By narrowly identifying blockchain with crypto, enterprises are overlooking its tremendous benefits and transformational role in diverse segments
‘Half-baked knowledge is a dangerous thing.’ This axiom aptly reflects the current scenario where enterprises are wary of blockchain since it is closely identified with cryptocurrencies. To resolve misconceptions, a holistic understanding is imperative to know what blockchain is all about and its inherent advantages for the Industry.
At the outset, it is imperative to understand that blockchain is a foundational technology first used by Bitcoin and, later, by numerous other entities. Unfortunately, because of the volatility and uncertainty around cryptocurrencies, the connection has become an unwanted burden for blockchain.
Global Buzz and the Origins
Accordingly, one needs to know other global blockchain users, like 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 spheres, recording major milestones annually.
Conversely, countless traditional organisations hesitating to use blockchain may not necessarily be marking new milestones every year. Without a doubt, from banking to insurance and cybersecurity to healthcare, the distributed ledger technology is creating a global business buzz today.
The origins of blockchain decode why it is so closely identified with Bitcoin. In 1991, Stuart Haber and W. Scott Stornetta envisaged what later emerged as blockchain in the new millennium. Their early work revolved around a chain of cryptographically secured blocks with tamper-proof timestamps of documents. In 2008, the present history of blockchain began when Satoshi Nakamoto, a pseudonym for the creator(s) of Bitcoin who wish to remain anonymous, worked on Bitcoin, the first application for this digital ledger technology.
As a decentralised database, blockchain is a list of records or an electronically distributed ledger accessible to many users. To log, process and verify each transaction, blockchain uses cryptography, thereby making transactions transparent, secure and permanent.
Blockchain hosts two general categories. The first is permission-less and open to anyone. The second requires permission, with every participant authenticated by the person or group overseeing it. The second category is further segregated into networks of private and community blockchains.
It is the latter category that holds tremendous potential for all enterprises. A TechRepublic Research survey notes that while 70% of the professional respondents said they had not used blockchain, 64% felt the digital ledger could affect their segment in some way, with most predicting a positive outcome. Likewise, analyst entity Gartner’s Trend Insight Report noted that business value via blockchain would grow to more than $360 billion by 2026 and surpass $3.1 trillion by 2030.
Thanks to its rich security elements, cybersecurity offers the best growth prospects for blockchain.
The technology is also used increasingly by financial services firms due to its tamper-proof features that ensure data security by allowing participants to verify the authenticity of files.
Safeguarding Food Safety
Nonetheless, apprehensions or resistance from enterprises in other verticals in adopting blockchain may be impeding the overall prospects of these industries and the economy at large. So it’s time to clear the web of misinformation and low awareness that could be impacting the economy in diverse ways. To achieve this objective, one must consider a comparatively offbeat example to drive home the point about the criticality of blockchain for varied enterprises.
One of blockchain’s main features is immutability – particularly prized in domains where data protection and product integrity are sacrosanct. The food industry is one such vertical where product safety is paramount because of the multiplicity of stakeholders – farmers, manufacturers, processors, logistics partners, distributors, retailers, certifying and government agencies, etc. Through blockchain, food safety can be safeguarded by tracking items right from their source to the destination. For instance, when customers purchase seafood from any frozen food outlet, they can track the specific product from the area where the catch was made across each supply chain section right up to the point of purchase.
When consumers are made aware of how blockchain supports food security, they will buy products without unwanted concerns about food contamination or allied health hazards. Conversely, without blockchain, contaminated food would only be detected at a very late stage. Once all stakeholders in the supply chain know that blockchain is in use, each person will be motivated to handle items more carefully to ascertain that the quality and standard of food are uncompromised.
Besides backtracking, blockchain assists in keeping counterfeit items out of supply chains. As the source of spurious or counterfeit foods can be tracked and identified, unscrupulous producers and suppliers of such goods will not resort to risky practices for the fear of being caught.
Moreover, blockchain’s food tracing feature can actively aid in minimising wastage. Delayed product shipments, substandard inventory management and inadequate cold chain facilities are some of the reasons causing food wastage. Irrespective of the cause, blockchain can prevent it as companies adhere to all the required logistics protocols, improving both delivery and inventory management. Since food items are tracked 24×7, enhancing efficiencies and limiting wastage to the minimum is easier and more convenient. Apart from curbing food fraud, this boosts consumer trust.
Coming back to the benefits for businesses, the biggest is that blockchain can lower transaction costs dramatically. Currently, records maintained privately remain distributed across various internal units. Consequently, reconciling transactions across various individual/private ledgers can be prone to errors 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. In essence, changes in one copy are updated automatically and simultaneously in other copies.
Given its unique functions, if deployed across industries – financial, manufacturing, services and more – blockchain can reshape the Indian economy by curtailing transactional costs. As new-age ecosystems like the metaverse hover over the horizon, blockchain is the perfect medium for enterprises and the economy to be future-ready.
In conclusion, another axiom puts the matter in perspective: ‘The love of money is the root of all evil.’ Just as there is nothing inherently wrong with money, except excessive greed for it, the same goes for apprehensions about blockchain. Verily a universal foundation for cryptocurrencies, blockchain can be used for positive purposes to promote safe and secure operations of all enterprises as well as the economy on the whole.
Views expressed above are the author’s own.
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