Blockchain revolution is in its fullest swing. A recent Forbes article stated that in the span of a year, Google search results for the keyword blockchain has increased by over 250 per cent. Well, what is Blockchain? Blockchain or the Distributed Ledger Technology (DLT) refers to an expanding collection of records. These records are called blocks, and each block has a cryptographic hash function the connects it with the block that comes before it. Blockchain databases are open, distributed ledgers that are usually managed by a peer-to-peer network. Once data is stored in a block, it cannot be replicated, updated or deleted. Incorporating Blockchain in business improves transparency, ensure accountability and eliminate third-party involvement. Nodes in a blockchain do not require any intermediaries to validate the transaction as it is a mechanism that can self-validate transactions and make it valid from a legal point of view.
According to a Payments Pulse Survey of 500 CFOs, only 1.2 percent had a clear idea about how blockchain can transform their business and make it more competitive. Learning why blockchain is important and evaluating how it can be the best fit for your business might turn out to be the next step to success for your business. In this article, I will help you understand why you should adopt blockchain and how to choose the best blockchain network that will yield maximum results to your business.
If your business value can be increased by providing more transparency to your customers, or if your business can benefit from a tamper-proof record keeping system or if your business can benefit from a tokenized business model, then blockchain in business is a good fit for you. Implementing blockchain in business can provide better transparency, authenticity, accountability in the organization. But, interestingly most of the business applications of blockchain technology fall under two general categories:
In more technical terms, digital assets are content that has been formatted in binary code and includes the right to use that asset. These assets are assigned digital ownership and include anything that is saved online or offline on to flash drives and SD cards. There are various online platforms for the transfer of such digital assets, but the downside is the lack of security. That is where blockchain shines with the peer to peer network that constantly audits itself. In the traditional digital trading model, each trading platform operates its own database where all sellers’ data is stored. While all data is secured from third parties, a central authority exists that has access to all the data. In contrast, blockchain based trading is based on decentralization, that is, the buyers and sellers will have a convenient platform for trading as well as a secured one where their identity stays anonymous. It eliminates intermediaries and allows a business to connect with their customers directly.
Blockchain in business helps to maintain transparency by recording their holdings and transactions securely. All the details stay intact and anonymous for every user, but it records all these transactions in an immutable ledger, which means with the right decryption code or a public key, all the data can be accessed any time. This ensures transparency for all users across the network, all the transactions will be easily accessible and visible which makes organizational audit very easy. Every transaction in a blockchain network can be tracked from its origin to the final destination. For a supply chain system or asset management set-up, such level of transparency will add an extra layer of protection to the safety of their materials. It also eliminates the need for error checking, advanced auditing, and other accounting activities.
Now you know why you should adopt blockchain i business. What you now need to understand are the basics of every blockchain network and the types of blockchain networks to determine which one will suit your business best.
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A public blockchain as the name suggests is an open network which is distributed and decentralized. Anybody can download the protocol, read, write or participate in a public network. Transactions in a public blockchain are recorded as blocks and linked together to form a chain. Each new blocks are time stamped and validated by all the computers connected to the network, known as nodes before it is written into the blockchain. All nodes are equal and all transactions are public. This means that a public blockchain is immutable, i.e. once verified, data cannot be modified. The best-known public blockchains are Ethereum: open-source, smart contract blockchain.
A private blockchain, on the other hand, is an invitation-only network governed by a single entity. Entrants to the network should have permission to read, write or audit the blockchain. There can be multiple levels of access, and information can be encrypted to securitize commercial confidentiality. Private blockchains allow organizations to use distributed ledger technology without making the data public. But this evidently means that they lack a key feature of blockchain: decentralization. Some critics claim that private blockchains are not blockchains but centralized databases that use distributed ledger technology. Private blockchains are comparatively faster, efficient and much cost-effective compared to public blockchains as those require a lot of time and energy to validate transactions.
Federated blockchain tries to eliminate the sole autonomy feature where all the authority falls with just one entity like in the private blockchains. Essentially, there is more than one entity in charge. A group of companies or representative individuals come together and create decisions for the network’s benefit. Such groups are also called federations or consortiums, hence the name federated or consortium blockchain. Such blockchains are able to run a full node and start mining and add transactions on the chain. It can also review or audit the blockchain in a Blockchain explorer.
Blockchain in business can be adopted depending on the degree of usability and accessibility of data, and it is customizable to the exact requirements of the business. Once the type of blockchain is chosen, the next big step is to choose the appropriate blockchain platform.
Be it private, public or federated, applying blockchain into a business is not simple. The objectives of any business would revolve around cost reduction, enhanced customer retention and audit cost savings. The production practice and usability of each blockchain platform has to be analyzed by a business to evaluate its efficiency in increasing their productivity. Adopting a blockchain platform can increase work efficiency and cost savings in every business. So, the next big factor a business should consider is what platform to use. Allow me to introduce the most widely used and prominent blockchain platforms that exist in the market today,
BigChainDB is an open-source, distributed ledger system designed to store large amounts of data and enables developers to deploy Blockchain applications and proofs-of-concept. The database provides decentralized control, immutability, low latency, powerful query functionality, and high-speed transaction processing. The system does not have its own currency but it permits issuing and transferring any assets, tokens, and cryptocurrencies. BigChainDB supports digital assets that are customized and establishes access permissions at a transaction level. BigChainDB is based on a Federation Consensus Model, a federation of nodes having voting permissions. Supporting both public and private networks, BigChainDB has various use cases, including in areas of intellectual property, government, human resources and land registry.
Corda is an open-source Blockchain platform developed to build permissioned distributed ledger systems. The project was generated by R3 consortium, combining the largest banks. It allows users to manage legal agreements between various parties. Like any other distributed ledger, R3 Corda provides safety in data storage and immutability in recording data. It is noteworthy that only Corda enables developing interoperable blockchain networks which transact with strict privacy. At the moment, it’s probably the only distributed ledger platform which has pluggable consensus.
Ethereum is an open-source Blockchain platform that provides programming tools for its creation and runs smart contracts and. The platform can simplify both the development of next-generation decentralized applications (DApps) and online contractual agreements. Ethereum permits its users to design and issue cryptocurrencies and tradeable digital tokens. A user can create their own DAO (democratic autonomous organization), e.g., a virtual organization where various issues are solved by member voting.
Blockchain Hyperledger Fabric is one of the most popular Hyperledger projects hosted by The Linux Foundation and was released in 2016. The fabric is written in Go and uses Docker-containers for the implementation of the smart contract. The platform serves as the basis for creating Blockchain-based solutions with a modular architecture and supports the use of one or more networks. This enables high levels of flexibility, scalability, and reliability.
It also contains channels for sharing confidential information and endorsement policies for transactions.
EOS is a blockchain platform that is used for the development of decentralized applications (dApps). It makes dApp development easier by providing an operating-system-like set of functions and services that dApps can make use of. The idea behind EOS development is to bring together the best features and promises of the different smart contract technologies out there. Simply put, the EOS community aims to provide one simple to use, massively scalable dApp platform for the everyday user. The EOS envisions to build a blockchain dApp platform that can smoothly and securely scale to thousands of transactions in a second, all while providing an accessible experience to app developers, users and entrepreneurs. They aim to provide an operating system that is suited for decentralized applications by providing services like user authentication, server hosting, and cloud storage.
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Integrating Blockchain in Business can impress their customers with transparency and improve customer loyalty. By eliminating intermediaries, businesses can deal directly with their customers and build a lasting relationship and attract new customers. The need for blockchain in business is real and set to become a massive market. Instead of buying a centralized service architecture or paying a lump rent to Google or Amazon web services, businesses are always recommended to look for more comprehensive protection that can easily host in their own services on a decentralized hosting space from a blockchain platform. A thorough understanding of blockchain in business can undoubtedly land you with exceptional and successful business use cases.