23 June 2022
If we are going to consider how to use blockchain technology to bring our business into the 21st century, first we need to be clear on what it is.
Blockchain is a way of storing information that encrypts it into blocks that are validated by the one before and the one after because they are linked in a chain. This has the advantage over a traditional database in that everyone using it knows that once a block is created it can’t be changed. This provides data security and trustless transactions. Trustless means there is no need to trust the anonymous person you are dealing with in a financial transaction over the internet, you both know where you stand. It also removes the need for intermediaries, like a bank to handle a transaction between 2 people, with blockchain the 2 parties can trade directly with each other, this significantly reduces the cost and time involved in most transactions.
Finally, processes can be automated so that when a certain condition is met that process is carried out or payment is sent, once again this can cut out large numbers of middlemen.
The first and most well-known application of blockchain is Bitcoin, where transactions are recorded on a blockchain, removing the need for a bank to carry out this work. Users effectively operate their own bank accounts. This has revolutionized banking by reducing cost and transaction time and increasing security. And the revolution in this regard has only just begun.
But it's not only about banking and storing financial data, but any data can also be stored on a blockchain for example IPFS (interplanetary file system) uses the BitTorrent protocol to store in each block, shards of data on a blockchain which can then be recalled and reassembled into its original form with a unique path that is generated when the data is uploaded. This is decentralized so this means that any data can be permanently stored in the cloud but with no need for a central server or data processing business.
Although the technology is still in its infancy, some of the biggest businesses in the world and entire industries are implementing blockchain into their operations and many business processes have already been changed forever by its introduction.
Some examples of industries that are already being transformed by the introduction of blockchain technology.
• Financial services
• Supply chain
The industries have already considered how to use blockchain technology to transform their businesses. So, if you were going to consider doing this with your business, these are the key reasons why you would use blockchain to replace a more traditional kind of business model:
Anywhere that a central authority is required to process data or make decisions, that can now be automated by lines of code on the blockchain. In the same way that cryptocurrency removes the bank from a financial transaction, the same can be done with insurance, supply chain paperwork handling, food component supply tracking, identity, and healthcare data tracking and many more applications. The concept of removing the middleman is called 'decentralizing'. When thinking about how to use blockchain technology to change your business in this way there is no doubt that the changes to your employment structure will be huge, but the way to look at it is this, if you don’t do it someone else will, then in time your business will cease to be relevant or competitive.
If you are going to trade with someone on the other side of the world, who you know nothing about, in the past this was done by local agents in each country, operating on a hugely expensive network like Visa or Swift, but now blockchain technology can remove the need for these networks. If your business currently credit checks or vets in any way the parties involved in transactions, then you should be thinking about how to use blockchain technology to remove that part of the operation. If the process can be automated and made trustless then there is no longer any need to know anything about the parties involved.
Processing data and transactions using automated computer code can reduce the time it takes to carry out an operation form days or weeks to seconds. Time is money and of course convenience, so this opens whole new opportunities for the way we do business. If your business currently handles cross-boarder data processing or still has any paper involved in your operations, there is no doubt that you can use blockchain technology to improve its performance. Even if you are fully computer based, any manual data entry or human decisions in the operations could be disrupted by the implementation of blockchain technology.
Removing the need for entire offices full of humans that once processed and checked these transactions manually will equate to enormous savings. Not forgetting all the infrastructure required to operate those offices. Although this is likely to be catastrophic for employees of manual data processing industries, these paradigm shifts in the way these businesses operate is already creating entirely new industries. So, if you have a labor-intensive data processing business you should really be thinking about how you can use blockchain technology to disrupt it before someone else dose that will put you out of business.
The purpose of this introduction is simply to get you asking the right questions and thinking about how to use blockchain technology in your business. Of course, it is not for every business, but it is certainly going to create a whole new breed of businesses that are nothing like we what we are accustomed to. To fully understand what is possible we would recommend booking an initial consultation with NextHash. We will be able to analyze the unique characteristics of your business processes and determine what can be implemented on the blockchain. We will then be able to put together a comprehensive plan for how we can help you start the process.