Blockchain will revolutionize the future of businesses. While reading this line, a ray of hope circulates all the reader’s mind. But, the thing is do we really understand it? The significance of blockchain and the opportunity gained on investing in it has uncovered here.
How non-techies see blockchain?
We cannot define blockchain in a single verse. When you are a techie, you might have in-depth knowledge about the blockchain outline. But, what about non-techies? So, let us extend the blog explaining the blockchain concept.
Blockchain technology is a new way to maintain agreements. The major difference between the blockchain technology and the existing ones is that the blockchain agreement cannot be maintained by a single authority.
Going in detail, the agreement relates the money ownership. Let us assume that a bank has been maintaining the agreement about the owner in a single document. The respective document contains all customers’ lists and other account details including standing balance too. This is the outline of the agreement in the bank.
Whenever the customer wants to send money, the bank will get notified and updates in the agreement. In addition, it subtracts the currency from one account and adds it to another account.
Instead of making a single handling authority, people wished to make their authority to themselves. Here the peer to peer ownership arises. Blockchain enters the screen. In order to own the document copy, the full agreement will be handled by all owners. There is no longer one single paper documentation. Every peer owns a copy. This is the literal explanation of the blockchain concept. Hope every non-techies have got a clear understanding of the blockchain evolution and the concept behind it.
Blockchain to organizations!!
Blockchain protocol brings trust, consensus, and autonomy to the organizations. The first blockchain used was bitcoin. Anything that has been represented digitally can use blockchain. A distributed ledger is the core of blockchain. Bitcoin combined technologies of distributed ledgers might bring in coordination toward secure and trusted inventory toward the digital representation.
Organizations are now evolving in the blockchain technology to currently operate in the trusted vacuum. Organizations are now using double-sided accounting to coordinate the transfer value. There is a reason behind it. As the companies are not trusting the ledgers, they use inefficient middlemen. But, many organizations now are using blockchain as they have an abundance of trust. According to their verdict, the blockchain transactions are secure, trusted, instantaneous. It also neglects the third party for validation.
Historical perception of blockchain
Ledger has been stretched from the stem Dutch word legger. It means that “a book laying or remaining in one place”. Before the advent of blockchain, the ledgers in early versions were in the physical book format and thus the official representations were also in the shape of scriptures. This is the reason why modern double-sided accounting using financial ledgers have come into account. Using the sales ledgers and accounts receivables, the principle “book of account” has been giving its benefits to the organization.
Today’s modern digital ledgers, coupled with debiting and crediting through double-sided accounting. It also enables inventory management and thus helps in the transfer of goods, services, rights, property, and other asset value. For instance, let us consider the number of cameras for sale in any eCommerce site. It is the result of a ledger with debits and credits between the particular eCommerce site’s inventory management systems, camera suppliers, and other consumers’ shopping carts.
Concept of a distributed ledger
At the epic scale, the ledger will turn out to be a distributed ledger, a digital inventory of value. This is the case where the participants on a network will have a copy of the ledger. Many transactions have to change inventory which might bring them a verified majority of network participants. Once the process has been verified, these transactions will be written to the ledger copies. And, at the same time, it will become a block of transactions which will be chained to the prior blocks as well. Using a sophisticated set of encryption techniques, the distributed ledger performs well. Thereby, it also reduces double counting and the settlement details. The need for double-sided accounting and dependence on trusted third parties will enable trust in the minds of the people.
The trust carried upon the single ledger is sacred which might lead to thousands of other ledgers. Every moment the commence operation might enable the secure and trusted inventory elsewhere. It helps to transfer anything that one wants to account for.
What Blockchain does for business?
Blockchain enables any person or a collection of persons to organize, govern, and corporate things in a secured shield. Blockchain is a new type of commercial freedom that has been enjoyed by multiple organizations. However, the blockchain also comes under institutional technology driving an institutional revolution.
There is a huge difference between the collaborative and industrial corporations in the incentive model. For the first time, Uber, AirBnB, and Wikipedia are showing down a pure intrinsic approach that might bring in an innovation model of commerce. Here, people can get self-motivated completely to create value in the common market.
The intrinsic motivational model has been coupled up with the ability to leverage upon many useful things. Here, the blockchain has been designed to organize and govern the groups to create and capture the value. It might increase the commerce model that brings in free concept for more than one person in the current world. In the future, the design of the institution may pay down with the employed, managed, governed, and paid things. When the capital has been invested by the board of directors, shareholders, and dividends, then it may seem very archaic combination. This is the point where the blockchain has started its institutional revolution.
How blockchain attracts more clients into commerce and changes business structures?
The potential of blockchain is far beyond the new business models. According to the United Nations, there are around 2 billion people who do not have enough digital identity. This hinders the ability to participate as consumers in the e-commerce field. Here, the blockchain can play a predominant role. For instance, the Estonia government has been piloting the digital identity for citizens using blockchain technology.
The democratization of the trusted identity may lower down the identity fraud and the other playing field levels. Thereby, it also extends the boundaries of commerce and increases the monetary value too. But, the blockchain also leverages in providing no identity to participate in commerce. It also allows people who do not trust and enter as consumers into the eCommerce field.
In addition to the blockchain impact on commerce field, the arising barriers of grouping humans and organizing them has been resolved. Now, the required incorporation and the following laws may govern with the boards of directors and management layers. The distributed ledger might rise with an organizational archetype that does not currently go along with a legal home.
Blockchain has also created abundant trust and sharing leads to transparency. A simple consensus might lead to decisiveness. Hence, the autonomous execution of smart contracts may lead to a reduction and lower the barriers to entry.
How are businesses and individuals investing in blockchain today?
There are three different types of blockchain investments. First, there are many chasing bitcoin and digital currencies. While viable, the bitcoin-only investment might typically limit the Fintech Sector and are similar to the gold rush at the boom of the internet. There are many building platforms associated with the blockchain. Ripple, Ethereum, and the Hyperledger project, etc are the list of investments that come around making the blockchain platforms. They vary in size, model, and sophistication. There are many crowdsourced and focusing consensus surrounding the Ethereum. The HyperLedger project comes along with the collaboration of large Fortune 500 companies and thus making a perfect trust layer.
The next thing blockchain owes to the companies in the operational efficiency that goes on top of the platforms or ahead of the platforms. It will anticipate catching up on the platforms. Many of the operations take place in Fintech, which has first distracted the venture capital and angel investor community. But, increasingly, the investments are being made beyond the hurdles using the blockchain technologies. It may avoid monetary asset risks and property and other usages.
The blockchain has now become an extraordinary alternative to traditional currency. It may also wave around the transaction methods. It might also handle financial transactions. The future of blockchain will be growing in the upcoming years. With the past six months of rising, around 1200 patents have been filed thereby involving blockchain as a part. It is only going to grow without any doubt.