How blockchain is changing business

Started by autorenta, Aug 14, 2022, 11:07 AM

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Blockchain is not only a cryptocurrency. With it, you can optimize various business processes: from verifying the authenticity of goods to controlling the entire supply chain in international shipments. The pandemic has accelerated the process of introducing blockchain into business. According to PwC forecasts, by 2030 global GDP will grow by $1.76 trillion thanks to the blockchain.
Blockchain can be used in any area, but it is not always profitable

Blockchain is a continuous chain of blocks with information that cannot be removed or corrected, but can only be supplemented. Copies of block chains are stored immediately on a large number of computers, that is, decentralized. Accordingly, if one or more computers fail, the information is not lost.

The main features of the blockchain are confidentiality, the absence of intermediaries, and the speed of financial transactions.

The full functionality of this technology can only be realized with the interaction of hundreds and thousands of participants, so the blockchain is not suitable for local use within one company.

    Blockchain brings the greatest benefit to business with a large number of suppliers, buyers, franchisees who need to be constantly monitored.

There are no restrictions on the areas where the technology can be used. However, you need to understand whether its implementation is beneficial for the business - a few questions will help with this:

    How many parties are involved in the exchange and storage of data?

    Are there intermediaries that complicate the process and make it more expensive?

    How important is the speed of decision making and proceedings?

    Is there a procedure for verifying the authenticity of information?

If the answer to most questions is yes, then the company should think about introducing technology into business processes.

The cost of a commercial blockchain project is calculated individually each time

Project costs vary by country, team composition, industry, project size, development goal, and other factors.

For instance, a simple smart contract — a computer program to automatically execute agreements on a blockchain when certain conditions are met — costs $200‒1,000, while the implementation of a large-scale blockchain application like Uber will cost at least $220,000. The cost of developing a blockchain-based decentralized application (DApps) starts at $1,000, and to set up an ERC20 token - a protocol that allows you to create other tokens on top of the blockchain - you will need to pay a minimum of $10,000.

    The most budget prices are from teams from India, China and Eastern Europe - they can be hired for $10,000. The average price of services from European developers is $30,000. The most expensive specialists are from the USA, the cost of their services starts at $50,000.

The most expensive blockchain products are developed in the field of real assets - assets that have a material and physical form - energy, legal services, utilities. This is due to the scale of projects when corporations or states act as customers.

    Blockchain is actively used in banking and finance, logistics, retail, healthcare, and copyright protection.

The most popular tasks that blockchain solves
Allows you to confirm the authenticity and origin of the goods

Distributed ledger technology - blockchain - is a good tool to combat counterfeit and counterfeit products.

So, for retail chains that work with a large number of suppliers, blockchain helps to increase and strengthen the trust of buyers. The technology makes it possible to track the entire supply chain, starting from the manufacturer, and products can be checked for compliance with environmental and other standards.
Increases the security and transparency of financial transactions

As a result, the market is better protected from fraudsters and cybercriminals. In addition, blockchain reduces costs and reduces the time of cross-border payments, which makes monetary services available to a wide range of people.
Helps resolve disputes

The data that is recorded on the blockchain cannot be corrected or erased. Accordingly, when resolving a conflict situation, you can be sure of the authenticity of the information.

Blockchain is a new technology, and mistakes in its implementation in business processes are inevitable ⟶ let's consider the most common
Ignoring the main features of the blockchain and, conversely, using it where a regular database can handle

Before implementing the technology, it is necessary to determine in which business processes the blockchain will bring the greatest benefit, and where it is better to use traditional tools, such as, for instance, in internal document management.

To assess the need for implementation, you can refer to the experience of colleagues in the market or consult with developers of blockchain solutions.
Difficulties in integrating blockchain into existing technologies and misconceptions about universality

Blockchain is the base that requires applications to cover individual business needs. For instance, to use technology in organizing deliveries, you need a user interface, you need interaction mechanisms, and more.

In addition, the market consists of disparate platforms that offer solutions to individual issues: for instance, privacy, tokenization. Compliance standards have not yet been developed, and there are no universal options that cover everything at once.

High expectations when using smart contracts

Smart contracts are one of the most attractive features of the blockchain.

These are the conditions for concluding a transaction, which are recorded in the form of a computer code in the blockchain. The contract is executed automatically as soon as the conditions are met.

The technology is not yet fully developed, so there are problems with scalability and manageability. The lack of unified legal regulation for all countries further complicates the use of smart contracts.
Blockchain implementation carries certain risks.

On the subject of risks, a large-scale study was conducted by ISACA (Information System Audit and Control Association - International Association of professionals in the field of IT audit, IT consulting, IT risk management and information security) and AICPA & CIMA (American Institute of Certified Public Accountants and Chartered Institute of Management Accountants - Certified Institute of Management Accountants and the National Professional Organization of Certified Public Accountants in the United States).

According to their report, the risks can be divided into five groups:

    risks at the development stage: the development of a blockchain project includes certain protocols and algorithms; any deviation from them violates the integrity of the protocol and the entire system, which becomes vulnerable to external hаcker attacks, fraud and abuse in the system;

    risks in the exchange and transfer of data: the exchange of information between different blockchain systems is not always carried out efficiently and can lead to errors, which affects the stability of business processes;

    infrastructure risks: 1) the volume of data stored in the distributed registry is constantly increasing - exceeding the transaction limit can lead to data reset; 2) incorrectly coded system updates also threaten information loss or corruption;

    smart contracts vulnerability: in transactions using smart contracts, counterparties can be from different countries. The legal regulation of the blockchain in each state is different, there are no unified unified standards in the world, accordingly, when resolving conflicts, legal difficulties may arise;

    risks when using security keys: Blockchain relies heavily on private and public keys. Despite the decentralization, the technology is used by people - the human factor cannot be completely excluded. When a user works with a distributed ledger from their PC, there is a possibility that the credentials for accessing the system can be hаcked and stolen.

How blockchain is used

Simplifying payment processes is beneficial for credit institutions, and blockchain offers a cheap way to send payments.

For instance, the technology company Ripple has established partnerships with more than 300 clients, including Santander and Western Union. The company's service xCurrent allows you to make calculations in real time.

Another popular use of blockchain by private business is supply chain management. Major technology companies such as IBM and Accenture are developing enterprise blockchain solutions for their clients.

So, in 2018, IBM successfully launched the Food Trust Network blockchain network based on the Hyperledger Fabric protocol. With its help, large stores - for instance, Walmart - can track food throughout the supply chain from the manufacturer to the store.

Another successful IBM project is with the Danish corporation Maersk, the world leader in container shipping. The TradeLens blockchain platform allows carriers and cargo owners to not only exchange information about proceedings, but also send monetary documents to each other.

In simplified form, it looks like this:

    the recipient sets requirements for documents;

    the sender uploads them to the online storage;

    information about the place of data storage appears in the distributed ledger;

    the warehouse employee confirms the delivery of the goods using an individual encrypted signature;

    the recipient similarly confirms the delivery.

The number of participants in the process may be greater. For instance, in international transportation, customs is an obligatory link. At the same time, the process itself remains unchanged: all participants have special software in which information about all operations is recorded at each stage. Each participant confirms his actions with the help of a private personal key.

 The metal-backed tokens are issued using the Atomyze blockchain platform and are traded on the German and London exchanges.

The mining and metallurgical company is actively using such an advantage of the blockchain as supply chain monitoring. Buyers can make sure that the delivered goods meet technological and environmental standards. The first batch of carbon-neutral nickel will be sold with the help of tokens.

The S7 air carrier, in partnership with Alfa-Bank, has developed a blockchain platform based on the Hyperledger Fabric protocol. In 2020, the Nemo.Travel ticketing system joined the platform.

Blockchain-based infrastructure allows real-time payments from booking to bank execution. The new version of the platform has reduced the transaction time to 15 seconds.

Thus, the money of agents is constantly working, and not kept on deposit, which is especially important in a crisis in the tourism industry. Human participation in the process becomes minimal: you no longer need to write acts, issue invoices, and so on. It is planned that over time, all companies involved in the organization of civil air transportation will be able to connect to the platform: suppliers of fuel, in-flight meals, and others.

However, the blockchain is not perfect, as it might seem at first glance. According to a number of experts, there are areas in which this technology, on the contrary, can worsen reliability. When conducting transactions, mathematical reliability does not protect against legal imperfections. And virtual tokens, which are gaining popularity, have little connection with the real physical world.

What is the result

Blockchain is a progressive technology, but not a universal solution to all problems. Blockchain improves some processes, remains useless for others.

Each blockchain solution is individual and is created for the needs of a specific business. Accordingly, the development and implementation of blockchain solutions is a promising industry that is worth learning.


I am interested in the question of why they choose existing cryptocurrencies, for instance, Ethereum, although for their own purposes, such as balancing work with clients, it is quite reasonable for them to create their own or use some with a minimum cost ... for instance, NFT, why do they need Ethereum?
this increases the cost of entry, makes it more troublesome at the start.

Я И Бал Крассавиц

  Hello! You wanted to give credit to the author, for the informative and verbatim explanation. But, nevertheless, it was possible to explain it to people in simple language (just for me, people like it when everything is simple and clear).
 Blockchain: 1) an opportunity through which you can transfer money to each other safely.
 2) Use a third party (banks, intermediaries, etc.).


Pros and cons of Blockchain:

Blockchain offers solutions that were previously unavailable to organizations, despite the rapid development of technology. But this system, like any other, is not without its own shortcomings. Let's consider the main advantages and disadvantages of blockchain technology.

There is no single point of failure. Distributed registry technology is designed so that the system is supported by many network nodes. In order to completely destroy the database or stop the network, it is necessary to disable all nodes. If at least one or two nodes continue to work. hаcking is further complicated by the fact that it is unclear exactly which nodes support the network, since such information is not stored in the blockchain.

blockchain. Cryptocurrency
Security and anonymity. Although blockchain transactions are visible to all users, they do not know who is hiding behind them. In centralized banking systems, it is possible to gain access to client accounts and transactions by hаcking the company's webserver.
But the blockchain system is protected from this, and it is almost impossible to get access to even one account unless a cybercriminal picks up a private wallet key or a seed phrase. Keys and mnemonic passwords (sids) are protected by 256-bit encryption, so even a supercomputer will need several years to find a password for a cryptographic wallet using the bruteforce method.

Improving the accuracy of information verification. When working with data, the human factor is included, so the system will not be immune from errors. Confirmation of blockchain transactions of the autonomous system will increase the authenticity of the data.
Elimination of intermediaries. By eliminating intermediaries in the exchange chain, companies can significantly reduce costs and increase business efficiency, since automatic transactions using, for example, a smart contract are much faster.

Transparency. Blockchain allows you to track data from start to finish, which eliminates the need for trust on the part of users or customers.
This will also allow the business to attract more customers, since each buyer wants to be sure that he is buying the expected product, and not a fake or a marriage.

Immutability. The blockchain algorithm is designed in such a way that no one can change or fake information. However, in some cases, this may lead to the fact that the information will be unreliable if reliable data verification schemes are not organized.

Registry scaling issues. The approach in which the entire history is stored on multiple nodes is also far from perfect. Huge computing resources are required to maintain the blockchain system. In addition, the size of databases continues to grow rapidly.
Sooner or later, we will face a situation where there is simply nowhere to store data, of course, unless "super disks" are invented before that, capable of storing a fantastic amount of data with low energy consumption and size. For example, the bitcoin blockchain uses about 100 times more computing power than all Google data centers combined.

Note. The developers, of course, are aware of this problem and have found one solution: segmentation of the blockchain or sharding, which will solve the scaling problem and increase the throughput of transactions.
With this approach, each node will not process all transactions of the network, but will process and store only that part of the information that relates to its segment. For example, if the network is divided into 10 separate segments, the amount of data will decrease by 10 times.

Lack of control. On the one hand, preventing third-party interference eliminates the risks of fraud and data fraud. But there is a downside to this. The lack of control opens up room for maneuvering for those who commit illegal financial transactions.
Nobody will be able to cancel or prohibit the transaction. In defense of the blockchain, we can say that even before the advent of the blockchain, nothing prevented criminals from performing illegal operations. But now it has become a little easier to do.