• Wed. Oct 5th, 2022

Blockchain a win-win for the industry and the economy; not to be confused with crypto

ByStephanie M. Akbar

Aug 27, 2022

By narrowly identifying blockchain with crypto, companies are overlooking its enormous benefits and transformative role in various segments

“Half-baked knowledge is a dangerous thing.” This axiom well reflects the current scenario where companies are wary of blockchain because it is closely identified with cryptocurrencies. To resolve misconceptions, a holistic understanding is imperative as to what blockchain is all about and its inherent benefits to the industry.

Initially, it is imperative to understand that blockchain is a fundamental technology used first by Bitcoin and later by many other entities. Unfortunately, due to the volatility and uncertainty surrounding cryptocurrencies, logging in has become an unwanted burden on the blockchain.

Global Buzz and Origins

As a result, other global blockchain users should be known, such as IBM, Google, Goldman Sachs, Deloitte, and Spotify, to name a few. Most of these companies are contemporary or new-age entities and market leaders in their fields, recording major milestones every year.

Conversely, countless traditional organizations hesitant to use blockchain do not necessarily mark new milestones every year. Without a doubt, from banking to insurance and cybersecurity to healthcare, distributed ledger technology is creating a global business buzz today.

The origins of the blockchain decipher why it is so closely identified with Bitcoin. In 1991, Stuart Haber and W. Scott Stornetta envisioned what later became blockchain in the new millennium. Their early work revolved around a cryptographically secure blockchain with tamper-proof document timestamps. In 2008, the current blockchain story began when Satoshi Nakamoto, pseudonym of the creator(s) of Bitcoin who wish to remain anonymous, worked on Bitcoin, the first application of this digital ledger technology.

As a decentralized database, blockchain is an electronically distributed list of records or ledger accessible to many users. To record, process and verify each transaction, blockchain uses cryptography, making transactions transparent, secure and permanent.

The blockchain hosts two general categories. The first is without authorization and open to all. The second requires authorization, with each participant being authenticated by the person or group supervising them. The second category is further separated into private and community blockchain networks.

It is this last category that holds enormous potential for all businesses. A survey from TechRepublic Research notes that while 70% of business respondents said they had not used blockchain, 64% felt that the digital ledger could affect their segment in some way, most predicting a positive outcome. Similarly, the Trend Insight report from analytics entity Gartner noted that business value through blockchain will reach over $360 billion by 2026 and exceed $3.1 trillion by 2030.

With its rich security elements, cybersecurity offers the best growth prospects for blockchain.

The technology is also increasingly used by financial services firms due to its tamper-proof features that ensure data security by allowing participants to verify the authenticity of files.

Safeguard food safety

Nonetheless, apprehensions or resistance from companies in other verticals to adopting blockchain can hamper the overall prospects of these industries and the economy as a whole. So it’s time to cleanse the network of misinformation and low awareness that could impact the economy in various ways. To achieve this goal, one must consider a relatively offbeat example to convey the criticality of blockchain for various businesses.

One of the key characteristics of blockchain is immutability – especially prized in areas where data protection and product integrity are sacrosanct. The food industry is one such vertical where product safety is paramount due to the multiplicity of stakeholders – farmers, manufacturers, processors, logistics partners, distributors, retailers, certification and government bodies, etc. Using blockchain, food safety can be protected by tracking items. directly from their source to the destination. For example, when customers purchase seafood at any frozen food outlet, they can track the specific product from the area where the catch was made in each section of the supply chain to at the point of purchase.

When consumers are made aware of how blockchain supports food safety, they will buy products without worrying about food contamination or related health risks. Conversely, without blockchain, contaminated food would only be detected very late. Once all supply chain stakeholders are aware that blockchain is being used, each person will be motivated to handle items more carefully to ensure the quality and standard of food is not compromised.

Besides backtracking, blockchain helps keep counterfeit items out of supply chains. As the source of adulterated or counterfeit foods can be located and identified, unscrupulous producers and suppliers of these products will not resort to risky practices for fear of being caught.

Additionally, the food tracking feature of the blockchain can actively help minimize waste. Delayed product shipments, substandard inventory management and inadequate cold chain facilities are some of the reasons for food waste. Whatever the cause, blockchain can prevent it as businesses adhere to all required logistics protocols, improving both delivery and inventory management. Since food products are tracked 24/7, it is easier and more convenient to improve efficiency and keep waste to a minimum. In addition to fighting food fraud, this boosts consumer confidence.

Future-ready option

Coming back to the business benefits, the most important thing is that blockchain can significantly reduce transaction costs. Currently, the files kept privately remain distributed among various internal units. Therefore, reconciling transactions between various individual/private ledgers can be error-prone and time-consuming. In the blockchain system, however, ledger entries are replicated in chronological order across multiple identical databases hosted by members of each group. Essentially, changes made to one copy are updated automatically and simultaneously in the other copies.

Given its unique functions, if deployed across all sectors (financial, manufacturing, services, etc.), blockchain can reshape the Indian economy by reducing transaction costs. As new-age ecosystems like the metaverse loom on the horizon, blockchain is the perfect way for businesses and the economy to be ready for the future.

In conclusion, another axiom relativizes: “The love of money is the root of all evil. Just as there is nothing inherently wrong with money other than excessive greed, so too are apprehensions about blockchain. A true universal basis for cryptocurrencies, blockchain can be used for positive purposes to promote safe and secure operations of all businesses as well as the economy as a whole.



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Disclaimer

The opinions expressed above are those of the author.



END OF ARTICLE


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