When B2B corporations look to understand why blockchain technology is unique in solving typical business problems, executives can think less about the mechanics of the technology and more about what makes it work. In a nutshell, blockchain technology, from a business standpoint, is a distributed, peer-to-peer database that doesn’t require powerful intermediaries, like banks, to validate or settle transactions. It is recording millions of transactions every day, worldwide. Every type of data imaginable – from marriages to real estate and supply chain to simple transactions between friends can be verified and authenticated.
What makes the technology necessary for business is it can transact payments on the spot, authenticate the origin of goods, and eliminate the need for many third parties to complete a transaction. Individuals own the data, rather than a few large entities. It provides value for various industries like finance, manufacturing, fashion, gaming, retail, and consumer brands.
How is Blockchain Technology Changing Business?
When businesses transact with anything of value using assets – money, stocks, intellectual property, art and music, materials and supplies used by manufacturers – corporations use an intermediary like banks, tech companies, governments, and such to establish trust during the transaction process. These third parties perform all the transaction logic needed, like identification, validation, authentication of people, clearing, settling, and record keeping. However, because the information is centralized, it is vulnerable to hacking and fraud. Blockchain allows for transactions without a 3rd party. Transactions recorded on blocks become part of the chain.
What Brings Value to Enterprise Business?
A digital contract that is stored on a blockchain and automatically executes an agreement between two parties when predetermined terms and conditions are met is called a smart contract. Because a blockchain enables businesses to automate processes and agreements through smart contracts, there is no longer a need for a third party, such as a bank or lawyer, to oversee or enforce the contract terms. Blockchain technology provides secure, tamper-proof data storage for every type of data imaginable like medical records, birth, wedding, and death certificates, property titles, and even voting results. Eliminating the 3rd party, like a bank or government entity charged with recording public information, provides faster and more secure transactions because the distributed ledger capturing the data offers transparency into the agreement terms, accountability for term enforcement, and reduces the risk of human error.
The value of blockchain is in its scalability, improved security and decentralization, access control, and transparency. Blockchain is fundamentally different and its (r)evolution and relationship to enterprise business is a true paradigm shift.
