Will Blockchain Technology Revolutionize Your Digital Business?
If you’re an entrepreneur, it’s likely you’ve heard of the blockchain and its most popular offshoot — cryptocurrencies. Blockchain technology is certainly an exciting field, and you might be wondering if it’s worth using blockchain applications in your business. We’ve done the research, and we’ll let you know about:
- What blockchain technology is, and what it does
- Limitations of blockchain technology
- How blockchain can be used in business
- If blockchain technology is right for you
If you’re going to form a business, it’s important to understand if moving to the blockchain is a good choice.
Introduction to Blockchain Technology
The blockchain is a framework of different technologies that share some common features. We cover blockchain technology in more detail here, so here’s a quick reminder of the key features. The digital blockchain framework is:
- Decentralized: That means no one organization can make unilateral changes to the information stored on the blockchain, instead all transactions have to be agreed to by the various users of that blockchain application.
- Verifiable: All information stored on the blockchain can be audited and verified, so transactions have been independently verified for their integrity.
- Immutable: Once transactions are recorded on the blockchain, they cannot be changed.
These three factors make the blockchain great for certain types of business application, but less ideal for others. Software applications that are developed and used across the blockchain are known as “Decentralized Applications” or DAPPS.
Limitations of Blockchain Technology for Business Processes
Some engineers believe that blockchain is the right approach to fixing any business process, but that’s not always true. While blockchain applications can be useful for areas like insurance, finance or the supply chain, it’s important to understand their limitations.
Blockchain Processes and Applications Are Slow
Every transaction needs to be verified, and that means the majority of machines on the blockchain need to review and authorize that transaction. This computing power can mean it takes several seconds to authorize a transaction, which is an issue if you’ve got thousands of them going through the network.
Blockchain Processes and Applications Need Participants
If a blockchain application is going to work properly, it needs everyone to participate in that application. Because blockchain technology is still new, stakeholders can be resistant to using an application for a specific business process. This lack of buy-in can prevent widespread adoption and limit the usefulness of the application.
There Are Often Better Solutions
Digital technology innovates quickly, and while blockchain certainly has its place, a different type of application can make more sense for many business processes. For example, if you’re onboarding customers through a digital signup process, it makes sense to use a regular sales processing app to do that, rather than try to do it over the blockchain. For many entrepreneurs, you should make the technology fit the use case, rather than the other way around.
How Blockchain Can be Used in Business
Now that we understand the limitations of blockchain applications in business, it’s worth looking at several examples of how they can be genuinely helpful to a business.
Taking and Making Digital Payments
If you want to take or make payments via cryptocurrency, then blockchain is an excellent choice. More and more retailers are accepting payments in Bitcoin and other cryptocurrencies, so if you’re a merchant, you need to look at your options. Before you decide to accept cryptocurrencies, be aware that almost every cryptocurrency is extremely volatile, and the value of any cryptocurrency you hold could go up or down very quickly.
Creating Smart Contracts
Smart contracts are a way of storing and processing information and transactions on the blockchain. They effectively “guarantee” you will carry out a specific action when something else takes place. Because these smart contracts are secured on the blockchain, they’re transparent, verificable and unchangeable, which is vital when building trust. This makes smart contracts an ideal way to manage supply chains and create transactions with third parties.
Business Intelligence and Sharing Information
If your business is involved in analyzing, tracking and auditing information, blockchain technology could be a natural choice. You can share your data in an open way, while ensuring it can’t be altered. If you mine large datasets for business intelligence, putting those reports on the blockchain will increase availability and accessibility.
How to Decide If Blockchain Technology Is Right for Your Business
Moving to blockchain technology can be a big commitment.
- Is a blockchain application the best solution to your needs, or would a different technology work better?
- Do you want to move your whole business to blockchain technology, or are there very specific business processes and interactions that you want to transform?
- Have you built your blockchain technology and development into your business plan?
- Do you know the best framework for your blockchain application?
- What do your stakeholders say about your proposed approach?
Answering these questions will give you insight into whether moving to the blockchain is the right approach for your business.
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