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3 Reasons Why Blockchain Technology Is Not Just a Fad
 3 Reasons Why Blockchain Technology Is Not Just a Fad

Blockchain technology has been making headlines for its huge potential to revolutionize the digital world. From banking and government to enterprises and even education, blockchain has sparked interest for the way it can redefine and transform processes across all industry sectors as we know it. 

Experts are also weighing in and sharing their insights on the future of cryptocurrency for businesses. Blockchain-based solutions are significantly gaining traction, but can the emerging technology disrupt the status quo?

Simply put, blockchain is a database or a record of specific data known as “blocks.” Blockchain technology keeps records of every online transaction—be it goods, services, value, or private data—as it occurs across multiple locations. As archives are created, they are confirmed and encrypted based on a validation algorithm, then linked to one another to create a chain.

So, why should you be paying attention to this technology and adopting it to your processes? Here some of the great reasons why blockchain is not just a fad. 

 

  • Makes Businesses and Systems Smarter and Faster

Blockchain allows businesses and organizations to work more productively than ever before. It improves systems and operations either by reducing costs and increasing speed. The technology is currently being used for interbank payments because transferring funds on a blockchain is a lot cheaper plus it improves cashflow by expanding payment options. Digital contracts provide the benefits of quicker and more secure payments. 

Blockchain also effectively simplifies complex transactions by speeding up processes. In 2017, multinational Spanish banking giant BBVA carried out the first pilot transaction that used blockchain for paperless trade between Europe and Latin America. The pilot showed how the blockchain was able to cut the time for paperwork in the sale and delivery of 25 tons of tuna from Mexico to Spain. From a week, it was able to do it in three hours.

More and more global companies are also choosing to use blockchain for better business models and revenue streams. In 2016, leading professional services firm Deloitte surveyed senior executives at organizations with $500 million or more in annual revenue. Around 28% of the respondents said that their companies have already invested $5 million or more in blockchain technology, with 10% investing $10 million or more.

 

  • Removes Third-Party Mediators 

With blockchain, businesses and organizations effectively avoid costs and risks associated with third-party intermediaries. Blockchain enables people to take advantage of “smart contracts”—the ability to create a digital property and transfer it without third parties needing to be involved.

Smart contracts have a set of rules that govern how each blockchain code-triggered agreement works and how data exchanges are carried out. These can’t be modified once created on a blockchain. The data entries are also always accessible because the database is stored across a network of computers instead of a central server.  

Through smart contracts, blockchain provides transparency and accessibility sans the mediators. Financial organizations can use smart contracts for an accurate and transparent recording of financial data. This can improve their financial reporting and reduce auditing and insurance costs.

Smart contracts digitize loads of commercial transaction records and automate renewal and releasing processes. OpenBazaar, for example, is a blockchain-based online marketplace that is free to use because trading is done peer-to-peer without an intermediary. It’s also more economical because traders didn’t have to provide a percentage to the intermediary for each transaction.

 

  • Superior Security, Transparency, and Traceability Features 

Blockchain technology optimizes complex transactions by making data sharing fast, transparent, and secure. Jim Scott, director of enterprise strategy and architecture at MapR, emphasizes how the blockchain operates through the concept of “irrevocable proof.”

When a transaction is made, each node of the blockchain is checked to make sure it's valid. The deal is recorded across the network with a verifiable, unique fingerprint. The technology creates a clear, tamper-proof record of what has occurred.

Of course, no technology is 100% secure. Blockchain, however, helps decrease the cost and high risk of fraud in transactions. The technology’s format makes everything traceable so that if an issue arises, it can be easily traced. It helps organizations strengthen their certification, validations, and auditing processes. 

In recruitment, for example, blockchain-based credentials will allow employers to automatically detect fraudulent applicants even right at the beginning of their screening phase. Blockchain-powered platforms also feature multi-factor authentication for an additional layer of security. Identity data are fully encrypted in the application on the user’s device and can be accessed without a username, password, or third-party authenticator.

 

Maximizing Opportunities

Blockchain technology is here to stay. Industries like health and medicine, supply chain, manufacturing, and even space agencies like NASA are turning to blockchain for their needs.

Blockchain’s most significant contribution is it automates tedious processes, allowing organizations to save more time, money, and resources on a scale unlike any other. It’s time to move past the thinking that blockchain is a fad and instead move into opportunities to change how we work, what we do, and where we do it. 

 

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