The potential of blockchain technology to disrupt diverse industries remains undisputed. It is estimated that the global distributed ledger technology market will reach a figure of US$2.3 billion by 2021. Governments across the world are putting in efforts to build regulatory frameworks around the use of this technology; while thought leaders, technologists and innovators are putting their minds to developing ideas that can leverage blockchain innovations. There is huge promise of blockchain applications being able to solve everyday issues and eradicate flaws in the existing systems. However, before we can understand its applications in daily lives, we need to understand what blockchain actually is.
Blockchain: The Most Important Invention since the Internet
When Satoshi Nakamoto, the anonymous creator of the Bitcoin protocol, came up with his paper in 2009, little did he know that the technology would be a revolutionary concept, which would go beyond the barriers of the financial industry.
So, what is blockchain? Essentially, it is a decentralised, distributed ledger, where transactions get added to a spreadsheet in the form of “blocks.” These blocks are connected to each other using cryptography links, creating the “chain.” A network of computers, called “nodes,” are involved in the system. While every “node” possesses a copy of this ledger, no one person alone can modify or corrupt it. Interestingly, those wanting to add a transaction have to solve mathematical algorithms. The millions of nodes in the network have to arrive at a “consensus” regarding this transaction, for it to be added in the chain.
So, there you have it; a transaction ledger that can be viewed and verified by anyone but cannot be edited by a single entity. Never has any other technology provided the ability to verify a transaction in such a transparent and public manner. Which is why it is the next big leap in innovation since the advent of the internet. It continues to spread its roots across different industries across the world and is expected to persist on this path. According to the 2018 Global Blockchain Survey report by Deloitte, businesses were once exploring the technology to streamline their processes, but now they are building actual applications on it.
Role in Cybersecurity
Since blockchain is essentially a technology that secures transactions, it has a huge role to play in the cyber security segment. Take for example the company called NuCypher; a blockchain-based security company that raised $4.3 million in 2017. It has developed a technology that uses the distributed ledger system for proxy re-encryption. Apart from this, it uses a public-key encryption to transfer data securely and to enforce and control access requirements. Blockchain and its public ledger are proving to be effective potential solutions for endpoint protection software and security for financial transactions. Its ability to maintain data integrity has found use in big data processing.
Role in Supply Chain Management
The traceability and cost-effectiveness features of blockchain technology come handy for the supply-chain industry. Goods can be tracked, right from their origin to their warehousing using it. This creates a high-level of transparency in B2B business ecosystems. Production process assurance, inventory management and payments are simplified. Companies like Martine Jarlgaard and Provenance are bringing the technology into the retail fashion industry. A report by DHL, in collaboration with Accenture, says that these companies are developing systems, in which users can track the source of a garment’s supply-chain origin, simply by scanning its QR code through their smartphones.
Role in the Accounting Processes
The ledger eliminates the scope of human error in recording data and transactions. In addition, the process leaves a highly traceable audit trail. Since no single person can tamper with the records, there is no scope of data manipulation. Businesses that leverage this feature will not need to maintain separate registers for everything. A single joint register will maintain the integrity of a company’s financial transactions. Blockchain will bring a paradigm shift in the way finance and accounting processes are run today.
Role in the HR Processes
Blockchain, with its roots in cryptocurrencies, can be effectively used for employee compensation. This is particularly beneficial if an organisation has international employees. Using a crypto coin like Bitcoin to compensate them can be a major cost saver. Bitwage is a company that is doing away with the costs associated with international money transfers. Founder and COO of Bitwage, Jonathan Chester, said in an article that using the public ledger, one can actually see where all the money is flowing to. Many big companies are gradually adopting this method of payment.
Role of Smart Contracts in Business Processes
Smart contracts will have far-reaching effects on business systems. What they will essentially achieve is removal of third-party intermediaries in the approval of important business documents. They can be used for quick verification of legal contracts. This feature is being leveraged across diverse industries like real-estate, legal, global trade and healthcare, where the use of official documents is essential. Companies can save tons of legal fees using this technology. Something like this can be seen in the project, Propy, which integrates blockchain ledger to enable fast issuance of title deeds by governments in a secure, online and cost-effective way.
Role in Creating Decentralised Apps
Every business is looking to create an app these days, for varied reasons. However, centralisation of an app is a problem in the market today. There is either iOS or Android, when it comes to options. Blockchain is enabling the creation of Dapps or Decentralised Apps. There is no single authority to control who uses the app and who doesn’t. Take the example of KYC-Chain, an app that enables identity verification through the use of distributed ledger technology. Dapps could change the face of the existing mobile app development market. We are talking about huge scope in the future in the P2P sharing economy.
While the mainstream adoption of cryptocurrencies and regulatory challenges associated with ICOs remain tricky topics, the potential for the use of the versatile underlying technology is abundant. Businesses that are integrating its applications today look set to gain an edge over their competitors in the future.