Understanding Blockchain and Its Benefits to Industries Beyond Cryptocurrency

Thanks to the entire buzz surrounding Bitcoin, Blockchain has also gained the attention it deserves. As more and more people are investing in cryptocurrencies, blockchain technology is also becoming popular. In fact, whether you investing in Bitcoin or not, you have to appreciate the underlying technology that makes digital currencies possible – the blockchain. This innovative technology is the major power behind all the digital currencies.

As a result of Bitcoin’s unprecedented popularity, many industries have turned their attention to the Blockchain technology. And today, Blockchain, a distributed ledger solution, has found its usage across many industries including manufacturing, finance, healthcare, government, and many others.

Blockchain has now overcome the infancy phase and is seeping into mainstream business applications. Entrepreneurs are utilizing it in its full-fledged form and innovators are increasingly exploring ways to use blockchain to disrupt and transform traditional business models. Now you may wonder why or how the tech underlying Bitcoin is adopted by businesses. To understand this, we’ll first understand the Blockchain technology and then look at its business benefits.

What Is Blockchain?

Blockchain technology was invented in 2008 to support Bitcoin. The blockchain is a virtual, public ledger that records every transaction securely and transparently. Don & Alex Tapscott, author of Blockchain Revolution define blockchain as- “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

The blockchain uses a decentralized ledger system- a file that maintains and tracks all transactions. The ledger file is stored on private computers and allows everyone to see everyone else’s transactions. This technology overcomes the drawbacks of the financial institutions by allowing the free transfer of cryptocurrency through a decentralized environment. Blockchain can be public and private.

Blockchain Benefits for Businesses

Blockchain which was initially introduced to power cryptocurrencies is now revolutionizing all leading industries. The technology has broken shackles and entered mainstream business operations to improve revenue or operational performance by sharing trusted data. Now without further ado, let’s find out the most important benefits of blockchain that are helping businesses in different industries.

1. Greater Security

When it comes to security, blockchain is far better than any other record-keeping system. In the blockchain, every transaction is secured by hash functions and every block is linked. If any participant attempts to change an already documented transaction, all checksums of the previous blocks would get disturbed. The shared documentation of transactions can only be updated or modified with consensus on a blockchain network. This means that blockchain is tamper-proof and impossible to hack. This feature of blockchain is particularly beneficial for industries that hold sensitive data such as financial institutions, government, and healthcare. Blockchain is utilized by these industries to protect their data and prevent fraud and unauthorized activity.

2. Better Efficiency & Improved Speed

The traditional, paperwork processes are exhausting and prone to human errors. Moreover, transferring anything requires the intervention of third-party which slows down the speed. But with blockchain, businesses can transfer information, as well as money way faster and more efficiently. Blockchain can streamline and automate the entire process to bring more efficiency in business operations. This tech can remove the risk of mistakes because there is a single ledger and participants don’t need to maintain multiple documents. Moreover, it eliminates the need for intermediaries which makes the process much faster.

3. Ensures Transparency

The blockchain is capable of transforming economic systems by increasing transparency. As a decentralized database, blockchain cannot be changed which makes transaction histories more transparent. The blockchain is a distributed ledger in which all network participants share the same documentation and the data is easily accessible for everyone to view. Even in the private blockchain used by businesses, data is available to all participants who have permission to access it. This means the slightest change would be visible to everyone and this ensures more accuracy, consistency, and transparency than paper processes.

4. Enhance Traceability

Blockchain can solve the complex supply chain by recording the exchange of good. For the companies that deal with the problem of tracking an item back to its origin, blockchain is immensely useful. Blockchain can provide businesses an audit trail to learn where a particular item came from. With the help of this historical transaction data, companies can verify their assets and prevent fraudulent activities.

5. Cut Down Costs

Most of the companies are adopting blockchain because it has the potential to reduce operational costs. Cutting down cost and improving efficiency is the priority of every business. It is possible to achieve this goal by incorporating blockchain in daily business operations. As mentioned above, blockchain eliminates the need for middlemen which can save a significant amount of money. Also, by replacing the traditional paperwork processes, there is no need to review documentation to complete a trade. All this can help businesses in saving in their time, money, and efforts.