Blockchain was introduced in the year 2009 and faced a lot of criticism. Only a few acknowledged the disruptive future of this technology. But now, the Trust, Applications, and Benefits of blockchain technology are the other way around.
According to fortunly statistics, by 2018, about 90% of European and US banks have begun investigating blockchain’s potential. In addition, 74 % of IT executives believe blockchain technology has enormous business potential. In 2021, 24% of businesses invested between $5 million and $10 million in the blockchain.
Blockchain is a part of Distributed Ledger Technology (DLT). It is a public ledger that records all kinds of transactions online. In addition, blockchain technology helps in storing any kind of information with Transparency, Security, Immutability, and Traceability.
Blockchain offers many other spellbound features for various industries and applications. Let’s dive into the top 10 benefits of blockchain technology with real-time examples.
Blockchain Technology: Top 10 Benefits
1. Enhanced Security & Privacy
Blockchain introduces a new concept called consensus mechanism, which states that every record should be agreed upon and accepted by the network’s users before placing it on the blockchain network.
Each record on the blockchain is linked to previous records, and all records are interconnected. This mechanism ensures that any data change in any record will change the record’s identity. However, it breaks the identity of records in the blockchain and makes us aware that the data is in breach.
All the transaction records in the blockchain are encrypted end-to-end, enhancing the privacy of each user’s data, and promoting high security.
2. Decentralized Structure
Decentralization is the most significant trait of blockchain technology. Traditional data storage and transaction systems are always centralized, consisting of only one server. And if the server fails for any reason, the whole data vanishes.
With blockchain technology’s decentralized structure and unique characteristics, the data is distributed across the internet and transparent to every blockchain user. Moreover, there is no aspect of data degradation or unavailability with decentralization. Therefore, any user across the globe can access any information using any data, provided he is authorized.
Contura Energy, a major coal supplier in the United States, relies on obsolete letters of credit to conduct international payments. Banks issue these letters of credit on behalf of clients.
Here, an intermediary bank serves as a guarantee of payment for buyers. Though this approach is reliable, it is labor-intensive, slow, and inefficient.
Contura Energy recognizes the importance of digitizing and automating its letter of credit procedure. However, the challenge they face is ensuring trust and verification between merchants and customers.
Using AWS, they’re developing a decentralized, blockchain-based solution to make international trade payments more efficient, cost-effective, and risk-free. In addition, a decentralized system improves openness by allowing all participants to view the data and documentation in real-time.
3. Cost Reduction
Blockchain technology eliminates the intermediaries, which is a significant cost cut down for businesses. By reducing manual tasks such as data aggregation and amendment, blockchain’s consensus mechanism and encryption technology simplify reporting and auditing operations.
The decentralized feature will also cut down maintenance charges due to eliminating central servers.
Assume a business owner intends to start an internet store selling handmade, artisanal goods from her hometown. However, she wants her high-quality items to be available to consumers across the country, so she hires a shipping firm to handle the delivery.
However, if she employs a blockchain-based smart contract, she doesn’t require an intermediary to establish the relationship between her and the shipping vendor. In addition, both parties have encryption keys that allow them and their authorized users to see contracts.
Smart contracts are virtually tamper-proof, and once documented, the original agreements are unchangeable. As a result, everyone saves time and money as they don’t have to coordinate with an intermediary service to facilitate the transactions.
4. Improved Efficiency
Traditional processes require a lot of manual intervention and take more time and effort. But with blockchain technology and its decentralized functionalities, we can eliminate manual labor and the intervention of intermediaries.
Employing Smart contracts, proof of work, and proof of stake, make the operations more efficient and speedy.
All financial corporations strive to improve the efficiency of their payments systems, ledgers, reconciliation, and maintenance to boost productivity and provide reliability.
Incorporating blockchain technology can help encrypt the joining ledgers, monitoring the transactions in real-time without relying on intermediaries. This means payments and other services can be processed quickly and efficiently. It also saves the time and energy of the inter-operations of the business.
With blockchain, companies can build a supply chain that includes vendors and suppliers. In the traditional supply chain, tracing objects is difficult, leading to problems such as counterfeiting and product loss.
Blockchain has made the operations of the supply chain industry more transparent. Tracking the commodities allows the parties in the supply chain to ensure they are not misused or replaced. Businesses can also use it to track their internal operations using blockchain traceability systems.
Walmart is the best example in this scenario. They use blockchain technology to keep track of groceries and other products. They can also display the history of the development in real-time. Traceability promoted trust among the users and reduced monitoring costs.
6. Personal Control Of Data
In blockchain technology, you have complete control over your digital data. Your data is well-protected by blockchain, and your ownership is never affected.
You have complete control over which aspects of your digital data you choose to share with whom and for how long. All these ownership functionalities are incorporated using smart contracts.
In the blockchain, every user has direct and decentralized access to any of their data without relying on third parties. Also, users can have direct contact with any commodities online and make direct contracts and transactions with excellent transparency and trust.
One of the fascinating aspects of the blockchain is that no one can modify the data once the data is recorded. You can also benefit from obtaining a permanent record since all transactions are date and time-stamped.
When the data is immutable, no entity can modify, manipulate, replace or falsify the data. The blockchain network immediately detects such a breach, and the consensus mechanism will not permit the change to happen.
Fluree changes how people think about data ownership, access, and security. Fluree is a distributed ledger that uses an ACID-compliant blockchain to record every state change in history as an immutable changelog item. In addition, FlureeDB, a graph query engine, enables advanced query capabilities.
Fluree is a practical and powerful platform for building, distributing, and scaling custom blockchains by bringing blockchain to the data tier.
An organization can use blockchain technology to create a decentralized, transparent system visible to everyone on the network but accessible only to the authorized ones.
Peers are responsible for carrying out and validating transactions on a blockchain. Although not all peers participate in the consensus method, they can participate in the validation process.
The consensus approach helps validate every transaction and activity on the blockchain network. Each node keeps a copy of the transaction record once validated. As each user on the network holds information about the transaction record, this is how blockchain promotes transparency among its users.
Businesses are using blockchain technology to incorporate it into their supply chain management. For example, to track and trace the operations of their goods and services both internally and externally.
Businesses need the trust of their customers to grow, and customers trust the companies that provide transparency.
Tokenization means transforming tangible and non-physical assets into blockchain tokens. In simple terms, tokenization is the digital way of representing ownership of any data or asset in the form of tokens. As a result, the concept of blockchain tokenization has gained tremendous popularity recently.
When looking at the many types of blockchain tokenization, you’ll encounter digital assets that can trade within a blockchain project’s ecosystem. Non-fungible tokens (NFTs), platform tokens, utility tokens, and governance tokens are just a few of the various tokenization options available on the blockchain.
To tokenize $1 million in the blockchain world, the issuer must first get authorization, deposit the funds in a bank account, and issue 1 million tokens worth $1.
Users can exchange these tokens without requiring the delivery of an asset. Still, the token holder can present them to the issuer and receive dollars in their account if they meet the specific requirements.
10. Better Customer Experience
Implementing blockchain technology to provide value to customers is gaining traction in almost every industry. As a result, companies are becoming more aware of the importance of blockchain, and several firms are incorporating it into their operations to connect customers with the brand.
In particular, blockchain technology would improve client relationships in organizations with bureaucratic management by providing increased security and speed. However, we should highlight that it has benefits in other fields as well, such as telecommunications, medicine and health, copyright, and online sales, to name a few.
IN the traditional business processes, customers must provide an enormous quantity of data before completing a transaction on any e-Commerce site. Businesses need the information to complete the transaction and confirm who they claim to be.
As the interaction between the customer and the corporation, blockchain technology stores the keys to a customer’s identification in a secure, independent location and authenticates that identity independently.
Organizations and their customers can rely on Blockchain IDs because no one can modify them. In this way, blockchains allowed clients to take back control of their data.
Due to these profound benefits of blockchain technology, businesses in almost every industry are migrating from traditional systems to blockchain-based operations.
However, the critical point is that blockchain technology is still a novice technology. Therefore, like any other newly introduced technology, enterprises should be ready to address the complications and drawbacks while trying to implement it for any of their business transformations.
Nevertheless, the good news is, at Parangat, our specialized staff of highly-skilled blockchain professionals will identify your visions, and impediments in the process and will provide you with the most feasible solution for implementing blockchain technology in business operations alongside providing you with the full-fledged support from project ideation to deployment.