Five Ways Blockchain Technology Helps Transform Businesses Part 1

Increased accountability and traceability.

 

Today, more and more companies, including Microsoft, Google, Apple and Kodak, are making announcements about investing in blockchain technology and creating their own blockchains. Blockchain also powers cryptocurrency networks such as Bitcoin, Ethereum and others.

While more and more people learn about blockchain technology, it may seem that the technology is not ready for small, regular, everyday businesses, yet this is simply not true. Blockchain can help regular businesses in a number of ways and this article examines five of them.

 

Increased accountability and traceability

One of the main properties of blockchain technology is immutability of records. The real problem that the Bitcoin network was able to solve was not the problem of how to send money digitally from one party to another. It was the problem of transaction finality and this problem applies not just to money, but to information in general.

When you buy a cup of coffee with cash, you give a cashier a bill, coins or a combination of thereof, the cashier gives you change if the price is less than the amount of money that you gave to the cashier and the transaction final and the transaction is over.

The finality of transactions and operations was also much clearer and simpler in the pre-digital age. For example, a person would write a note by hand, give the note to a co-worker or a manager and it was clear who wrote the note and what the note was about.

Things have become much more complex in the digital age because copying digital information can be extremely easy, be it digital money, a text file or some other kind of data. All you have to do to make a copy is click a few extra buttons. With digital money, a person could try and send money to the recipient A, recipient B, and so on at the same time as if he or she was sending the money just once. The question, therefore, is what and how can be done to prevent such copying and such multiple operations.

Blockchain technology has solved this issue by keeping track record of information and sealing information when storing it.

Most people have heard about blockchain in connection with Bitcoin and other cryptocurrencies, but cryptocurrencies are just one application of the technology, a financial one. On financial blockchain networks such as Bitcoin, blockchains contain information about financial transactions, including amounts, recipient information, time stamps and more. However, financial information is just one type of information. Just like on the Bitcoin network the Bitcoin blockchain stores information about financial transactions, a different kind of blockchain network could store information about virtually anything else, be it identity, cargo shipments, authentic designer apparel, food, weather, and more.

Here, for example, you can see a page for one of the blocks of Steem, a blockchain-based social network: https://steemblockexplorer.com/block/23051450 On that page, you can see that the blockchain contains information about who followed whom on the social network, who liked which posts (Steem uses the term “upvoted” instead of “liked”), and so on. The Steem blockchain also contains comments by users and other data.

Blockchain is software that works similar to a regular ledger. Blocks of a digital blockchain are similar to pages of the ledger.

The breakthrough of blockchain technology was that it was able to make records in the ledger immutable, meaning that it is impossible to delete or edit a transaction once it becomes a part of the blockchain. It was also able to connect pages in the ledger in such a way that it is immediately clear which pages are authentic and which are not.

These properties of blockchain technology can be useful in almost any business. For example, it is possible for a business to put all of its internal communications on a private corporation blockchain. This way, it will be immediately clear who was the author of information. It will also be possible to always track information back to the original source, which would be the first record on a blockchain.

Financial industry spends billions of dollars a year on payment clearing services and fraud prevention. The prevention is necessary because it is often hard to tell the legitimacy of a payment. With blockchain, the task of legitimacy identification is much easier because it requires simple record-checking.