When looking for a simple explanation, the best way to describe blockchain is by saying it’s a database technology with attributes that on their own have no value and are not unique to it. But, when collected together, it is a clear demonstration of a technological breakthrough in terms of storing, verifying, and exchanging sensitive digital information.
The first wide-known example of blockchain technology was the Bitcoin cryptocurrency, which in its start seemed too risky and uncertain of ways it can be used for business purposes. All of this changed a few years ago when the open source community started working on complete enterprise platforms, which also includes the programmable blockchain, Ethereum.
Only in the past two years, big companies such as IBM, Walmart, and Visa have successfully implemented blockchain technology and demonstrating to others how an enterprise blockchain can enhance their operations.
How Blockchain Works
The majority of key attributes of blockchain are coming from being a type of distributed ledger technology (DLT). These ledgers used to be utilized to record financial transactions, but now they’ve found their role in a digitized form in ERP and other pieces of business software.
When compared to those centralized approaches, distributed ledger technology distributes ledger copies to the nodes on the blockchain network. This makes each of them responsible for recording new transactions and being involved in a consensus mechanism to sign on the ledger updates.
This unique data format that blockchain has is what differentiates it from DLT. While traditional databases keep data in rows, columns, and files, blockchain keeps it in blocks that are linked together and crypto-protected.
Due to data block and transaction-verification mechanisms, it’s almost impossible to hack a blockchain, change data, or even disrupt transactions. A traditional central authority that hackers are aiming to attack here doesn’t exist, so no one can take data private or change the rules on their own.
Value Of Blockchain For Businesses
It’s very likely that investing in enterprise blockchain will become essential due to competitive reasons. This technology is revealing the enormous potential to reduce IT costs, widen B2B and B2C networks, enable new products, and create wealth. As a result, the value of blockchain’s business is predicted to increase as all of these enterprise implementations are being refined.
Enterprise blockchain shows even greater potential when it comes to processes that involve multiple parties who need access to the same data but are coming with different information. As companies were spending an insane amount of time reconciling data, having blockchain removing middlemen and automating processes that usually take time and effort is extremely valuable.
With the help of blockchain, businesses can expand their customer bases, reach out to their customers in a more efficient way, and expand the area of suppliers and partners. However, the biggest blockchain benefits that businesses state are trust, built-in privacy, security, and data integrity and transparency.
Besides the above-mentioned benefits that blockchain has for the companies who decide to implement this technology, there are also others that we need to be aware of if we want to make the most of this technology:
- Tokenization is making more asset classes tradeable online.
- Innovation is the biggest quality of blockchain that can be applied to existing problems.
- Decentralization helps businesses when interacting as peers and without a person in charge to manage the system.
Among the most valuable applications of blockchain for businesses is definitely smart contracts. They play a dual role as foundational elements of blockchain structure and as a technology application. Smart contracts are actually a program that uses business logic to finalize agreements and transactions between participants. Keep in mind that a smart legal contract is not the same as a smart contract as it doesn’t include blockchain at all.
In the business world, smart contracts can be used in many ways. These contracts can entirely automate the exchange of money and services, granting access to digital content and enhancing the aspect of privacy.
As more and more companies are now looking into ways how to make the most of applications for blockchain business such as smart contracts, enterprise blockchain development is in high demand. After all, to make the most of such a complex technology, a company will need a team of professionals to achieve its business objectives.
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