The biggest disrupter of technology is – technology itself! Decades ago, when the internet arrived, it caused a storm. Then, the next big technology that has gathered similar attention is the ‘Blockchain’. It is not often that there comes a technology that is innovative enough to make way for other new technologies to be built upon it; and Blockchain is one such technology!
So, what is Blockchain, and what does it do?
Blockchain is a distributed peer-to-peer network that allows the sharing of valuable assets and data (such as digital currencies, smart contracts) in a secure ecosystem. The assets or databases in this ecosystem are not controlled by any single individual or authority.
The databases can be written to, but cannot be changed without the consent of all participating networks. This means that the data cannot be altered by any single user or authority in the blockchain without the consent of other participants in the network.
Any electronic transaction needs a third-party intermediary (a bank) to authenticate and record all payments. The intermediaries add to the cost of the transaction significantly. Unless there is an intermediary, people would double-spend, or make purchases with money they don’t have, as there is no record of the money being spent.
Blockchain eliminates the need for intermediaries (any individual, institution, company or government agency) that administer or govern any transaction between two or more people/ parties and keep a record of their transactions and information. It does so by creating a distributed ledger or record which is possessed and verified by other users.
Blockchain technology has many varied applications. Widely known Bitcoin (world’s first decentralized digital currency) is based on Blockchain technology.
Blockchains can be customized to serve a wide range of needs, with some main features that are common to all applications, let us see what they are!
1. Unlimited capacity
Blockchain technology can increase the capacity of a network beyond any limit. Thousands of computers that work together in a network can have and deliver more power than a few centralized servers.
2. Enhanced security
Blockchains are more secure, since there is no single point of vulnerability or failure that can force the network to shut down. For example, Bitcoin, which is based on the Blockchain technology, has never been hacked. Though it is possible to breach individual private keys if they are not stored securely; the Blockchain network remains secured by itself.
All blocks or blockchains in the network are secured by many computers (nodes) that confirm transactions on the network. Public Blockchains use Bitcoins to reward miners in the network for verifying and recording transactions on the networks.
3. Immutability/ Irrevocability
A centralized database is susceptible to being corrupted and requires a trusted third party (intermediary) to check the validity of all data and information. On the other hand, altering or deleting the distributed ledger would need control over at least 51% of the hashing power, and the deeper a hacker tries to go in a ledger, the expensive the attack becomes; making it practically impossible to hack.
4. Faster Settlements
Traditional banking/ transaction processes are slow, and usually, settlements within banks take a week or more to complete. No wonder, financial institutions spend lavishly to upgrade their systems! On the other hand, Blockchains can settle transactions in real time, or within a few minutes; at a fraction of the costs involved in traditional transaction processing. This technology helps consumers and financial institutions save considerably in terms of time and money.
How Indian businesses can leverage Blockchain technology
Business enterprises must keep up with technology to remain relevant. The last decade has been that of great Financial Technology (Fintech) development in India. A much-hyped topic in finance has been that of Bitcoin – world’s first decentralized currency. The Bitcoin (which is based on Blockchain technology) awareness and usage has been growing steadily in India. Indian businesses can make use of Bitcoins by:
1. Accepting Bitcoin as a payment method
Bitcoin as a payment method cuts out the risk of chargebacks, credit card fraud, and high transaction fees. These are just a few reasons why merchants in India have begun to prefer Bitcoin merchant payment gateway over traditional ones.
2. Using Bitcoin on business trips
Bitcoins make sense when you travel for business. Secure Bitcoin wallets come with easy to use apps. For overseas travellers, bitcoin usage can eliminate currency exchange woes; simply convert bitcoins to the local currency.
3. Look for ways to use Blockchain technology
Numerous companies are exploring Blockchain technology to cut costs, and stream line their processes.
4. Use Bitcoin for cross-border trades
Expand your customer base to foreign markets by accepting bitcoins as payments, and reduce transaction costs and reconciliation timelines.
5. Bring about transparency in accounts
Since blockchain records cannot be tampered with, it promotes transparency.
As compared to other cryptocurrencies, Bitcoin is comparatively more regulated than others. As per Amit Bhardwaj (GBMiners, India), more than 500 Indian merchants are already accepting bitcoins. He adds that trading volumes are growing rapidly on the major Indian exchanges.
To begin using bitcoins for business, you need to create an account with a bitcoin merchant solution, which helps you accept Bitcoins. Then, there are bitcoin exchanges that convert bitcoins to other currencies such as Indian National Rupee (INR), Dollars, etc. at a very small fee.
Once you have your Bitcoin merchant account, let your customers know that you accept bitcoin as a payment mode. Likewise, you can also start paying your vendors and suppliers in bitcoins if they accept the same. If you run a brick and mortar store, your customers can pay you from their mobile phones using a mobile app such as a bitcoin wallet, using a QR code.
We can say that Indian businesses are exploring Blockchain technology in various sectors such as supply chain management, smart contracts for real estate, transportation, healthcare, etc.
As per an article published by CryptoCoinsNews (an independent site providing news coverage around cryptocurrencies), The Institute for Development & Research in Banking Technology (IDRBT), which is the research arm of the RBI, has tested blockchain solutions for core banking processes in the country. The researchers have noted that blockchain technology has developed enough to be the core technology to support the digitization of the Indian National Rupee (INR).
Recently, Yes Bank, with one of India’s leading companies in the engineering and manufacturing sector, implemented Blockchain for Supply Chain financing. They aimed at reducing the turnaround time for an invoice to payment cycle from the current 60 days to almost instant, real-time processing.
The applications of Blockchain technology will only grow in the future.
Also Read: What Is This Blockchain Thing?
(Disclaimer: This is a guest post submitted on Techstory by the mentioned authors.All the contents and images in the article have been provided to Techstory by the authors of the article. Techstory is not responsible or liable for any content in this article.)
Image Source: totalbitcoin.org
About The Author:
Rohit Arora, CEO and co-founder of Biz2Credit, is often quoted on small business lending by major news media, including the New York Times, Wall Street Journal, CNNMoney, and the Washington Post. He holds a Masters Degree from Columbia University and an Engineering Degree from India.
Under Rohit’s leadership, Biz2Credit visualizes a growth of its customer base by about ten times in the next couple of years and is projected to go global soon.