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Heard about Bitcoins and cryptocurrency lately? You probably have, thanks to all the buzz surrounding Bitcoin’s record-breaking exploits.
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It’s almost surreal to think that, back in 2011, Bitcoins traded for $1 each. Recently one Bitcoin was worth a whopping $16,000. As an entrepreneur, you may not be interested in purchasing Bitcoins or any other cryptocurrency as a form of investment. But you have to appreciate the underlying technology that makes Bitcoin possible — the blockchain.
Related: Why Blockchain Matters to Small Businesses
In layman’s terms, the blockchain is a virtual, public ledger that records everything in a secure and transparent manner. Unlike banks that facilitate transactions with traditional currencies, the blockchain allows the free transfer of cryptocurreny through a decentralized environment. All the data is then held in an interlinked network of computers, owned and run by none other than the users themselves.
To some people, the blockchain technology is a lot more promising than the cryptocurrency it was designed to support. Sure, the demand for Bitcoin is colossal at this point in time. But since it’s basically backed by nothing but sentiment, it’s reasonable to believe that the Bitcoin bubble may eventually pop– however unlikely that may be. The benefits of blockchain, however, are more than big enough to sustain its relevance for generations to come. Without further ado, here are the most important benefits of blockchain that may prove to be useful to businesses in different industries:
1. Supply chain management.
For supply chain management, the blockchain technology offers the benefits of traceability and cost-effectiveness. Put simply, a blockchain can be used to track the movement of goods, their origin, quantity and so forth. This brings about a new level of transparency to B2B ecosystems — simplifying processes such as ownership transfer, production process assurance and payments.
2. Quality assurance.
If an irregularity is detected somewhere along the supply chain, a blockchain system can lead you all the way to its point of origin. This makes it easier for businesses to carry out investigations and execute the necessary actions.
A use-case for this is in the food sector, where tracking the origination, batch information and other important details is crucial for quality assurance and safety.
Recording transactions through blockchain virtually eliminates human error and protects the data from possible tampering. Keep in mind that records are verified every single time they are passed on from one blockchain node to the next. In addition to the guaranteed accuracy of your records, such a process will also leave a highly traceable audit trail.
Of course, the entire accounting process also becomes more efficient on a foundational level. Rather than maintaining separate records, businesses can only keep a single, joint register. The integrity of a company’s financial information is also guaranteed.
4. Smart contracts.
Time-consuming contractual transactions can bottleneck the growth of a business, especially for enterprises that process a torrent of communications on a consistent basis. With smart contracts, agreements can be automatically validated, signed and enforced through a blockchain construct. This eliminates the need for mediators and therefore saves the company time and money.
Related: 3 Things Entrepreneurs Need to Understand About Blockchain Technology
Just like in supply chain management, the promise of blockchains in the aspect of voting all boils down to trust. Currently, opportunities that pertain to government elections are being pursued. One example is the initiative of the government of Moscow to test the effectiveness of blockchains in local elections. Doing so will significantly diminish the likelihood of electoral fraud, which is a huge issue despite the prevalence of electronic voting systems.
Another example is when NASDAQ leveraged blockchain technology to facilitate shareholder voting. It worked with the joint efforts of their blockchain technology partner and local digital identification solutions, which provided governments with identity cards. After seeing success, they described the “e-voting” project as a practical, necessary and disruptive.
6. Stock exchange.
The notion of using blockchain technology for securities and commodities trading has been around for a while. Given the open-yet-reliable nature of blockchain systems, it isn’t surprising to hear that stock exchanges now consider it as the next big leap forward.
In fact, Australia’s stock exchange is already dead set on switching to a blockchain-powered system for their operations, which is designed by the blockchain startup Digital Asset Holdings. In a press release published in December 2017, Blythe Masters, CEO of Digital Asset, said, “after so much hype surrounding distributed ledger technology, today’s announcement delivers the first meaningful proof that the technology can live up to its potential.”
7. Energy supply.
There are two types of businesses — those that shrug off monthly utility bills and those who scratch their heads, wondering where their energy expenditures are coming from.
In certain parts of the globe, commercial establishments and households can now take advantage of blockchain-enabled “transactive grids” for sustainable energy solutions that accurately track usage. A couple of examples would be Powerpeers in Netherlands and Exergy in Brooklyn. Blockchain can also be used to improve the tracking of clean energy. After all, once power is sent to the grid, no one can really discern if it’s generated by fossil fuels, solar energy or wind.
Traditionally, renewable energy is tracked through tradable certificates that are issued by the government. These certificates are, to put it bluntly, terrible in serving their purpose — something that blockchain would have no trouble handling.
Related: Why You Can’t Afford to Ignore Cryptocurrencies and Blockchain Anymore
8. Peer-to-peer global transactions.
Finally, the meteoric rise of Bitcoin and every other cryptocurrency in the market isn’t without merit. For one, it enabled the fast, secure and cheap transfer of funds across the globe.
While there’s already a slew of services like PayPal that process international payments, they usually require sizable fees per transaction. Other P2P payment services also have specific limitations, such as location restrictions and minimum transfer amounts. That’s why more businesses, as well as regular users, are beginning to prefer cryptocurrency for international transfers. Not only are they generally more secure, users are also granted more freedom when it comes to the movement of their funds. It’s clear that the blockchain is making strides into different industries outside of cryptocurrency. One could argue that most people aren’t ready yet for decentralized digital ledgers, but looking at blockchain’s progress thus far, it probably won’t be long before non-adopters follow suit.