Is Blockchain Really Useful for Business?

 

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You know that different groups of businesses maintain, record, store data, simultaneously duplicate data, mathematically encrypt, and approve commercial and financial transactions through consensus algorithms which are authenticated by permissioned participants who are linked by a decentralized distributed ledger technology (DLT) which you know as blockchain.

Blockchain technology, though, initially introduced with Bitcoin has been in existence for more than a decade and its applications are becoming visible in other areas of businesses which include accounting, advertising, marketing, administration, management, production, logistics, human resources, online security, information technology, healthcare, education, and other areas.

To maintain transparency, cost-effectiveness, efficiency, immutability, and security in making transactions, businesses chronologically use this technology and create smart digital contracts in which transactions once approved, cannot be altered, removed, and modified. 

Under the system of private and permissioned blockchain platforms which are more suitable for businesses in which transactions are approved through consensus algorithms from all participants who are allowed to take part in the network.

Is blockchain technology really a profitable investment and useful for every business or that is still in its stage of infancy?

Let us explore the true pictures where emerging great potentials and practical drawbacks of this technology which you will explore.

Businesses Gain

Enterprises substantially reduce cost of doing business through use of blockchain technology that is principally architected on decentralization and there are no middlemen or intermediaries involved, so, companies save considerable fees, taxes, or commissions, thus, avoiding centralized systems.

To reduce incidents of thefts and security breaches, it is useful for companies to use DLT platforms which are private, permissioned, or consortium based in which participants are limited and select group of entities manages the responsibilities of running the blockchain network.

Through stamp dated and unchangeable digital blocks which are hashed and linked from each other on DLT network, facilitate companies in making, executing, and recording transactions of tangible and intangible assets which include homes, vehicles, lands, money, inventories, products, books, films, patent rights, intellectual assets, commercial logos, and much more options you can choose.

Future Estimates

According to the study of Statista, the worldwide blockchain market is expected to cross around US$ 163 billion by 2027. You can notice that below year-wise expected trends positively correlate with increasing use of this vibrant technology from businesses and other institutions in the days to follow.

Confidence Building

Those companies which use blockchain on private or permissioned platforms, make business transactions with added confidence, comfort, and high level of trust because participants in the channels are limited and effectively regulated by a group of organizations which approves participation and legitimacy of the members in the network.

To perform transactions through private blockchain network, companies and institutions ensure transparency, efficiency, and trustworthiness of the blocks which are created, hashed, and approved through proof of work or any other acceptable consensus methods from the active participation of all members on network. 

Reduction in Operational Costs

Companies intelligently reduce considerable operating costs while using DLT networks because there are no central authorities, middlemen, financial intermediaries, brokers, escrow agents’ involvement, so, companies make transactions and reduce cost of doing business substantially in the forms of fees, commissions, service charges, banking charges, taxes, and other levies.

Significant amounts of money which organizations and lots of companies save from above cited overheads are wisely channelized into other areas of operations where future growth of the business is essential.

Authentic Databases

Under the system of traditional databases in which recording and maintaining of databases are performed through columns, fields, rows, and other operations, so, databases can be changed, removed, and modified by the administrator, when need arises.

Unlike traditional systems of database management, under DLT, database and other information are chronologically created and recorded through digital blocks and each block is hashed and linked from the previous block. 

Once a block has been created and approved by consensus algorithm, the approved transactional data or information cannot be changed and removed by anyone because there is no concept of administrator in this technology. 

In case, to make change(s) or amendment(s) in a transaction, a new block is created, hashed, and the same is linked from the previous block.

This inbuilt characteristic that is immutability in this technology makes it one of the super authenticated systems of recording and storing digital assets and other information which remain on permanent basis on the digital networks.

Enhanced Efficiency Level

Once a block has chronologically been created, hashed, and approved through the defined criteria of consensus by all authorized participants, then the same block cannot be altered and removed by anyone under the system.

Therefore, this unique mechanism ensures enhanced efficiency in recording and executing business transactions with high level of efficiency, accuracy, immutability, and trust among business partners, suppliers, customers, and vendors.

This technology facilitates transactions on the entire network and eliminates centralized verification procedures, third party involvement, and cumbersome reconciliations in making, storing, and recording transactions.

Beneficiaries from Blockchain

You can appreciate that this unique technology is useful for various institutions, companies, governments, and other sectors such as healthcare, supply chains, universities, stock trading, internet of things, food distribution, manufacturing, financial institutions, electoral systems, automobile sector, drug manufacturing, government institutions, education sector, real estate, and this list goes on.

No doubt, the importance, practicality, application, and implementation of this technology will rise further among businesses, commercial enterprises, healthcare, social organizations, governments, and other institutions with the passage of time worldwide, albeit, with prudence in practical approach and little bit hesitation.

Blockchain and Bitcoin

There is a confusion between blockchain technology and Bitcoin among common people and they consider them same, though, it is clear that Bitcoin is a cryptocurrency which facilitates in making peer-to-peer payments and it has its own market value in monetary terms.

Different platforms of blockchain are software programs that facilitate Bitcoin and other business channels in making payments, recording of tangible and intangible assets, and facilitation in transactions. 

However, Bitcoin runs on the platform of blockchain and both are based on decentralization mechanism, this is the only one thing that is common between them.

Transactions of Bitcoins are facilitated through public blockchain networks which anyone can join and participate which are usually slow, full of congestion, and can make up to 5 to 7 transactions per second whereas Visa can make more than thousands of transactions per seconds.

To execute transactions and mine further Bitcoins respectively, considerable amount of computational power and energy are consumed which are expensive, time-consuming, and not environmentally friendly for the businesses and individuals.

Issues Relating to Standardization

There are different versions and platforms of blockchain technology which slightly differ from each other in protocols, scope, and functionality.

Types of blockchain include public, private, permissioned, and consortium based, whereas different big platforms include Ethereum, Hyperledger, Corda, Ripple, and Quorum and there is a lack of standardization among prevailing platforms.

Different solution providers and platforms of this technology operate from their unique consensus algorithms such as Ethereum uses proof-of-work, Hyperledger and Corda both use pluggable framework, whereas Ripple uses probabilistic voting, and Quorum uses majority voting.

Noticeable Inefficiencies

• Different solution providers and platforms of blockchain technology lack standardization and solve problems from their unique protocols, so, it will take time to merge this technology under one unified umbrella.

• If a nefarious group of organization controls more than fifty percent of the networking of this technology, it means that network can be compromised, controlled, and manipulated in favor of hackers.

• To mine further Bitcoin, there are requirements to install hard disks of high storage capacity in computers, super computational power, and huge energy requirements for mining which are expensive and not friendly for environment.

• If there are more participants on the network at one point of time, then system gets quite slow, timing-consuming, and irritating for making a valid transaction.

• Blockchain gets slower when more participants enter on network and can only make up to 5 to 7 transactions per second while Visa can make more than thousands of transactions per seconds.

• If you are not tech savvy and unfortunately forget your virtual private keys, then there is no solution and help on the network because there is no centralized supervision available there for your usual online help.

Conclusion

Blockchain technology has been evolving, learning, standardizing, solving transactional problems, and finding an efficient and hassle-free route so that it may be adopted whole-heartedly in future by all businesses, government and private institutions, financial institutions, and large majority of people.

Any technology which is user friendly, fast to implement, secure, optimum priced, standardized and synchronized well on all digital platforms, clouds of networks, and it has the capacity to integrate all electronic devices and digital networks on international scale, holds the greater chance to become a global leader in the world of technology. 

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