Everyone is talking about cryptocurrencies these days, and the sudden appreciation in the value of Bitcoin has given a hope to the common man that he may become a millionaire one day.
Very few people know that the concept of cryptocurrencies is a decade old. Frankly, no one gave any importance to the founder of Bitcoin, Satoshi Nakamoto, when he first introduced the concept of decentralized currency using blockchain technology.
Now, whether you call it a coincidence or not, but the sudden rise of Bitcoin trading and its appreciation has gained attention of the financial world on blockchain. But is blockchain only limited to the financial use case or can an enterprise take advantage of the same?
Let’s look at it, but before that we need to understand the fundamentals of blockchain technology.
Today, we depend on banks or financial institutions to carry out financial transactions for us. For example, sending money to a friend, selling land, selling your car, etc. Everywhere, we have involvement of financial institutions in the transaction, which means every transaction is getting validated by a third party.
There are challenges to this model: Currencies are limited to geographical boundaries, the transactions involve delays, the validation is done by the third party, and they have full control to modify or change the transaction to their advantage. Or, let’s assume if someone hacks or alters the databases of these large financial institutions, they can cause the whole system to crash.
So, some people thought of creating a shared ledger which is controlled by everyone who is involved in the transaction and the entry is maintained by everyone and not a single entity. No transaction is fulfilled unless everyone agrees on it, which means there is no malpractice by a single entity.
This is blockchain, a shared distributed ledger/database that enables process of recording transactions and tracking assets. An asset can be cash, house, land, or it can be patents, copyrights, etc. Once data is stored in the database, it can never be modified or deleted. Every record on blockchain is permanent.
But is blockchain only for financial transactions? The answer is no. Blockchain is for anything which possesses value & not limited to just financial transactions.
Let’s discuss further:
- Contract management: Enterprise contracts involve various parties and stakeholders, but the contracts are done on a piece of paper and if any breach happens, companies must go to court for settlement, which is a tedious process.Using blockchain, contracts can be converted into smart contracts using blockchain code and every transaction will be recorded and agreed upon by both the parties so that there are no false claims. If there are any disputes, the transaction will not get fulfilled. That way, the possibility of breach will never arise.
- Supply chain automation: Eliminating fraud and enhancing trust between various parties in supply chain services is always a requirement. Blockchain offers a shared ledger that is updated and validated in real time with each network participant. It enables equal visibility of activities and reveals where an asset is at any point in time, who owns it, and what condition it’s in.
- Recruitment: Finding right resources, that too those resources who have good reputation in the industry, is a tedious task. What if each person would have a trail of feedback which would be accumulated over the course of their career by past employers. This would enable new employers to quickly review this trail and decide whether this person would be the right match for the job or not.
- Cross-border remittances: One of the major benefits of blockchain is decentralized currency. Of course, this could take years to get implemented but what if payments can be transferred directly between organizations across borders without any intermediary. Cross-border remittances and currency conversion charges will no longer be a problem in such a case which will ease a lot of pain in financial transactions.
Blockchain is new, but it is here to stay and grow bigger by each passing year. It is the technology which will build trust among various strangers; be it your employees, partners, or the supply chain. Blockchain has potential to streamline a lot of things within organizations and will soon come in mainstream adoption.