The blockchain is the most revolutionary innovation implemented by man in the 21st century. Although its initial entry into modern-day life and business was muted and gradual, its influence has been no less prominent than that of the discovery of the human genome in the early 2000s.
Blockchain technology has since grown in leaps and bounds, with even more innovations and upgrades to its name. Today, there are hundreds of cryptocurrencies, each running its own unique blockchain.
The growth of blockchain technology is linked to its adoption and application in everyday finance. As blockchain innovation takes new, diverse forms, its functionality in the corporate and business world ensures that it will remain a top solution in years to come.
But, before I proceed into the nitty-gritty of how the blockchain can improve your business, allow me to give you a brief introduction to what the blockchain really is.
What is Blockchain Technology?
The blockchain is a publicly distributed ledger of financial records with an innovative method of authenticity. Traditional financial transactions rely on the reputation and the efficiency of the software providers.
To a large extent, traditional finance is dependent on intermediaries, many of whom impose crippling transaction fees per transaction, making it burdensome for the businesses and individuals that are bearing the cost.
The blockchain relies on several proof systems in which third parties (miners) are tasked with validating each transaction and providing a way to link each transaction with the receiver and the originator.
Thus, financial transactions on the blockchain are irreversible, and each transaction’s status can be seen in real-time. This is the basis of the blockchain’s innovative financial authenticity- a proof-based, decentralized, peer-to-peer system of facilitating transactions.
How the Blockchain Works: Inherent Technologies
Here, I will discuss some of the technologies that make the blockchain unique. Later in this article, this knowledge will form a key cog in understanding blockchain applications for business sustainability and growth. Read on:
Cryptographic Keys
The cornerstone of blockchain cybersecurity is the use of public and private keys. Public keys are similar to your regular bank account number. The public key identifies your account when someone wants to send you funds on the blockchain.
On the other hand, private keys are similar to your bank account password. They provide direct access to your crypto funds and should never be divulged to a third party.
The cryptographic keys are signatures on each block within the blockchain, helping users identify your account and providing you with unique access to your crypto holdings.
Hash Encryption
One of the ways through which the blockchain secures itself from external and malicious influence is through the use of top-grade encryption protocols.
The technology uses SHA-256 encryption algorithms to transmit the public and private keys across the blockchain, along with other relevant identifying details.
As such, user and transaction authentication is seamless.
Mining
As the blockchain is literally a digital ledger of transactions, it means that there has to be a perpetual flow of transaction blocks. In blockchain lingo, adding these blocks to the ledger is known as mining.
Miners are rewarded with tokens for generating enough computing power to process the complex algorithms required to complete each transaction block.
Smart Contracts and DeFi
Smart contracts in the form of pre-programmed action codes are used to create strongly-binding legal agreements.
They are similar to a real-life contract agreement and are twice as binding. The automation can be put in place to be a payment to one party once the terms of a pact are fulfilled.
This has, in effect, enabled the development of various decentralized apps (DApps). These apps are written by blockchain developers, who themselves pay a fee to use the environment, as is the case with Gas.
Blockchain and Business
With its financial capability, blockchain can positively impact and improve businesses through the following ways:
Reduced Transaction Costs
In traditional finance, the cost of transactions is often inflated because of the role of the middlemen facilitators. The likes of Western Union, PayPal, and other platforms often charge a premium for transactions.
These fees often eat into business profits. In addition, they may discourage customers and clients from patronizing the business. Blockchain technology eliminates the need for all of that by decentralizing the entire system.
As a P2P (peer-to-peer) platform, blockchain technology makes it easy for you to do business dealings without the need for an intermediary. The best part is that there are no restrictions such as those that a Central Bank may pose.
Asset Protection
It is predicted that the total damages from global cybercrime will increase to more than $10 million in the coming years. Blockchain technology can help to protect valuable assets from loss.
Each block is immutable, decentralized, and transparent, thus providing unrivaled security. The blocks store information with complex algorithms that are nearly impossible to infiltrate. With the addition of each new block, the algorithm becomes even more complex, as there are innate references to the previous block.
Thus, it is impossible to manipulate one block without altering at least 51% of the network.
Tracking The Supply Chain
In pharmaceutics and medicine, there remain several cases of drug trafficking and fakes. In fact, the latter is an issue that plagues manufacturing in general.
When there is no adequate inventory and tracking system in place for the distribution of products, it can be difficult for business owners to draw financial inferences to drive productivity and garner customer feedback.
With the blockchain’s immutability and transparency, business owners can track the distribution of their products in real-time. The data gotten from this will then be channeled into business analytics to make qualitative predictions.
Eliminating the need for middlemen
There is absolutely no need for a third-party facilitator such as a Central Bank with blockchain technology. The peer-to-peer system eliminates the need for that.
Businesses are sure to find this a most welcome development, as they bid to better connect with customers.
Cryptocurrency, Business, and Finance
With the use of cryptocurrency, it is more efficient than ever to do business. Customers can order products and services online, with inventory management software optimizing delivery from start to finish.
The ease of buying cryptocurrency is made prominent by the integration of online tools to help the average novice. For example, you can compare the values of SOL with ETH using an Ethereum calculator
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In addition, you can check key stats like Ethereum price and filter hundreds of crypto tokens market cap and trading volume. As a business owner, this can help you decide on your fiscal service extension dimension.
Conclusion
The volatility of the cryptocurrency market cannot be underestimated, with many having invested wrongly and lost. Still, others have gone on to be successful investors in the new waters of crypto trading.
Blockchain technology has multiple benefits, most of which are yet to be understood. Most of its potential lies untapped. Coupled with technologies like AI, deep and machine learning, the applications of blockchain technology will continue to grow.
