may have got a faint or a complete picture of this exciting new technology. The blockchain is all about transparency and its use of shared digital ledgers essentially creating the future for all kinds of transactions whether in cryptocurrencies, finance or the enterprise. This could radically transform the way companies conduct transactions by making the overall process more efficient, swift and transparent.
Whatever the use case may be, blockchain helps in simplifying transactions, managing smart contracts or improving collaboration. This could assist in moving your operations forward in a more streamlined manner, which will help switch your business model into one based on transparency. But to put things into action, you need to audit your computing infrastructure and implement an appropriate blockchain system right away.
Blockchain is not a severely hyped technology as stated by different studies. In fact, the prospects that it puts forward simply brings out a new approach to conduct transactions and businesses in a better way. Moreover, it acts as a viable alternative over conventional processes by leveraging the most advanced technology to ensure that your business remains competitive enough in this rapidly changing world.
Tony believes in building technology around processes, rather than building processes around technology. At Fingent, he specializes in custom software development, especially in analyzing processes, refining it and then building technology around it. He works with clients on a daily basis to understand and analyze their operational structure, discover (and not invent) key improvement areas and come up with technology solutions to deliver an efficient process.
You can reach him at firstname.lastname@example.org, Skype: tony_fingent