Blockchain is a distributed ledger technology that acts as a decentralized system for recording and documenting transactions that take place involving a particular digital currency or assets. It’s basically a transaction ledger that maintains identical copies across each member computers known as nodes within a network. Since the ledger is distributed across each nodes, it facilitates the security of the blockchain.
Now the potential around blockchain has been overshadowed by the popularity of Bitcoins and other cryptocurrencies. However, blockchain technology remains a quickly-growing area of growth for companies across a host of industries. It is possible that blockchain technology will ultimately be seen as the most important innovation to come out of the cryptocurrency boom.
Potential benefits of blockchain*
- Up to 95% reduction in errors, due to the elimination of out of sync ledgers and reconciliations
- Up to 40% increase in efficiency, due to straight-through processing and a single source of truth
- Up to 25% improvement in customer experience, due to faster processing and use of digital channels
- Up to 75% reduction in capital consumption, due to quicker settlement of trades, straight-through processing, and freed up capital flows
* Based on KPMG research
Blockchain is already being used in many industries:
- Cross Border Payments: Traditionally, the transfer of value has been both expensive and slow, and especially for payments taking place across international borders. One reason for this is that, when multiple currencies are involved, the transfer process typically requires the participation of multiple banks in multiple locations before the intended recipient can actually collect his or her money. There are existing services to help facilitate this process in a faster way, but these tend to be quite expensive. Blockchain technology has the potential to provide a much faster and cheaper alternative to traditional cross-border payment methods. There are hurdles to be passed, including the regulation of cryptocurrencies in different parts of the world and security concerns. Nonetheless, this is one of the most promising and talked about areas of blockchain technology application.
- Smart Contracts: Smart contracts are often seen as a highly powerful application of blockchain technology. These contracts are actually computer programs that can oversee all aspects of an agreement, from facilitation to execution. When conditions are met, smart contracts can be entirely self-executing and self-enforcing. The potential applications of smart contract technology are essentially limitless and could extend to almost any field of business in which contract law would normally apply. Nonetheless, smart contracts remain one of the most exciting ways that blockchain technology has already extended beyond the cryptocurrency space and into the broader business world.
- Supply Chain Uses: For many businesses across various industries, a key to success is a well-functioning, efficient supply chain. Blockchain technology has already been used in multiple industries as a means of keeping tabs on supply chains and ensuring their efficiency. This could eliminate human work and the potential for error from a complex and crucial process.
There are lot more use cases of Blockchain in the Healthcare industry, Media and Entertainment, Air Travel and much more. It’s fair to say, Blockchain is the future.