Many experts consider Blockchain technology as the next stage of evolution in the optimization of business processes. The complete decentralization and the distribution of databases offer huge opportunities for business today. Numerous research proves the potential of applying Blockchain in state management as well as in various finance areas. That’s definitely the opinion of PriceWaterhouseCoopers (PwC) and Wirex.
More than a five hundred leaders from the world’s largest financial institutions participated in PwC’s research. About half of the respondents fully understand the importance of blockchain for business, but 57% do not completely understand how the blockchain technology can be applied and do not know how to respond to it. All of this is evidence that the world is standing on the threshold of global dominance of blockchain technology.
PRACTICAL APPLICATION OF BLOCKCHAIN
Blockchain technology can be used in almost any sphere of life. For example, it is possible to enter a medical record into the blockchain and then never lose it, or a musician can safely save their own media content without fear of somebody stealing it. The government of Estonia already permits registering marriage, birth and business contracts in the blockchain system. But the main focus of the technology remains the financial market.
Cryptocurrencies have become a more popular means of payment in advanced countries. Relatively low commission is charged in blockchain unlike general payment systems. And the speed of transaction is much higher. A standard bank transfer to a foreign country may take several days or a week. Now, transactions made through popular blockchain platforms, like in Bitcoin, take some 10-15 minutes, and some projects are working on decreasing the processing time down to seconds – like CREDITS (0,5 sec.) and NEO (20 sec.). That accelerates cash turnover and speeds up the business process. This is a great advantage over the traditional payment system for companies working in the international trade sector.
All payments can be easily seen in the accounting records. Quick payment is a way to optimize business processes and to build a reputation as a technically advanced company, which is newsworthy for PR.
There is currently much more interest in another way of applying a blockchain, to attract investments. It is possible to raise finance by using ICO (initial coins offering).
In an ICO: the company issues own tokens for cryptocurrency by selling them to different investors. According to the Smith+Crown agency, $102 million was raised in ICO in 2016 alone. Experts cannot estimate the amount raised in 2017 yet, but obviously it has increased dramatically. A well-grounded project can attract hundreds of millions of dollars if presented correctly and competently. Many crypto-investors have been disappointed by scam projects and now want to invest in blockchain projects related to the real sector of economy.
HOW BLOCKCHAIN WORKS ?
Blockchain guarantees the mutual fulfillment of contract obligations, thanks to a simple and reliable principle of a distributed network. Thus, the platform itself checks legal obligations and transactions. In the traditional business world, this responsibility is transferred to the third party. As a result, a businessman can make a contract with a supplier without a certified public accountant, and it is possible to track the flow of goods through the whole supply chain with all possible delivery details.
Take blockchain-based smart contracts as an example. Smart contracts can follow the terms of transaction, control the devolution of property, goods/services supply without any legal intrusion. Blockchain creates trust relationship between contractors and secures transparency for every deal made. At the same time, the network infrastructure of the popular platforms is supported by mining.
Billions of people all over the world do not have access to bank accounts and have no opportunity to exchange the currency. Cryptocurrency based financial technologies solve this problem with the only condition being internet access.
NEW FINANCIAL NICHE
New companies came to the market during this rapid growth, and they built a new niche in the sphere of consulting and financial services. A well-known exchange market for cryptocurrency Coinbase, is not only the intermediary platform for buying/selling coins, but it also secure digital assets from theft.
A company called Libra supports corporations in making records of operations with digital assets as well as in analyzing and auditing them. They accomplish this by working with various blockchain platforms.
New players continue to appear on the market, and they bring more advanced solutions and a high level of decentralization. Blockchain platform CREDITS is one of the fast developing projects. The company offers a high transaction speed with an average time of less than 0.5 seconds. At the same time, the system is able to process more than 1 million of transactions with the minimal commission of up to $0.001.
The platform, with the open source code, offers smart contracts to users so they can develop and implement their own business proposals over the CREDITS platform in the popular programming language JAVA. The project has its own local cryptocurrency of the same name and uses technologies that do not require support from mining.
To sum up, it is conclusive that the application of blockchain technologies decreases operating costs, makes all deals transparent and easily trackable, and also completely secures data from loss. Blockchain platforms allow supply chain management in a flexible way and protect intellectual property. They also minimize the number of third parties involved in all business processes. Obviously, this technology has a big future, and this is why any serious businessman must ask themselves if they want to join in or not.
There are many blockchain specialist projects and traditional companies who are experimenting with mutually distributed registries and blockchain technology. The key remaining question is still: who will win and who will lose in this race?
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