What Are the Benefits of Blockchain Technology?
What Are the Benefits of Blockchain Technology?
Have you heard about crypto and the blockchain? What are the benefits of blockchain technology for your small business? Find out here today!
While blockchain technology is most commonly associated with the popular cryptocurrency, Bitcoin, its reach is far more vast than that. There’s no denying that Bitcoin catapulted blockchain into the limelight. It has most certainly contributed to its success.
But today, the benefits of blockchain are far-reaching. This is a type of technology that can totally transform your business — no matter your industry. And it’s predicted to grow into a $39 billion industry in just four years.
So, if you’re a business owner that has not yet considered the power of blockchain, you might want to check out the rest of this blog. Here you can learn all about projecting your business model into the future.
What Is Blockchain Technology and How Does It Work?
Blockchain is no simple application. It’s an entirely new form of technology that is transforming the business world and its many transactions across the globe. But how does this technology actually work?
Blockchain is a form of technology that stores data in a sequence of blocks (which are really groups of transactions). They are then chained together and this blockchain of data is distributed among users.
In essence, the blockchain is a digital ledger of economic transactions. It’s capable of recording all types of transactions as they happen — and they’re not just financial. Blockchain technology can virtually record anything of value.
The transactions that blockchain records do not require any form of external authority. This means that the data is not subject to validation or authenticity. In other words, you can literally store anything on the blockchain without ever changing it. This makes the data immutable.
While blockchain is often labeled as ”new” technology, it has actually been around since 1991. Since then, it has sky-rocketed into popularity thanks to global cryptocurrencies, especially Bitcoin.
The Value of Blockchain Technology
So, how is blockchain so valuable when it’s not even a tangible object? This is because of the distributed security of the system. In short, the system is virtually impenetrable. There are five key concepts that form the basis of blockchain, and they include the following:
- The cryptographic hash
- The immutable ledger
- The peer-to-peer network i.e. virtual currency
- Consensus protocol
- Block mining or validation
To better understand what blockchain is and its value, here’s what blockchain technology is not. First of all, it’s not a cryptocurrency, which is the most common misconception. However, blockchain is the technology that supports cryptocurrency transactions.
Blockchain is not a programming language nor is it a cryptographic codification of any form. Some people get blockchain technology mixed up with artificial intelligence or machine learning. It is neither of these things. Finally, blockchain is not a framework of any kind or a Python library, i.e. a reusable chunk of code.
What Are the Benefits of Blockchain Technology for Businesses?
Contrary to what many people think or know about blockchain, it’s a type of technology that is incredibly diverse. So diverse that it is applied in almost any business industry today. Just some of these include banking, healthcare, e-commerce, mining, logistics, and transport. The list is endless.
By understanding it better as a business owner, you can assess how it can be beneficial to your business. Let’s take a look at the advantages of the blockchain:
1. Enhance Your Business Transparency
Industry and business transparency is a major issue today. Essentially, this issue revolves around business ethics and industry practices. But transparency in any business is crucial to foster client and employee trust as well as a good reputation.
Some businesses turn to the tactic of implementing rules and regulations to improve transparency. However, centralization does not always lend itself to 100 percent transparency.
This is where blockchain technology can change things. You can implement a decentralized network where there is no need for a central authority. This, in turn, improves your system’s transparency.
You are able to entrust your employees and colleagues with greater responsibility. Blockchain means their transactions don’t need approval or validation — and this is just one of the benefits of blockchain transparency.
However, if you still want to include an element of validation, then it’s best to use the consensus method. This means that the blockchain records a copy of each transaction and keeps it there permanently.
2. Bolster Your System Security
As mentioned, blockchain technology is very difficult, if not impossible to penetrate. This is because of the advanced security measures in place. And compared to other platforms, the security of blockchain wins every time.
You can also record all transactions within the blockchain via the consensus method, which allows you to keep tabs on all system activity. To add to this, blockchain encrypts all transactions and links them to one another via a hashing method.
The security of your system is further enhanced as each node within the blockchain holds a copy of all transactions ever performed. So, if a hacker attacks your system, it would be impossible to make changes to transactions as other nodes in the system would reject the request.
3. Reduce Your Vendor Overheads
There’s no denying that a good chunk of every business’s budget goes toward improving their current systems. But if you’re looking to reduce this cost, blockchain is your answer.
Blockchain technology can help to lower the cost of outsourcing or hiring third-party vendors to maintain your system. Due to blockchain’s decentralized nature, you won’t need to pay money to a centralized player. It’s all virtual and you control the system.
Blockchain also allows for less interaction when validating business processes or transactions. This means you don’t have to fork out money every time you make an update or a change to your systems.
4. Blockchain Offers True Traceability
When it comes to the business supply chain between vendors and suppliers there’s always plenty of room for error. This may include things like theft, loss of goods, counterfeit items, and loss of profit. This is because it’s difficult to trace all items 100 percent of the time.
With blockchain technology, you can eliminate all of this error. Your supply chain could become 100 percent transparent and easy to track. This technology allows you to enter, trace, and track goods to ensure they are not misused or replaced during the process.
5. Blockchain Is Fast and Highly Efficient
From an industrial sense, blockchain offers unrivaled efficiency and speed. This is because the technology aims to automate all time-consuming processes and maximize your business output.
You can also eliminate the chance of human error thanks to this type of efficient and speedy automation. Blockchain’s digital ledger means that you can store everything in one place. This streamlines your automation processes even more and makes it easier than ever to access your data.
6. It’s Resistant to Technical Failure
Blockchain, as a system, lives on a hugely a distributed network of nodes. This is great news when it comes to technical difficulties as it’s very resistant to malware attacks and system failure. The blockchain nodes are unique. They are able to replicate and store your data on a vast database, meaning there is no single-point-of-failure.
In other words, there is no chance that a single node will go offline and create a loophole or jeopardize the security of the entire system. Which is often a common issue with many other business systems.
7. Blockchain Is Incredibly Stable
Recorded blocks of data within the blockchain are irreversible. As we mentioned earlier, once you load data onto the system, you cannot change it and it’s difficult to remove. This is one of the key benefits of private blockchain technology. It’s one of the most stable on the market today.
It’s particularly beneficial for storing financial transactions. Or any other transactional data for that matter. This is due to the very clear-cut audit trail. Every single change is traceable, tracked, and recorded, then distributed on the blockchain ledger for all to view.
This also makes blockchain very useful when it comes to tracking fraudulent activity within the workplace. You cannot hide suspicious transactions. They’re always recorded within the network — and stay there permanently.
8. It’s a Reliable, Trustless System
All businesses operate some form of payment system that includes transactions between two parties. Generally, the merchant and customer. But most of the time, a third-party is also involved, i.e. your bank, a payment provider, or your lender.
When you use blockchain technology, you can cut out the third-party and keep your transactions between two parties. This is because of the blockchain distributed network and its nodes. Each node verifies every transaction through blockchain mining.
As such, you can rely on blockchain because it’s a trustless system. It also reduces your overheads in terms of transaction fees when you cut out the third-party, saving your business more money.
9. You Can Diversify Your Payment Options
By adopting blockchain technology, you have the chance to embrace new forms and options of payment for your products or services. Today, people want options, so what better way to embrace what your customers want?
Blockchain is the technology that supports cryptocurrency transactions. So, this means you can start accepting bitcoin and other forms of cryptocurrency.
There are also some other benefits to accepting cryptocurrency. For one, it shows your customers that you are up-to-date with the times. It also shows a willingness to extend the types of services you offer.
Accepting cryptocurrency means you can deal with your customer directly. And it also minimizes your transaction costs. Payments are also direct and permanent — so there’s no way for clients to default on payments.
However, there is a little extra work required when it comes to rolling out this new form of payment. As a business, you’ll need to spend some money on a digital wallet, a merchant gateway, and other services.
10. Make the Most of Smart Contracts
What are smart contracts and why do they matter for your business? In a nutshell, a smart contract is one that is self-verifying. It is also self-enforcing and you cannot change information once it’s recorded in the blockchain ledger.
Essentially, this means that no one can manipulate information without you knowing. These types of contracts could include almost anything, such as employee contracts, vendor agreements, a commercial lease, etc.
To add to this, a smart contract offers your business a level of protection that you would have otherwise paid for. For example, you may have had to fork out money to an attorney to draw up an irrevocable contract. With blockchain, you can skip this step and save money.
11. Raise Capital for Your Business
If you’re a small business owner and looking for smart, efficient ways to raise capital, then blockchain is a great tool. It offers an alternative method in the form of Initial Token Offerings (ITOs).
You have an alternative option to borrowing money from a bank, a lender, or investors. Instead, you can trade your ITO tokens for capital. And you can do so freely. ITO tokens are 100 percent compatible with revenue and other forms of equity.
If you find an investor that’s interested in your business, they can buy into what you’re offering. They will then receive blockchain ITOs from your company. You can choose what you want the token to represent, too.
For example, it could offer equity in some type of utility or service your company offers. Or it could represent an actual stake in your business. ITO trading has become a popular means of raising capital for businesses over the years. Today, it’s a trusted and reliable alternative when it comes to business funding.
You can also purchase tokens from other businesses, trade-off tokens, and sell them in various marketplaces.
Expert IT Management at Your Fingertips
The key benefits of blockchain are undeniable. But it takes a keen understanding of this type of technology to implement it into your business transactions. In essence, you’ll have to rethink your entire business IT model and you may need some expert help with this.
If you’re looking for expertly-managed IT services, Structured Technology Group is your go-to. We can work with you and your business to implement the best managed IT, cloud, and security system to meet all of your needs. Learn more about the array of industries we serve and how we can help support your business.