Blockchain technology continues to advance at a rapid pace. The questions remain about whether it will hit the mark of commercial value. The blockchain’s potential is a long way from realizing.
What is Blockchain?
In this interconnected and hyper-accelerated world, traditional ways of actions are being challenged. Blockchain is an invention that is changing the way transactions happen.
The following key features of Blockchain
· A development platform. Blockchain was born with Bitcoin. It has proven to be a reliable platform for the development of many ‘contractual’ and ‘transaction’ based use cases.
· A development platform. Blockchain was born with Bitcoin. It has proven to be a reliable platform for the development of many ‘contractual’ and ‘transaction’ based use cases.
· Secure and Immutable. It’s distributed structure and consensus-driven mechanism. So all participants/nodes in the peer-to-peer network need to confirm the transaction and hence the nature of blockchain. That is very secure. Any attempt to tamper data will create a need to change data present on all computers (nodes) within the network. Any violation will make the tampering invalid.
Common myths about Blockchain
Just one Blockchain exists
For those people who have started figuring out what Blockchain is, it may seem like there is only one unique Blockchain platform. In fact, there are many blockchains. Each has its own differences due to the purpose it has to serve. That means that anyone can apply blockchain for small business, too. Bitcoin uses public blockchains and half-public platforms which have some access limitations. For the most complicated tasks, there are private systems open only for very few members.
Blockchains are secured
Yes, blockchains appeared to provide users with a new level of security because of its distributed structure. Customers tend to believe that the system is impossible to crack. It is not true. There is not any 100% secure system in the world. The fact of hacking will be recorded and it wouldn’t go unnoticed.
Blockchain is open for everybody
Blockchain is an open database where all members have access to it. It is the basis of Blockchain. The access can only be given to the stakeholders. Moreover, a private blockchain can be on top of a public blockchain, providing access only to those users who need it.
Blockchains are for criminals
This myth is more connected with cryptocurrencies. Bitcoin is considered untraceable and so people use it only on the black market. This is not true. Blockchain records all actions and no one can delete this data. The transaction can be tracked back once a customer has cashed out cryptocurrency.
Blockchains are not for business
Many people don’t understand what the nature of Blockchains is. That’s why it is difficult for them to imagine what the blockchain applications are. In other words, Blockchains are for protecting blocks of data. They are for verifying information and recording all actions. So Blockchain is an irreplaceable technology for any sphere with sensitive data.
Use Cases
Payments
· Banking access in remote areas. In some countries, all people may not have access to banks or the banking infrastructure itself. So it is not robust due to uncertainties, currency fluctuations, and mistrust. In these cases, Blockchain is useful as a stable form of currency, which would not lose its entire value overnight.
· International payments. If someone wants to transfer money to a person or an institution in another country, they use a bank/money exchange based wire transfer. This process of wire transfer takes two business days. It has to go through domestic Automated Clearing House (ACH) of both nations. Additionally, international wire transfers have huge costs (approx US $45–50) to start the transfer. Using Blockchain, this transaction would be done in less than 10 minutes. And the transaction fees are around 15–50 US cents.
· B2B payments. Cryptocurrencies (Blockchains biggest application) are garnering a lot of attention these days. An institutional level of acceptance is still missing. The system would get a major push if banks accepted and held cryptocurrencies as deposits and exchanged it for fiat currencies.
Notary
If a buyer is unable to make payments, the bank will cover the full or remaining amount of the sale. This is a wide tool due to the difference in laws and economy of many regions and countries involved. There the possibility of valid and timely payments are not guaranteed.
The typical process of issuing ‘letter of credit’ is very time-consuming and paper-based. This slow process creates liquidity issues for businesses. The time-consuming nature of processing makes sellers wait for the payment until the buyer receives goods. Using Blockchain, this takes few hours.
There are various initiatives taken to install this. R3 is a global banking consortium for Blockchain. It is building prototypes to support trade finance on this technology. Barclays has partnered with the Israeli Fin-tech Wave to guarantee a letter of credit. It is for export of $100,000 worth of agricultural products. Such solutions could solve the issues in hours.
Securities Trading
Stock exchanges are experimenting with Blockchain technology to streamline time-consuming and inefficient processes in trading securities. Security trading, in a nutshell, is a financial activity of buy or sale of security assets. They can be stocks, bonds, commodities, and currency. The aim is to make money in the short term. Certain long-winded, complex processes are time-consuming. So exchanges are experimenting with blockchain technology. For example, NASDAQ, Australian Stock Exchange, the London Stock Exchange, exchanges in Japan and Korea.
Smart Contracts
The platform excludes the possibility of delays, suppression or any outside influence. The system provides comprehensive financial security. It monitors the terms of the contract and is unbreakable. If someone deals with many contracts Smart contracts are the best solution. Especially, if somebody needs to sign a contract with every client.
Supply Chain Tracking
Blockchain is a real must-have for any business if somebody works with deliveries of any kind. Usual software manages supply chains. It is very fragile and in a case of a crash, all chances to go bankrupt appear. The structure of blockchains is designed to cut the human factor and flaws in the system. Blockchain records everything that happens. That means that even in case of a failure or crack a person can always find out what happened and rehabilitate the system.
These blockchain-based applications show how useful the blockchains could be for some business. No matter how big the company is.
Distributed storage in the cloud
The platform helps store more data using the same amount of hardware and saves a tidy sum at the same time. So in case, a business operates big data, blockchain is a great opportunity to cut down its expenses.
Digital Identity
With the help of blockchain technology, it is much easier to track and watch digital identities. And the best thing is identity authentication. Blockchains demand to secure the whole procedure. The usual authentication methods use the system based on passwords. The blockchain system only checks whether there was a correct private key.
Benefits
These steps are inevitable if a business is in the e-commerce sphere. Various loyalty programs help engage customers and show them the care from the side of a company. Blockchains can help avoid different types of scams. They create unique certificates which would be easy to verify.
IoT systems
IoT devices collect megatonnes of data to learn how a person behaves, what he/she likes, how he/she lives and so on. All this information needs to be processed and stored. And blockchains fit these criteria the best. Blockchain can communicate with all the devices simultaneously. It saves a lot of money because it eliminates the central hub and acts as a bridge between all IoT devices.
The future
There is no doubt that blockchain is a technological leap, not an empty shell. And it will not fade away even when the dog and pony show is over.
There are about 150 cryptocurrencies. It is a very lucrative field if a person knows how to work here.
China is a leader in the industry of mining, they control over 60% of all the market. Despite a very popular opinion, the most popular pair of currency is bitcoin-yuan, not dollar. China is a country that can twist anybody around its finger. Take at least a sweep of the online lending market, which the local central bank is forced to deal with after a series of bankruptcies and frauds. And coping with them about the needing to use their instrument. Such functions as high-frequency and margin trading are developing. Derivatives are being produced, as well as index investment funds.
Blockchain applications in finance concern bank establishments. They are, like nobody else, interested in the blockchain technology. It was estimated that for the few last years about $1.5 bln was invested in the sphere. In 2016, the biggest international financial establishments reported their intention to create a new cryptocurrency. It will work with blockchains. The banks will use the currency for their transactions to simplify and speed up all the financial operations.
These are the spheres where cryptocurrencies weren’t in use at all before. Soon it will all change. Estonia is the leading country in electronic services. It is working on a united database for medical histories. They would be available to doctors as well as the insurance companies. The main database structure would be based on blockchain platform.
Similar blockchain based businesses and projects. They are being launched all over the world. It touches such spheres as medicine, land cadastre, logistics, transportation and so on.
Every day people see new Blockchain business opportunities. A lot of blockchain startups are appearing all over the world. It proves that this system is a bridge to the future.
