As the year is coming to an end, once again we are on the cusp of another technological revolution with a new, disruptive technology pounding hard on our doors. The tech world is buzzing about this new technology i.e. Blockchain. Be it a working-class individual or the big brands of today, everyone is talking about bitcoins and blockchain. Like many others, if you are also not sure about what this new technology is or how can it have an impact on your business or the economy, this article is here to shed some light on the same.
First things first, What is Blockchain
Let me start off by saying, as fancy and curious as this technology might sound, it’s still in a nascent stage. Drawing an analogy, consider it as a Google Sheet documenting all your trading transactions. Say, you want to sell a commodity X. You can sell it to any person across the globe without the intervention of a third party, for example, banks. This sheet works as a global ledger with encryptions and is decentralized to make the recording of data easier. Moreover, no single authority has exclusive control over it. The ledger is able to get the data and accept transactions from any source, without the need of any intermediaries. This means an open consensus occurs wherein the changes are irreversible. Thus, unlike the Google sheet, you can’t make changes to this ledger at your whims and fancy.
Blockchain and Bitcoin: The Difference
Chances are, the moment you hear blockchain, “bitcoin” comes to your mind, especially when it is all over the news and the internet. That is okay because one is not used without the other. But it is important to not confuse the two. The cryptocurrency bitcoin, also known as the digital gold, is just one of the ways of using the blockchain technology. Thus, transactions made using a bitcoin does not require management from a central authority such as a bank.Limiting the use of blockchain to bitcoin will be a mistake and we won’t be able to fully exploit the benefits of this technology.
Public vs Private Blockchain
Public blockchain is a completely decentralized platform which is accessible to anyone to read and send transactions. All the valid transactions are included in the ledger. Public blockchains are secured by cryptoeconomics, a combination of economic incentives and cryptographic verification. The degree of influence in the consensus process is proportional to the quantity of economic resources brought into the system.
In private blockchain, the permission to write is in the hands of a centralized to one organization. The access and permissions are strictly controlled and modification rights are restricted to the central authority. This will be most beneficial for large enterprises and financial institutes. Having a private blockchain will substantially reduce the transaction cost and improve efficiency.
Blockchain for Business
Blockchain has managed to create a dent in the conventional business to business transactions. Utilizing this new technology as a trading platform can bring many business benefits. Following are some of the benefits of blockchain for the businesses today:
What the internet did for communications, blockchain will do for trusted transactions
– Ginni Rometty, CEO of IBM
The structure of data in the blockchain platform lets the users make and verify the transactions without any third-party intervention. Modification of historical data is very difficult and can only be done using cryptographic signatures. They are like markers which help in tracking and identifying the modifier. This reduces the chances of data tampering, thus, creating a robust system.
With a decentralized and distributed data structure, there is no one authority which can make the decision – The users have control of all their information and transactions. Also, for businesses, lack of commercial transparency can lead to delays and hamper relationships. Since changes to a public blockchain data are accessible to all the members, the available data is real-time and consistent across the members, which adds another level of transparency and increases the trustworthiness.
As there is no third party involvement and the transactions happening directly between the relevant parties, it substantially reduces the time taken to complete a transaction. Blockchain transactions can reduce transaction time to minutes and are processed 24/7. Also, by making use of smart contracts, businesses can automatically trigger a commercial action if the preset criteria are met. This will effectively streamline the process and improve operational efficiency.
Reducing transaction cost by eliminating the intermediaries and other overhead expenses by accelerating the transactions and by using a secure, shared pool of data instead of relying on a centralized and complex process.
As each transaction is validated by everyone within the network by using verified complex cryptography, we can rest assured about the authenticity of the information. Along with reducing fraud cases, this also ensures increased regulatory compliances and no more data tampering without full traceability.
Improving CX with Blockchain Technology
Even though blockchain technology is still in the infancy stage, its scope goes beyond just the financial sector. It has the capability to transform various industries to help them deliver excellent customer experience (CX). Here are some sectors which can benefit by adopting this new age technology.
#Banking and Finance
From a customer experience perspective, blockchain will have plusses, like enabling new payment options for intangibles like media and better ways to manage privacy
-David Cooperstein, CEO, Figurr
Know your customer like the back of your hand. Get access to all the customer data in one click. With verified, authentic customer data, loan approval and loan settlement become easier. Faster domestic and international payments.Preventing money laundering by tracing unique cryptographic signatures.
#Healthcare and Pharmaceutical
Secure storage and sharing of medical records for a better patient experience. Digitally fulfilling the compliance requirements. Preventing billing frauds by transparent billing management. With blockchain, pharma companies can track the supply-chain of drugs at every step preventing losses due to counterfeit drugs.
#Manufacturing and Supply Chain Management
Increase the visibility into the system by easily tracking the goods and materials within the organization and throughout the supply-chain ecosystem. Be informed about ownership transfer and be updated on any compliance requirements.
#Government and Public Sector
Having essentially a permanent record of transactions, it becomes easier to keep a track of all the historical data. Having users validate the data ensures data accuracy, and solves the problem of digging up records from various sources. Moreover, it supports the government agencies during welfare programs and other policy implementations.
Verify data in insurance contracts to reduce fraudulent activities. Managing claims in a transparent and efficient manner without third-party interference. Faster and automated claim settlement to streamline the customer experience and improve the organizational efficiency.
Securing student records. Faster verification of transcripts and sharing of student information in case school transfer. Background checks on educators and students at the time of admission. Easy transfer of funds in case of tuition fees and college grants.
#E-commerce and Retail
Being a distributed ledger, blockchain prevents counterfeiting. Makes B2B payments easier. Have transparent records of customer purchase history, warranty information, etc. Reduce transaction cost and make payments easier and quicker.Streamline the supply chain with real-time monitoring.
Is Blockchain Here to Stay
We have seen a surge in the demand for and awareness about bitcoins. But, like I said, it’s just one way of using the blockchain technology. Blockchain technology will empower the businesses to deliver great customer support to improve the overall customer experience. All said and done, the big question remains – Is blockchain here to stay? Is it a sustainable technology? Well, we need to follow a “wait and watch” approach. Even though this new technology seems interesting, it’s still in infancy stage. Even though there have been a few early adopters like IBM, we need to understand businesses will take some time to warm up to this new technology. Moreover, we need to see how Blockchain developers can further develop it to ensure compliance with existing and future legislation. For now, it’s safe to say, Blockchain technology is not going anywhere in the near future.