Why Are Industries Shifting to Blockchain Technology? Practical Uses for Blockchain Technology
Industries are increasingly shifting to blockchain technology. Blockchain technology is already transforming certain industries – like banking and financial products. But blockchain technology has the potential to revolutionize entire industries.
Why are industries shifting to blockchain technology? What kinds of unique advantages are provided with blockchain technology that we don’t see with other technologies?
Nikhil Rangpariya recently tried to answer that question at HackerNoon.com in a post titled, “Why Industries Are Shifting to Blockchain Technology.” In that post, Rangpariya explains how industries are adopting blockchain technology for a number of important benefits, including decentralization, security, and other advantages. Rangpariya also explains how specific industries – like supply chain management – have benefited from blockchain technology.
What Kinds of Advantages Are Offered by Blockchain Technology?
Industries are shifting to blockchain technology due to its unique advantages. Blockchain has a number of significant advantages over the competition. Rangpariya mentions the following benefits:
Today, the world’s largest corporations exist in siloed, centralized data systems and servers. These servers present a lucrative target for hackers. Even though these corporations have the best security, they’re also being attacked by the best hackers all day, every day. Decentralization prevents this problem:
“Its decentralized nature is the biggest reason blockchain companies are being hired in several industries. Due to its decentralized network, it is difficult for hackers to attack it. Every node on the network contains the same data as the others. Secondly, when any node breaks down, it will not affect the network.”
Blockchains are also perceived to be more secure. No single actor – like a malicious employee – can manipulate the network. Whatever is done on one node must be replicated and agreed by other nodes before it becomes active. That means a single actor – like a compromised employee or an employee’s hacked computer – cannot take down the entire network.
Blockchain networks constantly check themselves. Nodes must verify information with other nodes. This reduces the risk of fraud.
“Fraud cannot be carried out on any system built on blockchain,” explains Rangpariya.
Which Industries Are Benefiting Most from Blockchain Technology?
Blockchain technology is going to appeal to certain industries more than others. Rangpariya highlights a number of different industries that have adopted blockchain technology and enjoyed powerful benefits.
Supply Chain Management
Supply chain management is one of the biggest areas of opportunity for blockchain technology.
“Blockchain is now being applied to supply chain management and its major advantage to supply chain management is ease of tracking. With blockchain, you can easily track the movement of your goods to the point of consumption.”
Traditionally, supply chain management relies on a series of trusted relationships. You trust that your shipping partner is going to safely deliver your goods to an overseas merchant. You trust that the raw resources you’re purchasing from a grower in Ethiopia are pure, untampered, Ethiopian-grown coffee beans.
With blockchain, trust is still required – but trust can be verified with blockchain technology. Blockchain technology helps supply chain firms track items from the raw resource phase to the final consumer phase.
At the end of the supply chain, if something goes wrong, the provider can check the supply chain to see where something went wrong.
In a traditional supply chain system, you may not be able to determine where something went wrong. If the final good arrives in a damaged state, then you don’t have a blockchain to check where the item was damaged. Damage could have occurred anywhere along the supply chain.
Obviously, this is a simplification, and there’s still the potential for fraud with a blockchain-based supply management system. However, blockchain has the power to significantly optimize supply chain management and reduce fraud.
Accounting firms can benefit from blockchain technology. Accountants can use blockchain to record transactions, minimizing human error and leading to higher accuracy.
Blockchain-based accounting systems can also protect sensitive data from illegal or fraudulent manipulations. Instead of changing a value in an Excel spreadsheet to “cook the books”, for example, any accounting changes would need to be verified by a network of nodes.
Accounting is all about audit trails, and a blockchain-based accounting system creates a secure audit trail verified by a network of nodes.
Stock exchanges have explored using blockchain technology to expedite and secure stock markets.
“No industry needs the distributed ledger technology more than stock exchange,” explains Rangpariya. “So, it is not a surprise that the stock exchange regulatory bodies in several countries are already working towards making a paradigm shift to blockchain technology. In fact, Australia’s stock exchange is dead set for the switch.”
Stateside, Nasdaq is reportedly “all-in” on blockchain technology, and is reportedly developing a platform – in partnership with other companies – to transfer collateral to central counterparties on the blockchain when trading securities.
Energy supply firms – like energy producers – can also benefit from blockchain technology. Blockchain creates a high level of transparency, making it easy for energy consumers to verify their energy consumption with energy producers. It prevents overcharging while also helping energy producers spot fraud.
The global payments industry is one of the most obvious industries that can benefit from blockchain technology. Services like PayPal, Western Union, Skrill, and Perfectmoney can effectively transfer money worldwide – but they charge high fees, aren’t available in all countries, and move money slowly. These services all charge 2% to 6% fees, including fees for accepting payments and fees for transferring money between currencies. Compared to blockchain-based currencies, these money transfer fees are exorbitant.
A blockchain-based payment network – like bitcoin – has changed the way we send money worldwide. It seems inevitable that existing global payments platforms – like PayPal – will migrate to blockchain technology to boost security and speed while reducing fees. They’ll need to compete with bitcoin eventually.
Rangpariya outlines several major advantages blockchain technology has over existing financial transaction solutions, including:
Easy Mobile Payments: You can send bitcoin and other cryptos to anyone just by scanning a QR code using a mobile app. With the majority of the world using phones to communicate, mobile payments seem to be the way of the future.
Security: Cryptocurrencies are as secure as you want them to be. As long as you have taken the necessary steps to secure your money, crypto is the most secure financial transaction solution available today.
No Restrictions: Bitcoin and other cryptos aren’t limited by country, geographic location, or identity. PayPal and other centralized financial transaction providers have strict geographic limitations.
Cheap International Payments: The world’s economy is more global than ever before. However, we don’t yet have an efficient, cheap international payments system. Today’s international financial transfers are a mess of fees, exchange rate conversions, long transaction times, and other problems. Cryptocurrencies – and other blockchain-based payment networks – make cheap international payments a reality.
Ultimately, it’s obvious that blockchain technology is transforming industries worldwide. To read the full article from Nikhil Rangpariya, check it out at HackerNoon.com here.