There’s a new kid in town and everyone is talking about it. Move over mainstream accounting, here comes blockchain technology!
Hold the presses! Did we just say blockchain, as in Bitcoin? Yes, blockchain technology is making waves again, but in a way that’s great for business. Originally developed to track cryptocurrency transactions, businesses are now finding new, innovative ways to benefit from this technology.
What is Blockchain?
We’re not talking about payment gateway systems, but rather, blockchains that allow for a larger range of stored financial data. Blockchains are a distributed ledger technology. According to Investopedia, they are pieces of shared information, but while they are shared, they lack the ability to be manipulated. So, once the block of information is placed on the blockchain, it leaves a permanent record for all users with access to it. Each time you add another block of information, blockchain automatically files it in chronological order. That way, the most recent information is always the last block in the chain. With that said, businesses are finding new ways to benefit from blockchain technologies and you can too. Still skeptical? Here are some of the advantages your business can enjoy through blockchains.
One of the biggest advantages for businesses is the efficiency that blockchains bring. It also doesn’t hurt that a cost saving is usually involved as well. Businesses are replacing their central recordkeeping with the decentralization of blockchain technology and it’s translating into big savings for many. While some question the legitimacy of what the actual cost savings are, Hackernoon explains it as a means of cutting out the middleman, so to speak.
Efficiency, though, is not just about the potential cost savings. It’s more about the workflow involved. Blockchains grant businesses the ability to allow many users to view or addw to the block of data. Forget the waiting. Now it’s faster, easier, and more efficient to create, store, and share your financial documents with others.
Transparency and Traceability
In the past, transparency has been an issue for many institutions. The term ‘to err is human’ comes to mind and while true, it’s not always a simple error or miscalculation that businesses have to worry about. Sometimes it’s protecting their financial data from those within or without the company who may have personal agendas in mind. Blockchain allows for transparency so you can see who created what block, the information contained in that block, and more, which allows you to track the information in real-time. That brings us to the final topic, security.
One of the biggest concerns with blockchain technology is security and how that would work. After all, one only needs to look to cryptocurrency transactions to see that, while unlikely, a breach can happen. Here’s the thing, though. Cryptocurrency transactions use a public blockchain, where many hands touch the block and you likely don’t know any of them. Corporations, however, use private blockchains, which allows them to retain some of the control over who can and cannot access their blockchain data. Consortium and fully private blockchains act much like their public counterparts, but access is limited to those whom the corporation chooses. If you’re not on the list, access is denied, so to speak.
Blockchain technology is not a single all or none method. There are variations in the way it can be managed and businesses across the globe are taking notice. They are looking to blockchains as a means to innovate, become more efficient, share valuable information with those within their chain, and save money. Blockchains for businesses are evolving and where they grow, only the future knows.