How blockchain smart contracts can benefit your business?

Today, many industry leaders, fortune 500 companies, and even smaller start-ups are embracing blockchain and integrating it into their business for its numerous benefits.
March 3, 2020

How blockchain smart contracts can benefit your business?

Today, many industry leaders, fortune 500 companies, and even smaller start-ups are embracing blockchain and integrating it into their business for its numerous benefits.

Today, many industry leaders, fortune 500 companies, and even smaller start-ups are embracing blockchain and integrating it into their business for its numerous benefits.

Most people associate blockchain technology with bitcoin and cryptocurrencies. It is true to some extent. Bitcoin first introduced us to blockchain technology, but blockchain technology has evolved into much more.

What is Blockchain?

In simple terms, blockchain is a digital database that logs and stores information. Information stored on the blockchain cannot be changed and altered. It can be private or public and can offer 100% transparency.

Today, many industry leaders, fortune 500 companies, and even smaller start-ups are embracing blockchain and integrating it into their business for its numerous benefits.

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Blockchain as a security solution

Nothing online can truly be safe these days as hackers get more and more sophisticated. Major companies, law firms, and investment banks have been hacked, including JP Morgan and Hilton Hotels, which has led to millions of accounts and personal information being leaked and sold online.

Cyber-criminals are able to achieve hacks by targeting and corrupting traditional networks and exploiting vulnerable servers which cause applications to crash.

Blockchain can prevent this. Data recorded on the blockchain are decentralized, encrypted, and every single transaction is confirmed by multiple nodes on the network.

To hack a blockchain, hackers would need to simultaneously attack all the nodes in the network. Even though this is technically feasible, this is not achievable by cyber-criminals today as they do not have the ability to do so.

Once data is recorded on the blockchain ledger, the information is impossible to be altered, changed, or deleted. Each block of transactions is verified within the network, and there are zero chances of security lapse.

Transaction verification are done through complex cryptography which is yet impossible to defraud.

For now, most business transactions require multiple third parties. From lawyers drafting paperwork to notaries authenticating signature. This not only comes with a hefty price tag, but this whole process is also extremely time-consuming and prone to human error.

Improves efficiency: cost & time

The blockchain technology allows for verification without having to be dependent on third-parties and intermediaries. A smart contract is a self-executing contract that has the terms of all parties written directly into code.

In other words, it is a computer protocol intended to digitally verify, facilitate, and enforce a legally binding contract. The code and terms of the contract exist on a decentralized blockchain network.

This can replace every process that requires a contract or a notary. It is legally binding and can be used in a variety of situations that range from property contracts, crowding funding agreements, and financial services.

Time is money. When Alpha Bank and S7 Airlines signed a letter of credit deal, they used a smart contract on the blockchain. The duration of the process got reduced from 10 days to a mere 4 hours.

Smart contracts allow businesses to pre-set contract conditions on the blockchain which automatically authenticates transactions when the conditions are met.

This ensures the transaction between the two parties are legitimate, and eliminates any risk of fraudulent activity and time-consuming and costly third-party interference.

Empower businesses through transparency

Smart contracts also use a single digital ledger for record-keeping that is shared among all its participants. Since all parties have access to the same information, negotiations can be done with trust and settlements can occur much faster.

Consumers love transparency. Companies that are transparent are viewed as responsible, reliable, and ethical. Mega conglomerates and tech giants nowadays often face backlash when they hide information that violates consumer trust.

Think about Facebook's ongoing public scrutiny in regards to the 2016 U.S. elections. Estee Lauder's battle with Peta and other groups for omitting ingredient sourcing from child labor and animal testing is another great example.

So how can blockchain fix this? Blockchain is decentralized. This means data and transactions stored in the blocks are contained throughout millions of computers that participate in the chain.

There is no possibility for data to be misplaced or lost. Every transaction that takes place is completely transparent and can be traced to its point of origin along the chain.

The transparency blockchain technology brings can help with business dealings, public relations, and misunderstood business relationships. Many charities are also adapting to blockchain technology for transparency.

Charity: Water, a non-profit organization that provides drinking water to people in developing nations is taking advantage of blockchain technology. It allows philanthropists full transparency to monitor how they are using their donation money.

According to the United Nations Global Compact, traceability is:

“The ability to trace and identify the history, distribution, location, and application of products, parts, and materials; to ensure the reliability of sustainability claims in the areas of human rights, labor (including health and safety), the environment and anti-corruption.”

Traceability is important because it increases supply chain visibility, improves quality control systems and reduces risk.

Blockchain improving traceability

There have been many scandals in the food industry lately; illegal honey imports, horse meat disguised as beef, poisoned milk formulas, plastic eggs, and more. Governments are putting more emphasis on food traceability, and supply chain traceability in general.

A product being sold on shelves that can be traced to its origin and every step in the supply chain can put consumers at ease.

Blockchain records transactions on the blockchain each time goods are exchanged between hands and suppliers. It provides an audit trail to trace where each product comes from.

Being able to track items from place of sourcing to manufacturer and then to distributor not only improves food quality, but can also prevent fraud, violation of human rights, and corruption.

There is no doubt about the benefits of blockchain technology for businesses. Still relatively new, blockchain is becoming the backbone of the new internet and the new way to operate businesses.

Report Linker predicts the global blockchain market to increase by 80% between 2018 and 2023, from $1.2 billion to $23.3 billion.

Companies who take advantage of blockchain now will have the ability to shape how the rest of the industry will use blockchain in the future. Be a pioneer, an innovator, a trend-setter in your field. Don’t play catch up.

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