The emergence of blockchain technology in business will continue to create breakthrough solutions across all sectors of commercial activity. Buy why, and how?
Blockchain is the technology of decentralized information storage: information that can be accessed by everyone, securely and efficiently, throughout the world. Decentralized – because it is stored not on one particular server, but on all computers involved in the blockchain. You can build your own blockchain, or use the ready-made solutions of blockchain as a service, or BaaS.
The information recorded in the blockchain can not be deleted or changed. If we talk about cryptocurrencies, the blockchain saves the entire transaction history, while still retaining the anonymity of the participants in the transaction. This is the foundation of the development of cryptocurrency exchanges.
Each entrepreneur thinks of the risks of losing important information during the construction of a business strategy, and also invests large amounts of funds in ensuring the success of all business processes. Yet imagine that you have an opportunity to get rid of such risks, and to automate business processes as much as possible.
Thanks to the blockchain, it is impossible to destroy, change or lose information. Millions of computers around the world serve as a guarantor.
How can blockchain be useful for business?
First of all, of course, it is worth mentioning cryptocurrencies. The digital currencies of this new generation can become an absolutely innovative means of payment, devoid of all the disadvantages of the existing monetary system.
With money turnover, whether it is payment for goods, services or investments, any enterprise and any person depends on financial institutions.
The blockchain technology behind cryptocurrencies allows one to remove the intermediary in the relations between the supplier and the customer. We also talked about how to integrate blockchain into your business, but from a different perspective.
Except you, no one else can control your transactions, “freeze“, withdraw a commission for transfer or in any other way affect you. Only you and your client independently control the movement of money in the registries of the blockchain. In addition, cryptocurrencies are a completely decentralized method of payment.
Using the traditional banking system, it can take several days (or longer) to process transactions, but the movement of cryptocurrencies, in contrast, is instant. Blockchain has no days off or public holidays. There is no failure of the system or political prejudice against the currency of any country.
Secondly, blockchain is an eternal way of storing information. Any commercial contract, ownership, or patent for a product will be assigned to you in perpetuity, and it is essentially impossible to change this information.
If you need to verify ownership of a product, you can publicly share the information in blocks available to everyone.
Otherwise, only you and those to whom you give permission will own the information. But the information itself will be stored on the millions of computers involved in the blockchain, and therefore destroying or losing it is impossible.
Automation of business processes
Blockchain technology gives us the opportunity to conclude “smart contracts”.
A smart contract is concluded between two or more people interested in a transaction and automatically records the performance of all contract items. Contrary to some misleading opinions, a smart contract is not limited to ERC tokens.
The concept of tokens is a small part of the overall functionality and capabilities provided by smart contracts. More details can be found in our previous article on how to create an ERC20 token on Ethereum.
The smart contract is online and essentially represents the program code written in the blockchain.
Suppose you are engaged in the production of food. You need raw materials for production. You conclude a “smart contract” with the supplier of raw materials and proceed to fulfill the contract items. The supplier, in turn, will be sure that he will receive payment for the work he completed.
Each action leads to a new action, when fulfilling the terms of the contract.
1) You discuss the conditions in detail with the supplier, conclude a smart contract in the blockchain, and automatically reserve funds for payment. The raw material supplier is confident that you have enough money to pay.
2) The supplier collects your order. All the information on the raw materials presented in the contract must be genuine. This is one of the conditions. The “smart contract” independently checks all provided information for authenticity and in case of non-compliance the contract will be terminated.
3) The supplier sends you the order. All step-by-step execution of the contract items are automatically entered in the registry of the blockchain system, and you in turn can track the stage at which the contract is being executed.
4) After you receive goods of proper quality, you confirm the transaction and pay for the order to the supplier. In case any term of the contract was violated or you received raw materials of inadequate quality, the transaction will be terminated and the money will not be sent. You return the goods to the supplier, and all the information on the smart contract is recorded within the blockchain and stored there for good.
This was just one example of a “smart contract”.
Still, you might ask “And what’s wrong with past solutions? It’s been working fine so far.” This might be true, but by using a smart contract and blockchain technology, the entire process becomes automated and secure.
A huge number of documents, bureaucratic processes, and payments for contract fulfillment go straight to the performer, bypassing banks and their oft-delayed transactions. Blockchain registers all stages of the contract, and you, in turn, control the process.
Human deception is even excluded from the equation with smart contracts. If you are a recipient, you pay for the service only if all conditions are fulfilled. If you are a supplier, then before you get started, you will be able to make sure that the funds for your work are already reserved.
Using smart contracts, we find that in the relationship between supplier and buyer, intermediaries disappear and large amounts of money are saved.
If you take as an example a larger contract involving a large number of participants, a smart contract allows you to control the movement of money fully.
Without fulfilling the terms of the contract, one or another participant in the business process will not receive money. And surely the one who decided to enrich himself in a fraudulent way will also get nothing.
Cryptocurrency and bitcoin scripts are already partially secured from this, and can be used to instantly launch your blockchain business.
It is also worth noting that it is impossible to harm the information encoded in the blockchain. It is impossible to change it or to delete it.
Even if someone harms your database or the computers of all participants in the business process, millions of computers involved in the blockchain will restore lost information.
Integration of the blockchain into your business
As a result, many well-known companies are fighting for specialists versed in blockchain technologies. This technology of perpetual storage of information and optimization of business processes offers us an impressive opportunity.
To begin with, however, if you have decided to integrate a blockchain into your business, you will need to answer a few questions:
1) What business processes do I want be transferred onto the blockchain?
2) Do I understand the essence of the technology well?
3) What benefits will blockchain technology bring to my business?
Simply said, blockchain is true. It is one single, verifiable truth for everyone. Applying it in business, we will get rid of the risk of information loss. Applying it in politics, we will get rid of corruption. Applying it in medicine, we will get rid of negligence.
Blockchain is the philosophy of storing the information of the future.
Is blockchain a business?
Blockchain businesses should not be perceived as something abnormal or mysterious to the uninitiated. In fact, creating a blockchain business is as easy as any other online business. Well, perhaps it is even faster!