Blockchain benefits for companies looking to reduce risk
Your average consumer may not know anything about blockchain technology, but they’ve probably heard of the cryptocurrency that rose to fame because of it. Bitcoin was a major alternative to traditional currencies when it became mainstream in 2009, but of much greater importance are the myriad blockchain benefits that can be passed on to businesses operating in a range of industries. Financial institutions, healthcare companies, software developers, retail brands and many others are eager to use blockchain to support their own operations.
Blockchain’s key benefits all center around its ability to deliver secure, frictionless transfers of information, especially financial transactions. Bitcoin is the most famous, but a host of other cryptocurrencies have been developed thanks to blockchain. Financial institutions are eager to use blockchain because it creates a virtual paper trail that perfectly records the path the money has traveled, making it a highly secure way to exchange money and other information.
Thanks to its design, which builds a new block of information each time the asset is modified and then strings them together in a chain — hence the name — blockchain improves upon many other technologies and tools designed to maximize security while minimizing risk.
Cutting out middleman solutions
In many cases where secure exchanges are required, companies from all industries lean on third-party verification providers. This is a very common solution that provides a secure exchange between two separate entities, and it has enabled enterprises to use mobile and online channels to facilitate payments, money transfers and other activities.
However, third-party verification remains fraught with complications. For one, its security isn’t perfect. As the middleman between two entities, there are transfers on either end of the exchange where security breaches are most likely to take place. Many patrons of these third-party providers are also frustrated with how slow these transfers can be, requiring extra days to ensure the exchange is successful.
Blockchain addresses these glaring pain points by cutting out the middleman. By enabling an exchange that doesn’t require the mediation of a third party, security risks are greatly reduced and, in many cases, entirely eliminated. As Deloitte pointed out, this simplified exchange also facilitates a faster transfer, and the timelines for completing the exchange are more consistent because there are fewer potential problems.
And, because the third-party provider is eliminated, companies are able to cut costs while improving security and efficiency.
Addressing the issue of record-keeping
Whenever companies exchange information or assets that require third-party verification, it’s important to keep accurate records. There are many tools that do this, and third-party vendors may often provide their own versions of this service. However, blockchain provides its own form of record-keeping that is extremely simple to use and effective at making sure validation is done without involving outside parties. Because the blockchain stamps assets with information each time an action is taken, record-keeping is incredibly accurate and has virtually no risk of error. Through these records, it’s easier than ever to track and monitor the movement of assets.
This is great for reducing risk for banks and corporations moving money and other sensitive assets, but it could also help media license owners track the use of various assets and charge licensing revenues with greater precision.
An evolving solution
Blockchain isn’t a perfect technology, but many enterprises see it as the best solution out there — and something that’s only going to improve over time. One example of industry-wide initiatives is the Hyperledger project, a venture founded and managed by the Linux Foundation that has earned the involvement of major tech and financial companies including IBM and JP Morgan. According to TechCrunch, Hyperledger will organize protocols and standards that support blockchain adopters coming from different sectors and facing different requirements.
Other issues, including regulatory concerns, integration issues and the cost of adopting and maintaining blockchain technology, will all be necessary to help the technology realize its potential.
The list of blockchain benefits could be recited ad infinitum, but it all depends on the technology’s ability to improve security and speed while minimizing and sometimes completely eliminating risk.