How to Know Your Business to Adopt Blockchain Technology
Blockchain is a revolutionary technology that gained popularity in the current business and marketing ecosystem. The global blockchain market is forecasted to reach $39 billion in 2025, as per the market study report.
The advent of blockchain is transforming the technological market, enabling organizations to unlock the various benefits of blockchain-based networks. The technology occupies a portion of the modern digital infrastructure.
While blockchain is now coming-of-age, companies face the question: “Is blockchain technology the right fit for my business?”
Before you proceed to decide whether to use blockchain or not, let’s begin by developing an understanding of the technology.
What is Blockchain Technology?
Blockchain is a type of distributed ledger technology (DLT). It consists of a series of computers or “nodes” that combines to develop a network, or digital ledger, of transactions.
Each block in the chain includes various transactions, and when a new transaction takes place, the record gets added to the ledger of every participant. The nodes in the network help verify transactions simultaneously.
The chain is a chronological single source of truth for the data. The most recent data joins at the top of the chain, and the oldest data is stocked at the bottom, and it is known as the ‘genesis block.
The blockchain is transforming how information gets shared on the Internet by recording and distributing transactions on a public ledger. Its working mechanism prevents any alteration or deletion in the data, thus maximizing data security.
The transactions get recorded with an immutable cryptographic signature referred to as a hash. The key features of blockchain are that it is immutable, decentralized, and enables transparency and real-time access.
No single computer or organization owns the blockchain. It excludes intermediaries and operates without a central authority. It functions as a record-keeping technology, which is difficult to hack, forge, change, or modify, thus rendering it secure.
Each party can review previous entries and record new ones. There is no redundant data, and it overcomes the need for a central authority. With the help of public/private keys, anyone in the network can view the data.
The Properties of Blockchain Technology
- Programmable: A blockchain is highly programmable. The programs stored on the blockchain are known as smart contracts that run when predetermined conditions are met.
- Ensure higher security: Blockchain-based applications are developed to strengthen data security. The technology improves the security of the apps. The encoding of data and its preservation using a cryptographic hash renders it difficult to exploit the data by tampering with it.
- Traceability: Blockchain technology improves the traceability of information. It has revolutionized the process of gathering, consolidating, and managing information. The traditional traceability approach makes it complex to identify the product trail and pick out the required product information. With blockchain, companies can get the desired visibility through traceability and improve decision-making. It enables traceability of assets using smart contracts. Thus, tracking down counterfeits or fake transactions, product origin, and various supply chain activities has become much easier.
- Peer-to-peer Trading: It involves the direct exchange of assets, such as digital currency, between individual parties without requiring any central authority. As compared to traditional client-server systems, P2P trading offers enhanced security.
- Document Sharing: The feature to add a timestamp in the blockchain helps track the document. It becomes easier to determine the source and identify if anyone has opened, edited, or altered it. Blockchain has the ideal data structure to store and share documents that ensures transparency, privacy, and data integrity.
- Unanimous: All network participants on the blockchain technology agree to the validity of each of the records, ensuring unanimous decision-making.
- Immutable: Any validated record that gets added to the blockchain becomes irreversible and is immutable by nature.
- Distributed: Blockchain technology ensures comprehensive transparency by allowing each network participant to access a copy of the ledger.
- Speed: Blockchain technology improves transaction speeds by eliminating the need for unnecessary intermediaries to process the transaction. The operational properties of blockchain help automate and streamline business operations, hence making the transactions quick and safe.
- Anonymous: In the blockchain, the participant’s identity is anonymous or pseudonymous.
- Easy transactions: It is easy to set up a blockchain wallet. You can put up a system where your customers can purchase your products with cryptocurrency.
- Reliability: As the blockchain architecture is solid and stable, it improves the app’s stability. The decentralized and distributed structure does not consist of a single point of failure, rendering the blockchain system difficult to corrupt.
Various Challenges You can Solve With Blockchain
Blockchain is a cutting-edge technology that has emerged as one of the most dominant software development trends. After 2009 as the technology that drives Bitcoin, blockchain has become advanced and the business ecosystem is acknowledging its widespread importance.
It presents an innovative way to conduct transactions and serves various use cases beyond cryptocurrencies. The two fundamental properties of blockchain are that it is immutable and distributed.
Organizations in various fields and domains, including healthcare, banking, supply chain management, banking, retail, manufacturing, stock trading, real estate, digital rights, crowdfunding, and elections are now leveraging blockchain for competitive advantage.
Blockchain can store any type of digital data or manage permissions. Hence, it is versatile and has limitless potential for developing applications. As there is a new wave of blockchain industrial applications, some of the top challenges that blockchain technology can tackle include:
Supply Chain Traceability
Supply chain management (SCM) is highly complex and involves various multiple parties including retailers, suppliers, carriers, and manufacturers, among others. There should be a smooth transaction flow between these entities and must enable optimized logistics and transportation processes.
Tracing each stage in this workflow is crucial. If the stakeholders do not have requisite supply chain visibility, it can result in delivery/shipment delays, cargo losses, or thefts.
Leveraging blockchain technology provides each product unique digital ID and it records everything in a distributed ledger. Tracking information enables the employees to view, monitor, and manage supply chain processes.
Provide Information Security
Enterprises can incorporate blockchain technology to boost information privacy. Cyberattacks are on a rise, and businesses must adopt measures to protect sensitive data from bad actors.
They should incorporate solutions to safely transfer messages between various parties. Blockchain technology maximizes information security by restricting data access, securing records, tracking information, and ensuring transactions’ safety.
Protect Intellectual Property
Blockchain technology enables individuals and organizations to protect their digital rights. It allows them to effectively secure their works, profit, or trademarks.
The records are time stamped and inconvertible, and it becomes easier to identify if there is any infringement on the concerned IP by using an automated system.
Improve Document Management and Minimize Paperwork
Companies must strive to uphold ecological ethics and do their bid in minimizing their environmental footprint. Organizations conduct agreements between entities that traditionally required paper versions.
Integration of blockchain technology provides a secure digital data record that reduces paperwork. The preparation of contracts manually is also prone to errors and correction of these mistakes is a demanding task.
Blockchain optimizes the document management process. It prevents information distortion, eliminates errors, and also brings down costs.
Prevent Counterfeit Goods
Organizations tend to suffer from counterfeit goods in various fields that deal with electronics, luxury retail, historically valuable artifacts, pharmaceuticals, and medical products, among others.
It can cost organizations their customer’s trust and reputation. Enterprises can thus target and eliminate such fraud activities in counterfeiting goods using Blockchain technology.
Blockchain-based solutions can help ensure authenticity to minimize fraud events. It ascribes a unique ID to products/goods allowing stakeholders to track their source. Thus, it helps to effectively remove the counterfeit risks.
Protect an IoT Ecosystem
Within the IoT ecosystem, the devices and sensors collect large volumes of data. Blockchain technology can maintain an immutable record of communications between multiple IoT devices.
It optimizes traceability of activities, and also simultaneously provides confidentiality. Ethereum smart contracts are popularly leveraged as it enables seamless message exchange channels.
Smart devices can automatically conduct the necessary actions as per the defined terms. It is enabling crucial and intensive activities such as supply chain monitoring, automatic water management, and energy consumption, among others.
Improve Cryptocurrency/Stock Trading
Blockchain is improving the stock trading ecosystem by simplifying financial operations. It enables decentralized financial exchanges. The investors are not required to deposit the assets with centralized authority.
They can issue, buy, and sell securities without the monopoly of the regulatory body. Thus, blockchain increases security and control.
It is speeding up the process, including cross-border transactions, that is otherwise prone to delays. Smart contracts can automatically trigger processes, improving reliability and speed.
Does Your Company Need Blockchain Technology?
Jumping into the blockchain trend without deciding strategically can lead you nowhere. Therefore, you must gather the necessary data points to join the dots and determine if your company needs it.
You need to prepare a checklist that addresses the necessary questions. Some of the essential pointers include:
Identify the Business-Specific Use Cases:
Blockchain technology can serve a wide variety of use cases as discussed above. You need to evaluate your business operations to determine what business issues you want to specifically address using blockchain technology.
It also largely depends on the kind of business you are in. Some of the pertinent questions are:
- Do you manage digital assets?
- Do you manage contractual dealings?
- Do you want to remove intermediaries?
- Do the transactions need to become public?
- Do you require a shared database?
- Is your goal to provide the highest security level of transactions/data?
- Do you intend to optimize supply chain/workflow traceability?
You need to identify real-life use cases by considering the value of blockchain technology against your business objectives. It is crucial to your decision-making process.
Perform Cost-benefit Analysis:
Before investing in blockchain, you need to conduct a cost-benefit analysis to aid the implementation process.
You must assess the return on investment associated with this technology to determine if it carries the desired profit potential. Approaching from a revenue generation perspective presents opportunities to identify if blockchain technology is the right fit.
Some of the essential cost components you must consider include:
- Development Cost: Do you have the required team or do you need to outsource the development support? What are the costs associated with each and which one should you go with? Is the development feasible, and what is the timeline for delivery?
- Infrastructure Cost: What is the infrastructural development the integration of technology will demand? Can your tech ecosystem accommodate it or does it require a greater level of disruption? Is it possible to scale the technology as your business grows without incurring higher costs?
- Other Costs: What are the costs to maintain the blockchain technology across its lifetime? How can the technology meet the compliance and regulatory protocols? What are the costs associated with updating it?
Determine if Your Organization Intends to Create an Extended Business Network for Improving Processes and Workflow
A business network involves various entities and it is necessary to keep each of their interests in mind to ensure that everyone is on the same page.
Blockchain technology helps in streamlining processes by providing the stakeholders access to the set of validated specifications for a seamless workflow. If your organization is seeking to join or create an extended business network, integrating blockchain technology can be valuable.
Blockchain technology can help accelerate innovation and transform the business network. Blockchain can reshape business models, digital property, security, lending, and consumerism.
As per your industry and requirements, you can strategically invest in the development of blockchain technology to improve operational efficiency and effectiveness.
About the Author!
Nathan Smith is a senior software expert and the head of the TechnoScore MEAN stack developer division. He is an ardent technology enthusiast with a curiosity to discover, understand, and share the latest technologies and trends imperative for building intuitive mobile applications that stand out.