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Blockchain in business: everything you need to know to succeed with this technology | Technologies for business

Blockchain in business: everything you need to know to succeed with this technology | Technologies for business

Blockchain in business: everything you need to know to succeed with this technology | Technologies for business
Anastasia Romanova

Author:

Anastasia Romanova

Content Manager

Category: Business
7 min read

In today's realities, innovative technologies determining the success of both the software and the company that owns it. Investing finances in technologies today is a profitable invention tomorrow.

But why should you put your money in innovations? The answer is pretty simple - because innovative tech, whatever it is, gives your business a competitive advantage. Besides, it’ll pay off in the long run.

This article is the first one in the Technologies for business series and aims to cover all your questions about Blockchain technology. Here’s where you will find everything you need to know to succeed as an innovator.

In this series you’ll be able to dive deep in the Blockchain, Artificial Intelligence and Machine Learning topic. These technologies will level your business up, so stay with us for more!

What is blockchain

The term of blockchain speaks for itself. It’s a chain of blocks, which in compilation create a decentralized database. The devices where the data is stored are not connected by any shared server, so all information in the blockchain is transferred between every electronic medium separately instead of one central server. Each block is an organized list of records which are connected with cryptographics (and that is what makes them this secure). All info in the blockchain can be accessed by every user. At the same time all blocks can be easily checked and they store a timestamp.

Simply put, blockchain is a way of data transferring from one computer to another. It is completely safe and automated, and this makes it comfortable for mass usage. If we’re going use more practical example to explain this technology, let’s imagine an online university, where every students’ records (all terms and essays) are one block, and the teachers records with students grades - are the other one. The records can’t be altered after they’re finished, because that would mean that the student has cheated, or the teacher is not being objective.

This way all records are protected from interference post factum. The access to students works have only those users who have it granted by the teachers. Example: teacher gives access to grades only to the student who’s earned those grades.

Bitcoin uses this technology for financial transactions. However, it shouldn't be underestimated as it also used for real currency transactions, as well as for many other high-profile solutions. Since each block is a unique entry in the network, it is possible to carry out operations in different directions: from customized purchase order in a furniture store to forming documents with a unique identification code.

With the clearance of this technology comes the understanding that it’s not so complicated after all. Now let’s figure it out how exactly the blockchain works.

How the blockchain in business works

To understand how this technology works we’ll have to use our imagination. Picture the Yellow Pages, which include not only information about businesses and organizations, but all records of transactions carried out. Every record is unique as a phone number.

You can't rip off a page from this book, as well as it’s impossible to fake or alter the record in it. But you can just look for (and find) what you’re most interested in.

Blockchain uses shared database for data storage, meanwhile this base itself does not have the physical embodiment and is decentralized. If we’re going back to the previous example - imagine what you actually remember of Yellow Pages contacts. But you only remember a part of this information. Your neighbor remembers the оther part, and the last one is in your mom’s head.

Whenever you need to transfer the contact, you create a block filled with information and… simply transfer it to the person you need. That is exactly how blockchain works.

Technology is using blocks for data transferring and there are so many of those blocks (and they are so well-protected) that it becomes impossible to falsify the info in it.

An approximate description of this process looks something like this: the initiator’s side creates a block and hence begins the transaction process. This block is then checked by thousands of computers. The block that has been checked becomes a part of a decentralized network and thus can’t be hacked or altered.

Changes in one block would lead to changes in millions of blocks. This is why it’s almost impossible for malefactors to break the system.

The blockchain technology is now one of the safest way to carry out financial transactions and other actions, related to important and confidential data transfer. Actually, it's quite easy to understand how it works for different industries:

the use of blockchain in healthcare helps to transfer unique data about patients, secured from external interference;

blockchain in insurance is conducting secured transactions and protects the unique number of the user’s insurance itself;

blockchain in delivery services allows users to make customized orders with an individual code, which will be carried out through a decentralized server, and will be completely commission-free for a user.

About the potential use of blockchain in the future we will talk later. For now, let’s just figure out what are the main advantages of this technology for business.

What every entrepreneur needs to know about blockchain in business: pros and cons

Transparency, security, decentralization, universality, and process automation are the main pillars of the blockchain for business value. These are the foremost advantages we will cover in this article just about now.

1. Transparency

At first, the blockchain base isn’t limited. This way anyone, from CEO to an average customer, can be the participant of the decentralized network. An important aspect in this state of affairs becomes the fact, that all transactions are completely transparent. Users with a certain access level are allowed to approve and keep track of the transactions. It builds users’ trust to the resource and also brings user experience on a new level.

This guarantees every data altering to be noticed at once, and the security level can be drastically improved with the help of transparency.

2. Security

The specific feature of decentralization makes impossible the emergence of crashes or malfunctions in the central points. It minimizes the chance of system failures forthcoming. Besides, the data is continuously on the view for all users, and that makes the chance of having the invisible defects or alterations in the chain significantly lower.

The security of blockchain is also achievable thanks to the mandatory requirement of the digital signature using an external and internal keys. It provides the full cryptographic encryption to the data.

Blockchain is like Superman before everyone have found out about Kryptonite. There are practically no weaknesses in the system, so the probability of hacking tends to zero.

superman

3. Universality

The wide use of blockchain in business is definitely worth mentioning. Blockchain's connection with bitcoin is firmly rooted in the minds of users. However, cryptocurrency is not the only sphere where blockchain can be implemented.

This technology universality is granted by its reliability, security and automatization of the transaction process. Besides, it’s really easy to use blockchain because this technology doesn’t have middlemen, it works 24/7, and has no charge for users. All transactions are transparent and fast due to the absence of intermediaries.

This technology can be used far beyond the cryptocurrency. Any individual transaction of confidential data can be improved by the use of blockchain. The optimization it provides to the business makes this process indispensable.

4. Business processes automatization

Blockchain is using smart contracts which eliminate the need in middlemen. Whatever they’ve done for your business before, whether it was transactions, data checking or contract enforcement - with this technology you won’t need their help anymore.

You will be able to fully automate the transaction process and optimize it for continuous operation with the help of blockchain technology. Does it need mentioning how much your business will get with such a solution? Your business will win everywhere - from increase in profits to clients base growth.

5. Decentralization

Well, here it goes - the main advantage of blockchain in every way. It is the decentralization what provides this technology with such a popularity among businesses and guarantees the blockchain work efficiency.

Let’s look at this through an example of a bank. You know that all your finances are stored there, you conduct electronic transactions through the bank, and this process always has a center. The information will always go through it before it reaches the point of its destination.

When you’re using a decentralized technology, all information goes to the point of its destination directly. Using the bank example, in centralized system you buy something and your payment goes through the bank; in decentralized system you payment goes directly to the seller.

If the center in the data transferring network is present all the system will break down as soon as the intruders damage the data there. Decentralized systems nullify the possibility of this.

In addition, decentralized systems, such as blockchain, can be overloaded. In this network can participate a hundred or a thousand computers.

Now recall how many times was your bank application overloaded?

blockchain-in-business-decentralization

But you won’t believe if we say that blockchain is perfect for business. Without a doubt, it has its cons and now we’ll look at them more closely.

1. High costs

Like every innovative technology, blockchain for business is expensive. Even though most blockchain solutions are opencode, businesses will invest a large amount of funds in its customization and implementation. This is why innovative technologies, such as blockchain, have to be implemented in business when the company is ready for it.

Even the highest cost can be paid off in the long run. But the creation of such technology won’t be possible if your project budget will run out in the middle of the development.

2. Scaling

This shortcoming is one of the most crucial in blockchain segment. The limited size of blocks indeed is contributing to the network security from potential cyber attacks, but at the same time it’s drastically restricts data bandwidth. However, the technology is rapidly evolving and this disadvantage can be nullified in the future. What blockchain has now is indeed influencing its scaling abilities, and you have to remember it when implementing this technology into your business.

3. Energy efficiency

You’ve probably heard of this particular problem of blockchain from the internet jokes. But fear not - your computer won’t catch fire from using this technology or mining the cryptocurrency. You may experience major slumps in productivity, though.

The technology demands high energy costs and won’t be easy on gadgets with mediocre characteristics. So if you’re about to implement it in your business - count on that. Quality techs is also important for innovative technology usage. As much as professional aid from software development experts.

4. Data can’t be altered

You can look on it as on both advantage and disadvantage. From one point of view - this improves blockchain security and reliability as a transaction technology. From another - once data is encrypted it is no longer possible to alter it. Hence we can say for sure: blockchain is unforgiving. Nothing can be reversed and this can turn against your business at the certain circumstances.

So how do you decide whether your business needs blockchain? Look closely to the picture below and maybe it’ll help you get the right answer.

blockchain-in-business-checklist

How blockchain for business is used in software development for different industries

Blockchain in business is becoming more and more popularity within different industries these days. We give you the list of only few of them, to help you get a better idea of the influence this technology has on the world. Firstly, you need to understand which business and how the blockchain can optimize.

First and the most obvious - finance.

One of the most important aspects of financial transactions are trust and security. These two critical factors determine why blockchain will be implemented in the financial processes of the majority of businesses in the foreseeable future.

The use of blockchain technology while creating an app will save your business from the need to use the middlemen in financial operations. It will help you optimize payments, business contracts and globa tradingl.

This is demonstrated by B2B startup Crowdz based on Ethereum. The startup is widely used by companies for account automation and payment collection.

 

law-industryLaw industry (software for voting, wills verification, assurance, public service management)

The field where blockchain can save users from fraud and low data security levels. Besides the need of using the paper-based documentation can be reduced thanks to blockchain in public service management. Blockchain in applications for this industries can improve communication between organizations' structures and units. In the USA and Eastern Europe (Georgia) the process of automation with the help of blockchain has been gaining popularity since 2016.

Using blockchain technology in software development for voting is also highly possible, since the importance of user identification and unaltered data transferring is crucial in this field.

taxi-and-ride-sharing-servicesTaxi and ride-sharing services

Ridesharing services are still working in the dispatcher mode: certain software mandatory controlling rides and the driver work. Blockchain can help a business like this be more customer-oriented and level up the clients comfort while riding and running the financial transactions. Hence, this will increase profits and clients base of ridesharing app. Taxi and ride-sharing services

Ridesharing services are still working in the dispatcher mode: certain software mandatory controlling rides and the driver work. Blockchain can help a business like this be more customer-oriented and level up the clients comfort while riding and running the financial transactions. Hence, this will increase profits and clients base of ridesharing app.

internet-advertisingInternet advertising

Every ad you see on the internet clogs the cache of the device and affects its productivity. With the help of blockchain you can place targeted ads only for those users who are interested in it. Besides these advertisements will be completely secured and won’t leave anything in your cash behind it.

Using blockchain in application development could help you achieve better results from advertising and get maximum feedback from ads showing to the customers.

For example, Brave Browser that’s already using blockchain for internet advertising. Their users can choose to watch personalized ads and be rewarded for it by brands.

cloud-storageCloud storage

Blockchain solutions are already being used by the cloud storage business, and the popularity of this technology will only grow in the future. Cloud storage decentralization protects cloud keep applications safe from data corruption and cyber attacks through cryptographic encryption.

educationEducation

Blockchain solutions in e-learning can significantly improve its quality. It can be achieved by verifying students and transferring their data safely to teachers. It will also help to transfer the correct assessment of students' work and the cheating screening of essays. This, in turn, will improve the quality of any e-learning software.

According to Mayank Sahu, B.Tech. From Indian Institute of Technology, Blockchain technology will be used even more widely in education in the future:

With the advent of widespread MOOCs (mass open online courses) and e-learning portals, training and certification can be simplified with the help of a block system. They can be accessed at any time without any fear of data loss or hacking.

Blockchain technology can also be widely used to reduce cybercrime. Cryptographic encryption and other security protocols used by this technology make both data falsifying and identity theft in applications impossible. The systems that are used today have a central server or storage through which an attacker can gain illegal access to the digital information. Without a specific system center, its hacking will be impossible - no hacker can hack all the computers at once. Not even the coolest and most cinematic one.

blockchain-in-business-cat-hacker

entertainmentEntertainment

Through the use of blockchain it is possible to establish fair wages for entertainers. They will receive the transaction only when the data is transmitted - a.k.a bought - by the user. This way, it will be impossible to steal their work and all data will be encrypted (including customer transactions) for transfer to be more secure. Therefore, applications created in the entertainment industry will become more attractive to both performers and customers.

forecasting-and-analyticsForecasting and analytics

If we are talking about forecasting and analytics using machine learning, thanks to blockchain you can obtain as relevant data as possible. Since the technology by its very nature keeps accurate open records of all transactions, they become easier to trace. Besides these records are as accurate as it can be, which creates perfect base for their analysis with the use of machine learning in the software.

real-estateReal estate

What are the main troubles in real estate business? Most often it is an abundance of paper documents, lack of transparency in transactions and, as a result, a high percentage of fraud.

Technology of blockchain is just perfect for leveling down those problems in real estate software. You already know that blockchain guarantees the records transparency and it is drastically important in this case. For example, RealT company that uses blockchain to speed up payment collection.

assuranceAssurance

A blockchain in insurance may allow the system itself to act as a third party to the process. This fits perfectly with the specifics of this technology. In insurance the parties exchange valuable assets through a common transaction channel. Security also plays an important role in this. With familiar electronic insurance programs, data can still be stolen and the blockchain minimizes this risk. Blockchain-based insurance applications therefore become more attractive for the user than competitive offers.

healthcareHealthcare

The use of blockchain technology in the healthcare app means improved diagnostics and economically more profitable treatment model. This way every patient will have each unique number through which they will be able to pay their bills through healthcare application without second thought about confidentiality.

Blockchain in business: what comes next

In today's world blockchain holds a very advantageous market position and remains one of the fastest growing innovative technologies. Looking back at forecasts of the software popularity in general, we can conclude that this technology is not going to give up its position in the foreseeable future. In addition, in 2019, the cost of the Blockchain in the U.S. was about 3.13 billion dollars, and by 2025 Statista predicts growth to 41.11 billion. Gartner forecast business growth to $3 billion in 2030. This indicates that this innovative technology is becoming more and more popular nowadays.

Based on this we can conclude that to 2025 minimum 20% of all businesses in the world will be using blockchain in its business processes.

In 2021 - 2023 in U.S. and China blockchain will be most popular. The graphics below demonstrate the popularity of blockchain in businesses across the world.

blockchain-in-business-popularity

Innovative technologies can change the world and blockchain is no different. But even the most significant change can be made by someone working alone.

We recommend you working with the reliable IT company, that can give you both technical and business expertise for blockchain implementing in the business processes. By working with a trusted IT partner, you will be able to identify the correct needs of your business and implement the technology so that it works with maximum efficiency.

At the end of this article, we would like to summarize all the information we have provided you with short answers to the questions that you might have.

Q: What is blockchain?

A: A blockchain is a technology that can transfer and manage the time-stamped records of data decentrally, quickly and without the ability to alter it.

 

Q: For whom blockchain is suitable?

A: A blockchain is best suited for businesses that require the most secure and transparent organization of financial transactions and data transfers.

 

Q: What is blockchain used for?

A: One of the advantages of blockchain technology for business is its breadth of application. The technology can be used for both financial transactions and data transmission using cryptographic encryption.

 

Q: How does blockchain work?

A: The way the technology works is as follows: The initiator side creates a block, starting the transaction ➜ the block is checked by thousands of computers ➜ the data are encrypted and cannot be changed.

 

Q: How will blockchain change my business?

A: Blockchain technology for business will make all processes related to the data or financial transferring safer, more transparent and faster. This, in turn, will both increase customer confidence in the business and avoid the expense associated with security malfunctions and failures.