According to a recent International Data Corporation report, worldwide blockchain spending is expected to jump over four-fold to US$9.7 billion in 2021 from US$2.1 billion in 2018. Complementing this view, a leading global bank suggests that this technology will add US$300-US$400 billion to the global annual economy by 2027.
Sounds big? Going by these optimistic predictions, it sure is something.
Are you wondering what this technology is, and more importantly, what it has replaced?
Answering the second question first, a new technology doesn’t always replace something. Sometimes it just fills an empty space that is created by the limitations of existing methods.
Now, what exactly is blockchain? It’s often described as a “digital ledger” that is designed to record data efficiently, permanently, and securely. What makes this digital ledger unique is that there is no central location for it, which means there is no way a cybercriminal can hack the information that is stored on blockchain.
The Rise of Blockchain
Ever since blockchain technology came into the picture, it has continued to gain popularity among business leaders, software developers, and even regulatory bodies. Businesses, investors, and even governments are trying to make the most of it. However, to understand what they are trying to achieve, it’s important to know what they are looking at.
In case you don’t know already, this technology is what enables cryptocurrencies like Bitcoin. In fact, it became popular only after the launch of Bitcoin. It’s called blockchain because every time a new transaction is performed, a block is added to the chain, which creates a permanent record that no one can tamper with. And this is exactly what the world is looking at.
Even as a vast number of people continue to believe that cryptocurrencies are a scam, almost everyone agrees on the potential of blockchain and how it could possibly change the way information is stored. Also, it was only a few years back that businesses started to realize that blockchain could be used for much more, actually across almost every sector, not just cryptocurrencies.
Could it be a Game Changer?
Looking at the benefits that investors are expecting from this technology, it will definitely bring great changes to the business world and the financial system. Imagine this: there is a public ledger made of various blocks, with each block sealed once a transaction is performed. Also, the transaction will be considered as complete only when a majority of computers across the blockchain network (called nodes) agree to it.
Once the block is sealed, it’s impossible for anyone to unlock and alter the information. Since each block is built on another block, anyone who tries to change the information will have to almost work on the entire chain, block by block, which is virtually impossible.
It’s this idea of security of the information, coupled with the fact that this technology could help save billions of dollars, that has companies and government bodies working fast to develop blockchain applications. Even as integrating blockchain in different business applications is still a long way, the opportunities it presents could definitely change the game.
What Opportunities Does It Bring to the Businesses?
1.Boost to Big Data
True, Big Data has been popular for quite some time now. On the other hand, blockchain has just started to gain popularity. The question: is there any match between the two? Yes, there is a strong connection between the two. Imagine blockchain is a ledger for not just bitcoins, but for everything including banking transactions, contracts, and other key information. You are looking at a huge chain with blocks that contain the data related to every transaction that has ever happened over the network. Now, what do you do with all that data? That’s where Big Data comes into the scene. The two technologies when combined can present great opportunities for businesses to learn about their consumers and take actions in real-time.
2. Quick Way of Fundraising
Although it comes with its own risks, the idea of raising funds in seconds is worth considering. This is possible through an Initial Coin Offering (ICO), which sounds and works like an Initial Public Offering (IPO), except there is no exchange of equity. Through an ICO, a business can raise funds by selling tokens which, then, can be traded on the cryptocurrency exchange market. Initially, the value of these tokens varies with their demand, but gradually their value is aligned with the performance of the startup and the market reaction.
3. Data Safety
In the past few years, storage infrastructure has become increasingly centralised as businesses moved to the cloud instead of setting up their own servers, thus saving billions of dollars. The cloud storage has not only helped businesses save costs but it has also provided better uptime and overall efficiency.
However, when it comes to data protection, cloud storage appears to have not helped much. That’s where blockchain comes in. It’s not only cheaper than the existing cloud storage infrastructure solutions but also more secure. With blockchain, the data is protected by multiple nodes across the network and there is no single party that controls it. Also, the nodes that have your data can never look at it as it’s heavily encrypted by a key that only you have.
4. Faster B2B payments
Blockchain offers a great opportunity to reduce the costs associated with B2B payments. Usually, the involved parties have to pay a fee to a financial institution for processing the transaction. However, with blockchain there will be no third party and hence, no such service charges.
Apart from saving costs, this will also help businesses save their time involved in such transactions. This is true especially when foreign payments are concerned. Through usual channels, cross border payments can take days. But with blockchain, such transactions can be completed in seconds.
5. Improved Quality Standards
Businesses can use this technology to keep an eye on their supply chain. In case there is an irregularity at any point of the supply chain, blockchain can help get exactly to the point where the problem started. This could help businesses not only ensure the quality of products but also save lots of money and time on various processes.
What Lies Ahead for Blockchain
No doubt that blockchain offers great opportunities and promises to resolve various problems that the business world is facing today. However, it’s also true that this technology still has a long way to go before it delivers what the world thinks it is capable of. Many experts have even gone on to compare this innovation with the internet. They believe that blockchain could have the same effect on businesses and financial transactions as the internet. And it doesn’t stop there. It’s potential is getting bigger and bigger with each passing day, as experts continue to imagine different uses of this technology.
This also means that now is the time for everyone who believes in the potential of blockchain to take the risk. The coming years are expected to be really crucial as companies all over the world work on their blockchain strategies.