The industries and regions employing blockchain
The blockchain will benefit the following industries:
The list above names only a few sectors for blockchain. Furthermore, blockchain helps to use money faster, get benefits, and send and store data, including agreements, contracts, etc.
- The financial sector, namely this industry, includes the stock market and securities. Primarily, a blockchain focused on these sectors. Small companies and individuals actively trade assets without intermediaries on exchanges.
- Logistics involves numerous clients and suppliers that require supervision and the completion of many tasks. Integrating blockchain with logistics reduces additional document flow and optimizes many working processes.
- Real estate is a sector of massive capital, frequent transactions, and countless documents.
- The power industry employs blockchain to reduce the expanses of the entire infrastructure and simplify processing documents. As a result, entering the business is more straightforward and provides profitable conditions for trades.
- Insurance uses blockchain to automatize processes and increase the communication between clients and companies.
The cost of any project will depend on the country, team, industry, targets, and other factors.
A smart contract is an application that processes agreements automatically following particular conditions. The price can reach 1000 dollars while integrating an extensive application on a blockchain; for example, Uber costs above 220 thousand dollars. If developing an application DApps, the price will start at 1 thousand dollars and create a token — a dozen-fold more.
The real asset, with material form, is the most expensive blockchain product. The reason is that the projects will be large-scale, and the customers are often large corporations and states.
Common issues while integrating blockchain into business
There are some common problems while integrating or employing blockchain in business projects.
The reason is that technology is young and new. Common issues are:
- Ignoring all network capabilities and employing the technology for purposes that a regular database can manage. It is essential to understand where blockchain will provide maximum benefit and where classical instruments will do.
- The complexity of integrating it with existing technologies and the myth of the versatility of networks. Blockchain is a separate base that requires applications for particular sectors. For example, it’s critical to have a user interface and other interaction mechanisms to enhance supply chains. Also, some platforms focus on specific tasks. For instance, some are necessary for tokenization, others for privacy, etc.; there are no versatile solutions for all functions.
- High expectations for smart contracts. Smart contracts are a significant benefit of blockchain. These are conditions in code within the network that automatically execute the agreement if all requirements are met. However, there are issues with scaling and control since there is no unified regulatory base for states; therefore, employing smart contracts is complicated.
An example of processes within a consortium blockchain network
If you plan to implement blockchain in business, it is essential to understand smart contracts and consensus. There are three consensus models for selection:
After understanding the consensus models, the next step is to figure out the smart contract features since they are critical fur employing blockchain in business. Smart contracts connect business management and blockchain technology logic.
- Proof-of-Work (PoW) — involves risk with machine idle time. Also, the model has large expanses of equipment and power.
- Proof-of-Stake (PoS) — mane risks concern money, yet it doesn’t require energy-hungry computing. Miners only provide the signature, while the success depends on the token volume of stakers. It's a handy model for public networks. Potentially, the consensus comes to centralization; hence, the network becomes vulnerable. To support the stakers' motivation, you can employ Leased-Proof-of-Stake (LPoS). The model will reward the stakers with an interest rate for their tokens. Most public networks grow thanks to stakers motivation.
- Proof-of-Authority (PoA) — is one of the best options for private networks and businesses. It doesn’t require tokens to increase financial motivation. The model picks random active networks to support decentralization and reduce validators, which allows for scaling management. The prime risk concerts the reputation.
It’s essential to know how to record data and store it:
- Programming languages are helpful for records. For example, Ethereum employs the Solidity programming language. It allows the creation of any contract and distribution to all nodes, thus allowing them to execute the contracts and add output information. The prime issue is bandwidth and its capabilities. Smart contracts for corporate employment frequently have complex logic. The next problem is the language since only specialized professionals know it.
- Smart contracts can also connect the node and the contract, thus providing high transaction speed, yet the mechanic might be poorly efficient if it requires changing the business contract. In this case, the concern is the continuity of operations.
- Smart contracts function within docker containers and are accessed via REST API or gRPC. This approach allows writing smart contracts in a specific programming language for a particular company. Hyperledger Fabric company employs this technology.
The example of smart contract functioning
Blockchain technology is rich in solutions, which makes it versatile for particular industries. The companies can determine their option and adjust personalized settings according to their activity. For example, Bitcoin offers transparent transactions visible to anybody. Many projects in business do not want this system since it violates their corporate secret. Therefore, there are four blockchain types: public, partly public, private, and sidechains.
Blockchain types and risks of implementation
Bitcoin, Ethereum, and other very first cryptocurrencies represent the classical blockchain. All transactions are public and transparent; hence, anyone can view the history since the first block, the addresses of receiver and sender, sums, time, etc. It allows confirming financial operations. Public blockchains benefit authorship and businesses that manage valuable assets, copyright, etc. Public blockchain allows knowing the age of a car, its breakdowns, and information on former owners.
Partly public networks allow managing rights and picking users that can access specific information in the blockchain. The approach might differ; for instance, the voting and ratings can help determine the authority. Each user will have its power. ZCash provides users anonymity; no one can track their financial operations.
Private blockchains are similar to the public, yet only particular people can access data. The blockchain is centralized; the company owner defines all rights. It’s an excellent solution for health care institutions.
Sidechains are networks that function as a bridge between two blockchains to avoid intermediaries. It’s perfect for storing confidential data if the main blockchain can be hacked.
Information System Audit and Control Association and other institutes conduct global research on the risk of blockchain employment.
According to their study, there are five groups:
Blockchain introduces a change to numerous business processes and changes the work models through integration. The solutions that corporations couldn’t access earlier are now available, simplifying and making the work faster.
- The development phase involves protocols and algorithms. When deviations occur, the entire system's integrity is compromised, making the network vulnerable to intruders.
- The data exchange is not always efficient; hence, some processes in business are unstable and cause issues.
- Data volume in blockchain always grows, and violating the limits causes data reset. Wrong update coding also might result in losing information.
- Different countries use smart contract transactions. There are no unified regulations and standards for blockchain. Therefore, the conflicts are troublesome from the law's point of view.
- Blockchain relies on security keys; still, the networks are decentralized, there is a chance for the human factor, and storing the keys on a PC might help hackers to steal funds and data.
Blockchain solutions for solving tasks in business
Blockchain technology simplifies many payment processes, providing credit and financial institutions benefits. Registry payments are cheaper than traditional methods. For example, Ripple Corporation works with numerous clients. Santander and Western Union are among them. With xCurrent, the company's internal platform, real-time payments are made.
The next popular area of use is managing supply chains and control. For example, IBM and Accenture are developing blockchain-based enterprise solutions for different clients. In 2018, IBM made a successful launch, the Food Trust Network. It gave large stores like Walmart the to track products at any stage of their journey. The next successful project was the TradeLens platform. It made it possible for transportation companies and freight owners to exchange transaction data and send documentation to each other.
The simplified form of work is as follows:
There can be any number of participants in this scheme; for example, customs are added to international shipments. The procedure does not change; all participants receive software from working, and the data are recorded on any transaction at all stages. Anyone involved confirms all actions with an individual key.
- The customer puts documentation requirements.
- The sender leaves them online.
- The blockchain is populated with data about where the documents are stored.
- With a personal encrypted signature, the warehouse employee confirms the actual delivery of the goods.
- The recipient also confirms the delivery of the shipment.