5 Applications for Blockchain in the Business World
The blockchain is an emergent technology often referred to, but very often not completely understood. Those who don’t work in a blockchain-centric field or choose to stay in their professional lane likely won’t ever understand the intricacies of the technology, and that’s perfectly fine. However, a basic understanding of what blockchain technology is and how it could theoretically impact the world of commerce will help business owners better prepare for the future.
Essentially, blockchain technology consists of a distributed ledger, like a Google Document that is accessible by those who have permission to a given blockchain network. Each change one makes to the ledger must be approved by the many computers – known as nodes – that comprise the chain. So, while the blockchain ledger has the benefit of being accessible from virtually any place across the globe, it also offers a level of security that traditional alternatives often do not. The downside, as of now, is that the blockchain is not infinitely scalable, so specific processes – logging and processing Visa’s daily transactions, for example – aren’t fit for blockchain adoption.
Considering the benefits that blockchain technology provides, let’s find where it could be applied in the business world to streamline and securitize operations.
1. Supply Chain Management
Supply chains are the organizational and logistical systems by which goods are transported from a factory, extractor, or grower to the consumer, and they are typically complicated systems that can span the globe. And, as the import and export of raw materials and final goods have become an increasingly global affair, keeping a close watch over supply chains has become a substantially more troublesome task.
Most of these systems are comprised of independent databases whose records are kept centrally. This can make acquiring verifiable information about shipments and processes nearly impossible for the person tasked with supply chain management, as opacity and fragmentation can disrupt any unity they hope to install throughout the links in the supply chain. This is where blockchain incorporation could be of excellent service.
The blockchain is a single, decentralized ledger, meaning that all parties on a supply chain could log their information into that ledger once they have the proper permission. This would allow a single, secure system by which each unit in the chain – especially the overseer – could view in real time – including how the goods are being handled and processed on their way to their final destination. This would increase transparency while holding each stop in the supply chain accountable for lost, damaged, or fraudulent goods being introduced into the supply.
This would be particularly valuable in pharmaceutical and food supply chains, where fraudulent products and disease-ridden food can corrupt an entire supply. Being able to trace more accurately the point in the supply chain where those tainted products were introduced could not only save on costs but potentially save lives.
2. Incorporating Regulators More Seamlessly
From insurance to lending and government, regulators abound. As of now, cooperating with regulatory agencies is a hassle. Audits and processes which require a business to virtually halt their operations and sift through rooms-worth of files to appease regulatory agents are an owner’s nightmare, but fortunately, the blockchain holds the promise of a better way.
One company, R3, has made it its mission to streamline the regulatory process, particularly in the financial sector. Instead of keeping physical files that can be fraudulently altered, lost, or damaged, R3’s Corda platform is built on the blockchain. Corda allows regulators to be given access to a record of financial transactions to verify that fees are being paid, the proper signatures are collected, and operations are generally being conducted above-board.
This system, in which regulators are privy to real-time information about a given transaction or operational process, will allow time and money to be saved on the shipment of physical documents and oversight processes that are cumbersome and outdated.
3. Improved Record Keeping/Sharing
This category pertains more to public systems, but these systems of records-keeping and law enforcement impact the business world, if only tangentially.
Have you ever actually tried to go to your local records hall and acquire information?
If you’re not a journalist or lawyer, there’s a good chance that the answer is ‘no’. Good for you, because current systems of large-scale recordkeeping are nightmarish in most cases, and nonexistent in others.
Physical systems of record keeping, from wedding licenses to criminal records and corporate filings, take up the room, are difficult to organize and navigate, and generally serve little purpose beyond formality. If a system could be digitized and secured along the blockchain, records requests would be a breeze, and municipalities and corporations could save money by eschewing physical space, employees, and systems that are operational dinosaurs.
Additionally, law enforcement could benefit from a system by which records and sensitive information could be transmitted between departments securely and efficiently. Countless investigations go cold simply because departments didn’t have the means to share information that would have resulted in a suspect being nabbed, or weren’t willing to navigate arcane systems to share one file with a separate department. Corporations, who are often subject to criminal behavior such as fraud, have a stake in this application, too.
If there was a system – the blockchain – by which one agency or department could store and share information with another by passing along a passkey, it’s likely that these reduced barriers to sharing intel would result in more information shared and more cases solved.
Regardless of your field, voting likely comes into play on some level. Boards, shareholders, and employees are just three classes that are asked to hold votes from time to time, some more frequently than others.
But – and this is especially the case with shareholder votes – means by which democratic tallies are conducted aren’t always conducive to achieving an effective or complete ballot. Are shareholders expected to show up to a physical location in, say, New York to exercise their democratic right to comment on corporate leadership?
The blockchain can provide a means by which votes are issued securely, with that vote being tied to a person’s unique identification metadata. Such a system would streamline the process and ensure that democratic systems aren’t existing in theory only, but are put into practice in a way that reflects the geographic and financial constraints that most people are subject to.
Such a system would automatically tally and maintain the result of such a vote, providing an uncontestable and permanent record of what conclusion was reached, for all parties to see. Whether this means voting on the members of a board, the direction the company should take, or a CEO’s salary, the blockchain offers excellent potential for democratic voting systems across industry lines.
5. Financial Management
This is perhaps the industry with the most significant promise for blockchain incorporation. Many of the uses mentioned above – regulatory oversight, voting, and record keeping – all apply within the financial services sector, but the applications for the blockchain in finance go beyond those applications.
We’ve already seen how cryptocurrencies can impact the financial world as an investment and speculative currency, but the blockchain – the technology upon which cryptos are made possible – could better protect user data, streamline transactions (especially across borders), and create an unalterable ledger which is more effective in preventing fraud and malfeasance (looking at you, Wells Fargo).
The applications for the blockchain in the financial sector are so immense that major players in the industry, from Barclay’s to, yes, Wells Fargo have already invested significant funding into exploring its uses. The level of regulatory oversight in this industry alone is reason enough to adopt the blockchain on a large scale, but the technology also promises to reduce costs for banks that they could then turn over to users as a competitive advantage.