While blockchain technology is all the rage right now, it hasn't yet hit its stride.
- Although blockchain technology is highly popular these days, it has yet to be fully developed and its full potential is still yet unknown.
- Blockchain is used in business to help with things such as contracts, bookkeeping, international transactions, and more.
- In the future, blockchain will most likely become a part of our daily lives, whether we aware of it or not.
Blockchain is undeniably one of the hottest new technologies to hit the business world, and companies are racing to learn more about it and how they can apply it to their business. While some dismiss blockchain as the latest consumer buzzword, many liken the decentralized ledger technology to the dawn of the internet, when consumers and technologists were both equally excited about the fascinating new technologies, but things were still too new to be sure about practical uses in our everyday.
Where we're at now
Christian Catalini, assistant professor of technological innovation at MIT and founder of MIT Cryptoeconomics Lab notes that we're still in the earliest stages of adoption and experimentation.
"There has been a lot of enthusiasm about the technology, but actual use cases are still limited. Once this experimentation phase will complete, you will see a few, top applications emerge that will make the technology mainstream, but those are difficult to predict at the moment."
"You're not going to go into Starbucks tomorrow and buy your coffee with bitcoin," added Anders Brownworth, chief evangelist at Circle, a money-sharing application that uses blockchain to let you send money from your phone to anyone, anywhere in the world. "We're not there yet. We're going to continue to use cash for things like that. But where blockchain does allow for things to get interesting is cross-border flow, where you're sending money and needing to swap it into local currency. There's a strong use case there for bitcoin."
When does blockchain not make sense?
Businesses have come to embrace data through practices of proper warehousing, business intelligence and artificial intelligence. But just because you have a lot of data, it doesn't mean that blockchain is the perfect solution for you.
"You may not want that data warehouse published on a blockchain," said Brownworth. "You may not want your financial data on a blockchain. Ultimately, you could have a record of my financial history, perhaps not on a public blockchain but even on a private one."
How is blockchain used in business?
According to Investopedia, blockchain is essentially a chain of "blocks", which are made up of digital pieces of information, each of which consists of three parts: information about the transaction, who is participating in the transaction, and a unique code or "hash" that makes it possible to distinguish one block from every other block on the chain.
Blockchain is important because it is a foundational technology that has the potential to be used in an almost infinite number of ways, states Brookings. Much like the internet in its infancy, blockchain has the propensity to upgrade an array of aspects of our personal and professional lives.
According to Insight, blockchain helps to benefit businesses in the following ways:
- Operational cost reduction. One of the top benefits of blockchain technology is that it can reduce operational costs. This is because blockchain allows businesses to remove intermediaries or the administrative effort associated with both transaction reconciliation and record-keeping.
- Easy tracking of transactions. Additionally, blockchain makes it possible for businesses to easily trace products and transactions back to their origins.
- Transparency, authenticity, reliability, and security. Lastly, blockchain technology also provides a greater level of transparency, authenticity and reliability. This is because it is encrypted, which makes all transactions more secure and allows for every aspect of the transactions to be tracked and recording.
Given that blockchain technology is so popular these days, you may be curious about the ways in which it can be used for businesses. The following is a list of some uses of blockchain in business:
- Contracts: Blockchain can be used to create contracts, reports Due. This is convenient for businesses that frequently deal with contracts in that the use of blockchain makes it so the contract cannot be subsequently changed or altered in any way.
- Bookkeeping: Hacker Noon states that bookkeeping is also a common use of blockchain technology. This is important for businesses that have accounting processes that go beyond the borders of their network.
- International transactions: According to Due, blockchain can also be used to assist with international transactions. The encryption used in blockchain makes it ideal for these transactions. Additionally, the faster, more accurate and the ability to forego the use of banks also added benefits for international transactions of all kinds.
- Supply chain management: Another great benefit of blockchain for businesses, says Hacker Noon, is that it makes supply chain management simpler. Blockchain offers a cost-effective method of tracing goods without the guesswork and inefficiencies.
The future: Where blockchain makes sense
Consumers may never be fully aware of the technology in future use cases. In other words, they may rely on blockchain in the future, and they may benefit from it and even use it daily in some applications, but they won't explicitly think of it as using blockchain; they'll just know that, for example, they are able to send money to their friend across the globe quickly and without fees.
"Blockchain will operate in the background," Brownworth said. "Users may not even know they're using it. But they'll appreciate the benefits of it, such as privacy [and] fast payments."
Catalini agrees that applications will be largely in the background, even for many businesses.
"As with consumers, many of the mainstream applications of cryptocurrencies and blockchain that you will see in the next few years may be invisible to small and medium-sized businesses," Catalini said. "A blockchain may be used in the back end of a service, but the consumer or small business may no need to know. They may just enjoy lower prices because of it."