How can blockchain transform traditional business?

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While being an entrepreneur in the tech industry isn’t the same as being an entrepreneur in some other industry, there are a few things that remain constant, regardless of the business you’re in. You still want to use the best techniques and technologies available to save time and money, secure your precious business data, and provide the best product or service possible.

Disruptive innovations, such as blockchain and cryptocurrencies, are impacting the way entrepreneurs do business more and more every day, forcing traditional business models to adapt or be superseded.

What is the blockchain technology and Why is it so important for businesses?

Over the past few years, more and more people are getting involved in the trading of cryptocurrencies, many without even realizing how the underlying technology (blockchain) is changing our world.

While this technology can sometimes be complex, the idea behind it is quite simple. As the accounting and audit firm KPMG explains, “Blockchain is the technology behind Bitcoin and works as a distributed ledger or database system, running on millions of devices which can be used by anyone, that records transactions, establishes identities, validates contracts, and safely stores technology”.

Initially launched with Bitcoin in 2009, the blockchain offered at the time an alternative monetary and financial system, one that didn’t require any centralized power to create money, nor any 3rd parties to approve transactions.

Decentralization was a core concept in the creation of this digital peer-to-peer payment system and the blockchain technology

The lack of trust in financial institutions (especially US-based institutions) led to a banking and financial crisis back in 2007-2008. For Satoshi Nakamoto, the pseudonymous creator of Bitcoin, taking power away from the few and putting it into the hands of the many was, one can easily imagine, a key motivation.

Nowadays, blockchain technology is used in many different industries

Some of the industries in which blockchain is most prominent have very little to do with the financial sector – industries as healthcare, music, food, education, fashion, human resources, accounting, supply chain management, legal services, marketing, and the public sector, among others.

The main reason for its success in so many different sectors is that this technology can be used to quickly, securely and privately transfer and store information and money. But it can also deal with “anything of value – money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes” notes Don Tapscott and Alex Tapscott.

In a report published on Harvard Business Review, it is explained that blockchain is “solving the problem of IP [Intellectual Property] in a digital age, creating a better sharing economy, opening up manufacturing, and changing enterprise collaboration”.

As a “blockchain can be public, private or managed by a consortium of companies, and accessible by everyone (permissionless) or restricted (permissioned)” declared Emmanuelle Ganne from the World Of Trade, it is then easy to see how its use can remodel the way companies can collaborate with other firms, but also within their own services, and change the way international trade works.

The main characteristic of the different types of blockchain, according to Emmanuelle Ganne

(Source: Can Blockchain revolutionize international trade? – Publication from the WTO)

The blockchain could help companies to make transactions more efficiently, more transparently, quicker, cheaper and with a higher level of security

This would definitely have a significant impact on how companies operate, “from financial to physical cross-border trade transactions, reducing processing, verification, tracking, coordination and transport costs by streamlining and digitalizing processes that involve multiple stakeholders,” declares Emmanuelle Ganne in her report about whether Blockchain may revolutionize international trade. “It could reduce fraud, improve the administration of IP rights, enhance traceability and trust in value chains, and open new opportunities for small companies,” she added.

Another great feature of blockchains are smart contracts

Smart contracts represent a set of rules established in advance and encoded in a blockchain. They follow an agreement between two parties and they are automatically executed once all the conditions have been met, all without the intervention of a 3rd party.

Bottom-Line
Innovations based on the blockchain tech offer many opportunities for current business models to evolve in more transparent and digital ways. Among the most important innovations being developed, according to KPMG, are peer-to-peer sharing economies, dynamic and distributed payment infrastructure, smart contracts, digital identity, property ownership, and intellectual property, among other areas?

With the world’s economy changing at a rapid rate, business models need to be agile and adapt, making use of innovations and new technologies to save money, all while building a stronger reputation and community in an increasingly digital world.

The use of blockchain, smart contracts as well as crypto-currencies just might take your business to the next level, helping the processes of your business quicker, safer, and more scalable.

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