Reading time: 15 minutes
Blockchain is an emerging technology that can radically improve banking, supply chain, and other transaction networks and can create new opportunities for innovation. Businesses contain many examples of networks of individuals and organizations that collaborate to create value and wealth. These networks work together in markets that exchange assets in the form of goods and services between the participants.
Blockchain technology provides the basis for a dynamic shared ledger that can be applied to:
- save time when recording transactions between parties
- remove costs associated with intermediaries
- reduce risks of fraud and tampering
The business backdrop
Businesses never operate in isolation they always work together with other businesses, with governments, with banks and with all different types of organizations within markets and effectively wealth is generated by the flow of goods and services across these business networks. So a lot of money gets wasted in these organizations.
With the involvement of block chain, all the extra money involved in these organizations can be saved.
Relation with bitcoin
A lot of people gets confused between blockchain and bitcoin. They think both of the are same but they are not same.
Bitcoin is an implementation of blockchain. Bitcoin is an unregulated shadow currency which has the interesting property of anonymity. We do not know who we are passing a bitcoin to and we do not know who we are receiving a Bitcoin from and also because this is effectively to achieve that anonymity.
Bitcoin was the first live use of blockchain. So bitcoins actually a very important reference point but we are really interested not in these censorship resistant shadow currencies we are interested in blockchain for business and this differs from Bitcoin as we prioritize edit identity over anonymity this means that everyone in the business network knows who they are dealing with. So it's actually very clear who our counterparties are but we also prioritize selective endorsement over proof-of-work which means that with the blockchain that we were interested in we get to choose who in the business network validates a particular transaction and this is much more computationally efficient than the resource intensive our proof of work that's associated with Bitcoin.
Impact of a blockchain in a business environment
Blockchain is relevant for business.
Let's look at the benefits for putting blockchain into a transaction processing system all of these benefits are real and also very tangible. For example:
Blockchain saves time
The first one is that blockchain application saves time. Transactions can be transformed to something that can take a number of days to almost real-time and for certain transaction types this becomes very important things like a letter of credit can actually take days to get through and this can be made pretty much instantaneous through blockchain revolutionising the the business network.
Blockchain reduces risk of cybercrime
As metioned earier by involving the internal and external auditor in the business network we can slash internal and external auditing across both it basically added a stroke so overheads and it costs intermediaries can actually be taken out and the whole business network can be made more efficient by removing costs we said earlier when we looked at how the network was before blockchain but there was the risk of tampering of vulnerability in there but effectively because the Ledger's distributed and we're using privacy services to lock together the elements of the blockchain, we reduce risk within the business network of tampering for fraud or cybercrime.
Blockchain increases trust
A net improvement of trust within the business network effectively because everyone uses the same way to keep their their Ledger's updated and to keep their business processes flowing this can actually increase the trust within the Business Network.