What is the Future of Blockchain Technology for Businesses?
Blockchain technology is more than just Bitcoin and other cryptocurrencies. This innovative system for recording, tracking and securing data has many real-world business applications that’re already disrupting industries. The nature of blockchain is that it’s decentralized, highly transparent and leaves a clear, auditable trail for anyone who’s using it. In this article, we’ll explore how blockchain is already being used and the future of blockchain technology in business.
How Blockchain is Being Used Today
Blockchain has already filtered into a raft of business operations and practices. The nature of the system lends itself well to users who need transparency, speed and security. A brief explainer of how blockchain works can help show why it’s so useful.
A blockchain transaction is executed in the following steps:
- A transaction is created in the form of block of data
- It’s sent to all of the nodes of the blockchain network, usually other computers, to be approved or verified
- The transaction is verified using mathematical equations — this process is called cryptography
- This verified transaction is added to a block with other transactions
- That block is connected to the chain, which then locks it in place with all the other blocks that came before
Each of these transactions and their history are visible to all the nodes on the network. This means that if someone tries to alter a block or a transaction, the other nodes in the network can see it and automatically reject that change. This is what makes blockchain records almost completely tamperproof.
Supply Chain Management
Companies are already using blockchain technology to record and track movements through today’s complex supply chains. For example, De Beers, a global diamond company, uses blockchain technology to record and track its diamonds from the mine to the customer. This way, they can authenticate the diamond and demonstrate that it was sourced ethically.
Every day, thousands of ships and hundreds of thousands of shipping containers cross our oceans. IBM uses blockchain technology to trace these shipments through its TradeLens platform. This creates a reliable chain of custody which helps manage shipping times and movements and helps prove the origin of goods. It can even help identify where loss or damage occurred.
Blockchain technology can even trigger events in the supply chain automatically. One way it does so is by using smart contracts.
Smart Contracts and Document Management
Blockchain technology can be used to set up smart contracts which automatically trigger events based on transactions defined in the smart contract. When a block is added to the chain with transactions that fill that demand, the next transaction defined by the smart contract occurs immediately.
This could be used for procuring goods, organizing milestone payments or even paying employees and contractors directly for the work they perform. Also, because this transaction doesn’t have to be verified by a third party like a bank, the transaction is almost instantaneous.
On a more mainstream, everyday level, blockchain technology already helps verify and support digital e-signatures and protects the electronic identities of individuals.
Data Security
Cryptography, the engine behind blockchain technology, allows records to be transparent and private simultaneously. Because extremely complex algorithms encrypt each transaction, data is inherently anonymous. This is good news for medical records, taxation records and other private or personal data.
BurstIQ is one company already using blockchain to help healthcare companies share data securely without compromising patient privacy or contravening HIPPA legislation.
At the same time, the nature of this chain created by blockchain makes it extremely difficult to manipulate or alter records, which helps make your data more reliable and trustworthy.
Bookkeeping
We spoke earlier of the inherently strong audit trail that comes from the blockchain. This feature has obvious benefits in accounting and bookkeeping because it means that every transaction and every piece of data is locked to the chain of transactions and data before it.
Businesses use blockchain technology to verify transactions recorded in their accounting and bookkeeping ledgers in real time. This eliminates the need for blind trust because instead of your bookkeeper or accountant being the sole source of truth, blockchain technology distributes and verifies every bit of data on every node in the network.
Payments
Blockchain technology allows global money transfers to happen more quickly and fluidly than traditional bank transfers. IBM’s Blockchain World Wire is no longer operated by IBM, but its open-source code is being used to help facilitate financial transactions across the globe.
Companies like Paystack, which is now owned by Stripe, use blockchain tech to process international payments in various currencies. Santander has also tested blockchain technology to make faster payments between international entities. The immediate and safe movement of money between nations is a positive for global businesses.
How Blockchain Technology Will Improve in Existing Use Cases
Blockchain technology continues to evolve. The increasing strength of encryption is one way these systems are improving, but even the growing scale and distribution of blockchain technology is a boon for users. The more nodes there are in any given network, the better the security and immutability of that network will become.
Improvements in Smart Contracts
We’re already seeing electronically controlled and created smart contracts make their way into the mainstream. In 2017, Arizona passed legislation allowing a smart contract to be legally enforceable. In the future, governments might issue marriage licenses, title deeds and even personal identification using blockchain technology to track and verify this information.
Improvements in the Financial Sector
Blockchain technology is making global payments easier and faster. This will improve as the technology improves. It will also help make auditing and financial reporting easier and more transparent.
Anti-money laundering techniques will also use the blockchain to help verify the movement of money throughout the financial system. Where that money leaves or enters any given financial ecosystem, and how much of it did, will be harder to fudge when the entire trail is recorded in minute detail on highly encrypted chains.
Supply Chain Management
Regulations and industry-imposed standards call for more robust environmental and ethics reporting. Blockchain technology will allow businesses to self-report with better trust and accuracy as it provides an immutable tracking tool.
For example, a global building company can track each of its suppliers and the materials they provide, provide end-to-end analysis of its labor force and even environmental impact thanks to the chain of custody and process that the blockchain provides. You can expect to see blockchain technology used to verify the providence of precious commodities on an overt level — and indeed as we mentioned with De Beers, this already happens.
You’ll also see this happening with mainstream goods like food and beverage products, consumer materials and even raw production materials as companies use blockchain technology to trace their supply lines.
What is the Future of Blockchain Technology?
Blockchain technology is moving further into the mainstream. In much the same way the internet is now a key part of our lives and integrated into almost everything we do, blockchain technology will take a role in multiple systems we interact with daily.
We could even see blockchain technology being used to help track the way we interact with digital marketing, helping marketers trace from impression to conversion without identifying the actual user involved. Blockchain will sit in the background of other processes too. For example, insurance companies can use this technology to quickly assess, complete and payout on insurance claims.
Concert tickets, loyalty cards and even receipts for your transactions might be stored in a blockchain ledger, making verifying these transactions easier. That same tech can lock your transaction and make it more secure so that you’ll see less fraud and misuse of gift cards.
The next steps for blockchain technology will involve more government oversight and regulation. Government intervention will come in a few key ways:
- Governments regulating blockchain ecosystems through new laws
- Government oversight of blockchain currencies and financial systems
- Government departments adopting blockchain technology for civic functions like licensing or issuing identification
- Law enforcement agencies using blockchain technology to search for illegal financial transactions
Blockchain Technology is Already a Major Part of Business
The ubiquitous adoption of blockchain technology is already well underway. Almost any digital transaction or interaction, whether it’s business-to-business (B2B) or business-to-consumer (B2C), can be improved by the blockchain. Increased validation, increased speed and increased privacy are all goals that businesses and corporations desire.
This decentralized, anonymous, tamperproof system can help cut administrative costs, reduce fraud and increase security for everything from insurance and banking to law and order. Medical professionals will continue to use blockchain technology to secure patient data in new and innovative ways. Even shipping companies and global distributors use these systems to monitor, record and track their goods. Are you excited or nervous about the future of blockchain? Follow the jSign blog for more insight into the future of digital technology.
