Sectoral Analysis - Blockchain
Understanding Blockchain and its Implication on Various Industries
What is Blockchain?
A blockchain in simple terms is a time-stamped series of fixed record of data that is managed by a cluster of computers not owned by any single entity. Each of these blocks of data are secured and bound to each other using cryptographic principles (i.e. chain).
Advantages of Blockchain technology
Better Transparency
Transparency is one of the big issues in the current industry. To improve transparency, organizations have tried to implement more rules and regulations. But there is one thing that doesn’t make any system 100% transparency, i.e., centralization. With blockchain, an organization can go for a complete decentralized network where there is no need for a centralized authority, improving the system’s transparency.
Enhanced Security
Blockchain technology utilizes advanced security compared to other platforms or record-keeping systems. Any transactions that are ever recorded needs to be agreed upon according to the consensus method. Also, each transaction is encrypted and has a proper link to the old transaction using a hashing method.
Security is also enhanced by the fact that each node holds a copy of the transactions ever performed on the network. So, if any malicious actor ever wanted to make changes in the transaction, he won’t be able to do so as other nodes will reject his request to write transactions to the network.
Reduced Costs
Right now, businesses spend a lot of money to improve to manage their current system. That’s why they want to reduce cost and divert the money into building something new or improving current processes.
By using blockchain, organizations can bring down a lot of costs associated with 3rd party vendors. As blockchain has no inherited centralized player, there is no need to pay for any vendor costs. On top of that, there is less interaction needed when it comes to validating a transaction, further removing the need to spend money or time to do basic stuff.
Traceability
With blockchain, companies can focus on creating a supply chain that works with both vendors and suppliers. In the traditional supply chain, it is hard to trace items that can lead to multiple problems, including theft, counterfeit, and loss of goods.
With blockchain, the supply chain becomes more transparent than ever. It enables every party to trace the goods and ensure that it is not being replaced or misused during the supply chain process. Organizations can also make the most out of blockchain traceability by implementing it in-house.
Improved Speed and Highly Efficient
The last industrial benefit that blockchain brings is improved efficiency and speed. Blockchain solves the time-consuming process and automates them to maximize efficiency. It also eradicates human-based errors with the help of automation. The digital ledger makes everything possible by providing a single place to store transactions. The streamlining and automation of processes also mean that everything becomes highly efficient and fast.
Which Industries Can Benefit from Blockchain?
Almost all the sectors out there can benefit from the blockchain. There are already many companies using blockchain technology actively after realizing the potential of this tech. To get a glimpse of exactly how different industries are taking benefits of blockchain, here are a few examples
Banking
From a macro perspective, banks serve as the critical storehouses and transfer hubs of value. As digitized, secure, and tamper-proof ledgers, blockchains could serve the same function, injecting enhanced accuracy and information sharing into the financial services ecosystem.
Credit Suisse, for example, partnered with New York-based startup Paxos to use blockchain tech to settle US stock trades in March 2020. Meanwhile, JPMorgan Chase has entered the blockchain space with the JPM Coin, which it intends to use to facilitate transactions between institutional accounts. Other banks like Goldman Sachs and Citigroup have also experimented with blockchain. More broadly, blockchain has the opportunity to disrupt the $5T+ banking industry by disintermediating the key services that banks provide, from payments to clearance and settlement systems.
Accounting
Accounting is a textbook example of a field that can profit from blockchain technology. Simply put, accounting is full of challenges from the over-complex tax code to the paramount need for accuracy and precision. The blockchain can address all of these issues.
The transparency provided by the blockchain can decrease the time auditors spend sampling and validating transactions. By having more time at hand, auditors could focus on controls and other vital tasks.
Deloitte is one of the big companies that has been playing the blockchain game from the early days. They launched Rubix, labeled as “one-stop blockchain software platform” in 2014. Since then, they have continued to expand their offerings and even made a partnership with Waves Platform to make crowdfunding and cryptocurrency trading more accessible than before.
Marketing
According to Juniper Research advertisers are expected to lose an estimated 44 bn USD by 2022 due to frauds. The blockchain technology can help significantly reduce so-called “click frauds,” enabling the marketing executives to actually reach their targets.
By utilizing the system to manage budget spending, remove intermediaries and prevent fraud, the risk of overcharging and underperformance is reduced.
IndaHash, an online platform that helps brands to reach digital influencers is an excellent example of how blockchain can transform marketing. By directly connecting brands and influencers, it enabled deployment of authentically branded campaigns in a swift and scalable manner.
Travel and Mobility
Recording physical assets like auto parts —on a blockchain is a prime example of where the technology might come in handy to track ownership with a tamper-proof, neutral, and resilient system. While paper records are prone to forgery and/or physical degradation, and centralized databases may be subject to hacking, human error, and/or tampering, blockchains are immutable and have no single entity controlling the ledger. Blockchains could be used to track parts in a supply chain and weed out those that are counterfeit. Automakers like GM and BMW have partnered to share self-driving car data using blockchain tech.
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