Of course, when leaving the holidays we probably would have very few of us to thank for the chain of blocks, but it has been a great year to think. It has been nothing less than epic for blockchain, the distributed ledger technology that is used to facilitate the direct exchange of value through the Internet. Why is it quickly becoming the preferred system for business transactions? I will let the benefits speak for themselves.
1. Security: unquestionable
The method by which transaction records are validated and added to a blockchain is inherently more secure than other record keeping systems. For a transaction to be approved, participants must agree through a consensus. Then, the transaction is encrypted and linked to the previous transaction. This creates an immutable chain that is virtually impossible to modify retroactively as it would require the alteration of all subsequent blocks and the collusion of the entire network.
2. Traceability: more than tracking and tracking
When goods are exchanged in a chain of blocks, the transaction record provides an audit trail showing the source of the asset. This is especially useful in a supply chain, where the components can be tracked along their route. The information related to the component can be transmitted to or from the new owner for possible action. Historical transaction data can also help verify the authenticity of the assets.
3. Transparency: see data in context
In a blockchain network, the data is complete, accurate and consistent among the participants. Through the distributed accounting structure, the transaction information is accessible to all relevant users. And you can see it in relation to the relevant data in other transmissions, such as location, time, temperature and type of transaction. This allows network members to build stable business relationships based on transparency rather than negotiation.
4. Documentation: compliance and clarity without expensive clutter
Traditionally, keeping accurate records of monetary and asset transactions is a time-consuming and paper-intensive process that is prone to human error and often requires third-party mediation. With blockchain, record keeping is carried out using a unique digital book that is shared among the participants. This reduces the clutter and complications of the use of multiple books that must be reconciled.
5. Efficiency: more than efficiency
Along with better organization, blockchain provides greater effectiveness in driving the right kind of work at the right time, which is greater than simple efficiency, since performing a suboptimal process more efficiently is not the best method. With a better process, less time is spent on administrative tasks and more opportunities to simplify and automate. Tasks such as clearing and settlement can occur much faster without numerous intermediaries, and transactions can be processed 24 hours a day, which frees up time and, most importantly, capital for the business.
6. Intermediaries: less necessary with less friction
Blockchain is decentralized, which offers the promise of almost friction-free cooperation among business network participants. Enhanced security makes it possible for these users to interact directly with each other because no intermediaries or trusted intermediaries are needed to confirm transactions.
7. Costs: Reduced labor, time and process
For a company, reducing costs is important. Although initially establishing a blockchain network will not be cheap, with better organization, greater efficiency and fewer intermediaries, it can reduce daily costs, such as third party fees, administrative costs and general expenses for the exchange of assets.