Photo by Shane Aldendorff on Unsplash
Blockchain’s ability to integrate with business systems and processes makes it a purveyor of trust and transparency—a highly coveted trait for both business and consumers alike.”
Arun Ghosh, Principal of Digital Enablement at KPMG
Businesses face enormous challenges including workforce, capital, regulation, taxes, digitalization, and globalization. These challenges are also opportunities for innovation. Blockchain technology can provide transparency and increase trust, solving complex business problems along the way.
All over the world, businesses drive economic, social, and political stability. Whether small, medium, or big, businesses need smooth, seamless operations and processes. With new technology such as the blockchain, business operations can be made smoother than ever.
Transparency is necessary for smooth business transactions, but it is often hard to guarantee. Many business transactions are crippled by a lack of transparent accountability. This leads to loss of revenue, destabilization, corruption, more errors, avoidable losses, and the slow death of many enterprises.
Here are some of the ways businesses can use the blockchain to improve transparent accountability, and unlock new opportunities.
Transparency as a Feature of Blockchain Technology
The blockchain is decentralized, secure, and transparent. It provides a simple, secure and accountable way to record transactions. While its use for financial transactions is widely known, it can also be used for other business dealings including supply chain management, accounting and governance.
The blockchain guarantees transparency to users in several ways:
- It is completely traceable.
The blockchain, as its name implies, is a chain of blocks, where each block represents a collection of transactions. A new block is added to the chain through a process called cryptographic hashing. This is a one-way, secure function that converts any type or size of data into a unique string text. So, no two blocks are the same. If you need to trace any data on the blockchain, it is easy to do so because everyone can see the transactions.
- It is a fully auditable, accurate ledger of transactions.
Business owners would agree that one way to prove transparency is by auditing any process or organization. Blockchain technology is fully auditable. The data on each block on the blockchain cannot be altered, deleted, or manipulated once the network has validated it. It is impossible to alter any data block; for this to happen, you must alter all the blocks in the system, which is relatively unachievable.
- It is decentralized.
The blockchain is a decentralized technology, meaning no single entity can manipulate or influence the network at all. It is built as a peer-to-peer technology, which means that transactions are validated by miners (a special type of user); these miners are spread across the world, and centralization is eliminated. Even the big governments cannot break through the decentralization feature of blockchain.
- It is safe and secure.
Data security is a big problem in the digital world. With blockchain, this risk is completely eliminated. Every block on the blockchain is secured by cryptography and contains a unique, private key that can be verified with a public one. If any transaction data is changed, the unique key becomes invalid. Blockchain security is guaranteed by its consensus and immutability characteristics.
- It is a trustless system.
Blockchain is trustless, which means that you do not need to trust a third party or entity before a network performs a transaction. Because it’s trustless, it can ease concerns of integrity between parties, especially where trust cannot be proven or does not yet exist. It is one of the most highlighted benefits of blockchain technology and creates tremendous value for users—individuals and businesses alike.
Business Applications of Blockchain Transparency
Blockchain’s features make it useful in many ways across many industries. Here are some opportunities that blockchain transparency has created.
- Financial Management
Blockchain technology has revolutionized financial management. It ensures faster and cheaper settlements, secure exchange of funds, reduced risks for banks due to clearing delays, and wider financial infrastructure. The blockchain has also made digital assets and cryptocurrencies that allow ease of payments and stores of value widely available.
- Supply Chain Management
Supply chain management involves oversight of a sophisticated network: tracking and moving goods, keeping records and managing inventory. With the blockchain, documentation and data management is easier. Because the blockchain is decentralized, parties involved can follow the entire process. The blockchain can also be used to ensure product authenticity.
- Smart Contracts
Smart contracts are self-executing, as long as all the set requirements are met. With the many bottlenecks in contract execution, payments, and common cases of contract manipulation, the blockchain ensures that the contract terms set are followed through on and unchanged during contract execution. This use case can be seen in B2B transactions, escrow, and project hiring.
This is arguably the most applied blockchain solution right now. It facilitates cross-border payments, online transactions, and crowdfunding for projects.
- Intellectual Property Rights
Copyright and royalty issues are common among creators, and blockchain solves many of these problems. Authenticity and ownership can easily be established, royalties can be paid directly to creators, and plagiarism is eliminated. This principle also applies to identity verification, pharmaceutical products, and the storage of important certificates and documents.
The Role of Blockchain in the Future of Business
Contrary to some popular beliefs, blockchain is not a replacement technology, but a transforming technology—changing how we live, buy and sell. The Harvard Business Review describes it as a foundational technology, with the potential to create new foundations for our economic and social systems.
Embracing the blockchain’s transparency and accountability can help your business grow. You can reap the benefits of knowing exactly what is happening, when and why, while staying ahead of the competition and making a handsome profit too.
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