Blockchain is a technology that can provide multiple advantages to businesses – whether they choose to use a public blockchain network or opt for private or public blockchain applications.
Among the top benefits of blockchain are:
With a blockchain, entities with or little trust can establish trust with each other. These entities can, therefore, engage in transactions or share data in a way that they would otherwise not or would have needed an intermediary to do.
One of the biggest benefits of blockchain is enabling trust. Initial blockchain applications demonstrated the value of blockchain by enabling transactions between entities without direct relationships but still needing to share data or pay each other. As one of the best examples of how blockchain enables trust between parties who do not know each other, Bitcoin and cryptocurrencies, in general, are great examples.
2. The decentralized structure
A Blockchain’s value is best realized when there is no central actor who enables trust. So blockchain not only enables trust when participants lack trust because they are unknown to one another, but it also enables the sharing of data within an ecosystem of businesses where no single entity is in charge exclusively.
Multiple businesses in the supply chain, from suppliers and transportation companies to producers, distributors, and retailers, need and want information from each other, but no one is responsible for facilitating it. A decentralized platform like the blockchain solves this dilemma.
3. Enhanced security and privacy
Blockchain systems are also secure, which is another leading benefit of this technology. Blockchain technology offers enhanced security due to how the technology works: It produces a record of transactions that can’t be tampered with, and it encrypts them end-to-end to prevent fraud and unauthorized activity.
Additionally, blockchain data is stored across a network of computers, making it virtually impossible to hack (unlike conventional computer systems, which store data in servers). Blockchain technology can further address privacy concerns as it anonymizes data and requires permissions to limit access.
4. A reduction in costs
Additionally, Blockchain’s nature can reduce costs for organizations. Transactions can be processed more efficiently thanks to it. In addition, it reduces manual tasks, such as aggregating and amending data and simplifies the reporting and auditing processes.
Blockchain experts pointed out that the ability of blockchain to streamline clearing and settlement translates directly into cost savings for financial institutions using it. Blockchain also helps businesses reduce costs by eliminating the middlemen — vendors and third-party providers that have traditionally provided the processing that blockchain can do.
Businesses benefit from the unique characteristics of blockchain by increasing trust, security, transparency, and other factors.
Blockchain can handle transactions significantly faster than conventional methods since it eliminates intermediaries and replaces any remaining manual processes. Some transactions can be handled in seconds or less by blockchain technology. However, the speed at which a blockchain-based system can process transactions varies depending upon several factors, such as the size of each block of data and the volume of network traffic.
Nevertheless, blockchain is typically faster than other processes and technologies, according to experts. Alibaba used the blockchain to trace the origin of sliced mangoes in seconds, an operation that previously took seven days. Walmart is another prominent application of blockchain technology.
6. Traceability and visibility
Using blockchain for Walmart isn’t just about speed; it’s also about being able to track where those mangoes and other products come from. Walmart, for example, can use this information to better manage its inventory and respond to customer questions.
Retailers can identify and remove products from a farm when it has to recall its products due to contamination, leaving its remaining products for sale. Blockchain can be used to track the origins of various products, such as medicines to confirm that they aren’t counterfeit and organic items to confirm that they are indeed organic.
7. The immutability
The immutability of the blockchain simply means that transactions, once they have been recorded, can’t be changed or deleted. All transactions on the blockchain are timestamped and date stamped, so they are forever recorded.
Consequently, blockchain can be used to track information over time, enabling an audit of information that is both secure and reliable. Omar pointed to Sweden’s use of blockchain to digitize real estate transactions to track property titles even as they change hands as an example of this benefit.
8. Individual control over data
One of the biggest advantages of blockchain technology is the ability to control one’s digital data in an unprecedented way. According to Michela Menting, a research director at ABI Research, “In a world where data has become a very valuable commodity, this technology inherently protects your data while giving you control over it.” With blockchain-enabled smart contracts, individuals and businesses decide what pieces of their digital data they want to share and for how long.
9. The tokenization
Tokenization is the process of converting a physical or digital asset into a digital token which is then recorded on and then shared via a blockchain. Tokenization has been popular with digital art and other digital assets, but tokenization has broader applications that may ease business transactions. Utility companies, for example, could use tokenization to trade carbon emission allowances under carbon cap programs.
10. The innovation
Blockchain-based systems are being explored and implemented across multiple industries as a means of resolving intractable problems and improving longstanding practices. Blockchain technology has been used to verify information on the resumes of applicants, according to Field.
There is consistent evidence that a large percentage of job applicants falsify their resumes, leaving hiring managers to verify the data manually, a tedious process. It has been discovered that pilot programs that allow participating universities to put data about their graduates and their awarded degrees on the blockchain that can then be accessed by authorized hiring managers help resolve both issues — getting to the truth as quickly and efficiently as possible.
Examples of industries that benefit from the use of blockchain
Industry sectors can benefit from blockchain technology, but some sectors and enterprises are more suited to it than others. Frequently, businesses that are decentralized by definition, have several parties that require access to the same data, and they need a better way to verify that the data has not been tampered with, are conducting pilot programs, or bringing test cases to full production. Here are a few industries that benefit from blockchain technology.
- Financial institutions — and their customers — benefit from faster and cheaper clearing and settlement.
- Health care organizations are realizing that blockchain-based technologies can help secure patient records and maintain patient privacy while also allowing them to share data only when a patient agrees to it.
- Government and non-profit organizations are using blockchain applications to create immutable records and enforce stipulated terms.