Blockchain - A Force for Good for All Businesses

History has made it extremely clear that new technologies have always been a force for change for companies around the globe. Adopting novel technologies has disrupted entire business models and inspired organizations to create entirely new business models. Take the example of the internet. Some companies were able to tap into the potential of the others, while the others failed. We also saw a drastic decline in traditional media companies and brick-and-mortar shops with the internet. But, the internet also gave rise to the biggest tech companies of today that are taking charge of all the innovations. Likewise, Blockchain technology has also proven to be a force for good for business far and wide.  In this article, we won’t dive deep into the technicalities behind the working of Blockchains. We will look more at the commercial opportunities that this technology provides and how different businesses have been able to tap into the unlimited potentials of Blockchain. But before we do that, let’s simplify the definition of Blockchain so that there is no confusion. Think of Blockchain as a decentralized database that is transparent, immutable, trustless, and, more often than not, public. Needless to say, such an ecosystem is extremely secure, ensures privacy, and eliminates the need for middlemen, thereby reducing the friction from the overall process.  With that settled, let’s now look at the wonderful opportunities that Blockchain tech has opened for businesses around the globe. 

Blockchain Tech Redefining Business Models for Good

The emergence of New DeFi Companies and Protocols

DeFi, short for Decentralized Finance, is one primary area where Blockchain has really taken off. DeFi can simply be defined as banking without a bank. On top of Blockchain, all important things like lending, saving, trading, and hedging are being done on cryptocurrencies. Businesses have sprouted that enable users to invest in crypto, save the cryptocurrencies with interest, trade easily, and even spend them using a Visa card. These cryptocurrencies are transferred into fiat currency at the point of sale. In a scenario like this, the major differentiating factor when compared to traditional banks is that the user always has possession of all his assets. There is no deposit - which is essentially a loan to the bank - and the only way to access this money is using a private key. This private key is exclusive to the user at all times. Having such non-custodial digital wallets has proven to be a real game-changer in a world where people have started to lose trust in banks, especially for countries that have faced multiple bankruptcies till now. 

Enhancement of Payment Processes

Blockchain comes with such an unending array of potentials simply because it can solve multiple problems at once. Various fintech businesses around the globe have switched to Blockchain to provide faster and cheaper payment methods to their users. Generally, it took three to six months for Spotify earnings to reach the artists. This was a really big liquidity problem, especially for indie artists, and this would also translate into quality issues in their work. To solve this, companies have started analyzing the artists’ streaming data to estimate the revenue that needs to be paid in six months’ time. These companies then allow the artists to convert these accounts receivable into advanced payments by transferring real-world assets on Blockchain. The tokens guaranteed from accounts receivable can be used to borrow money easily. As of now, this payment is primarily in the form of DAI stablecoin. One DAI equals approximately 1 USD, so it can be easily transferred into dollars without any liquidity risks. Such an approach to providing payments is not only faster, but it has also proven to be quite cheaper than other traditional solutions. 

Simplification of Digitization and Trading of Real-World Assets in Real Estate

Looking at the various products or services available easily today, it is safe to say that many of them could not have even existed if not for the existence of Blockchain. For example, various companies in the Real Estate sector have started allowing owners to tokenize their real estate and sell it to multiple buyers in the form of fractions. Such an approach provides two-fold benefits - on the buyer's side, it allows them to invest in the Real Estate market with as little money as they want. The entire rent of the property is divided among different investors based on their share, and the interest rate for a specific property is equal for all investors - irrespective of their investment. This is a much more liquid attempt at operating the Real Estate market, and it could work only because of the existence of Blockchain. Further, it has given businesses novel ideas to go about the Real Estate domain to benefit them while improving the services for their users. 

Improvement of SCM and Logistics

The logistics and SCM sectors have also seen amazing shifts and innovations as a result of Blockchain technology. Blockchain's key benefits in these sectors include transparency, cost reduction, elimination of manual administration, and improved traceability of goods. Take the example of Tradelens - a neutral and open SCM platform that works using Blockchain technology. Developed by IBM and Maersk, Tradelens has grown to more than 150 members, including prominent logistic firms like MSC, ONE, CMA CGM, and more. In doing so, Tradelens has freed companies from manual documentation work, poor visibility, and legacy and inefficient data systems. This has led to efficiency gains of 18%, worth up to $2.8 trillion in 2020, and $6.2trillion per annum by 2040.

In Conclusion

The above-listed benefits and use cases are not in any way exhaustive. It is just to give you an idea of what all is already happening and so much more that is yet to happen. At this point, shying away from the importance of Blockchain as a force for good for your business is a counter-productive thing to do. The need of the hour is to embrace the tech and find ways of integrating it with your business stack and operations for the best results!