Understand 5 Advantages Of Blockchain For Businesses
When we hear blockchain, the first thing that comes to mind is Bitcoin cryptocurrency. The technology that guarantees the security and reliability of the famous cryptocurrency is increasingly in vogue, and its applications are being tested and studied for use in the most diverse corporate and government segments.
Banks, retail companies, logistics, the public sector, and many other segments are studying ways to use blockchain to improve their processes and make their transactions safer, less bureaucratic, and agile.
What Is Blockchain?
As we saw in the introduction, it is challenging to conceptualize blockchain and its origin, let alone Bitcoin, as the two were born and gained popularity together. It all started in 2008, in an academic article purportedly published by one person, under the pseudonym Satoshi Nakamoto.
In this crisis scenario and distrusting the traditional banking system, Bitcoin emerged as a reliable and decentralized alternative for making financial transactions. The blockchain guarantees all this.
In a digital environment, the centralizer can change, exchange and even create data on the blockchain. There is no possibility of copying a block or tampering with values; only transfers are allowed.
How Does It Work?
Blockchain, or in a literal translation, a chain of blocks, as its name suggests, are interconnected blocks, each having its key that connects with another. In the case of Bitcoin, for example, the link between the blocks is financial transactions.
A block brings its information and that of the previous block, and with these two pieces of information, it creates its own identity, which is transmitted to the last block, which repeats the process.
This interconnection promotes a chain reaction in which all blocks are validated, with the oldest ones having the most significant confirmation power, as they bring more information. For a transaction to be confirmed, it must be validated by more than 50% of the blockchain.
What Are The Advantages For Companies?
Well, now that you know the basics of the concept and operation of bitcoin, you must have understood that its main advantage is that it is a system for storing inviolable data and transactions.
All this capacity is being studied and explored by corporations to perform some activities that demand maximum security and data transparency. Check out the five main advantages that blockchain has brought to companies.
One of the biggest obstacles that companies, especially starting ones, the face is raising the capital to turn ideas into reality. In times of crisis, such as the one we are facing, access to fundraising and capital through financial institutions becomes increasingly tricky.
When they get some credit release, companies run into abusive interest rates and massive bureaucracy. Blockchain allows the capture of investments without the need for intermediaries.
Thus, entrepreneurs with great ideas, especially for launching startups, will be able to do fundraising campaigns globally without additional fees.
Supply Chain Verification
Blockchain is also useful when it comes to the supply chain. Most entrepreneurs know where they buy from but do not know who their suppliers are.
As everything is traceable and accessible, blockchain will allow companies to know all the product movements from the origin. For example, if a device is not working, using blockchain, it will be possible to identify who was the original supplier of the defective component.
Blockchain is also helpful in confirming the originality of products, preventing counterfeit or dubious parts from being included in the equipment. In summary, we can say that technology will help companies verify that suppliers meet their requirements.
Fully Automated Legal Arrangements
Most companies are studying how to use blockchain in the formative stages and business. When it comes to contracts, blockchain can automate the process of legal agreements and documentation without the involvement of humans, significantly decreasing the bureaucracy that delays the process.
Business contracts are often bilateral and require documentation and signatures from both parties. This can result in delays, which can hamper a company’s productivity and cause managers to miss deadlines, because of a missing signature, for example. Blockchain will help eliminate the delay in transactions that require signature and approval.
Companies are constantly threatened by hackers who devise plans to access and steal data. The great interest is usually in private consumer data, including financial information. With blockchain’s help, customers can take control of their knowledge with an encrypted key that will only be decrypted by companies that have access to the blockchain.
More Transparency And Accountability
The main benefit of blockchain technology is its transparent and accountable nature. All transactions are recorded on a public ledger, encrypted and secured, without the possibility of fraudulent alterations. This means that financial, logistical, production, and quality controls will be much safer and with a reduced margin of error.
These are just a few examples of how blockchain can play a significant role in a business. With threats to security and data protection, as well as the fragility of enforcement systems in the business world, blockchain adoption can help address this effectively and efficiently.