‘Blockchain’ may sound like something that goes on a vehicle’s tires in icy weather or that perhaps is part of that vehicle’s engine. Indeed it is a type of technology that may help drive business worldwide at some point soon — but digitally, not physically. No matter what your industry, now is a good time to start learning about blockchain.
Blockchain also is sometimes called ‘distributed ledger technology.’ It was introduced in 2009 to support digital ‘cryptocurrencies’ such as bitcoin. Entries in each digital ledger are stored in blocks, with each block containing a timestamp and providing a link to the previous block.
Typically, a blockchain is managed on a secure peer-to-peer network with protocols for validating blocks. Once data is recorded, no one can change it without altering all other blocks, which requires approval by most network participants. Blockchain proponents argue that this process essentially authenticates all information entered.
The financial industry led the way in recognizing blockchain’s potential, foreseeing that users could execute transactions without relying on banks and other third parties. Another potential application is in the mergers and acquisitions (M&A) sphere. Buyers and sellers could shift due diligence documentation to blockchain, so financial and legal advisors would not have to spend as much time poring over so many different and disparate records. The M&A process could thereby be completed more quickly.
There also are many industries that could employ blockchain technology to conduct quicker and more secure transactions or simply track data more efficiently.
Take manufacturers, as well as virtually any supply chain business: blockchain could provide safeguards against errors, fraud, or tampering. This functionality could bolster trust among supply chain partners. Over the long run, blockchain may even eliminate the need for third-party payment processors.
Another example: the health care industry. Blockchain could be used to better secure electronic health information, improve billing and claims processing, and enhance the integrity of the prescription drug supply chain. All of this could positively impact the health care insurance market for every employer.
Ahead of the curve
Most business owners do not need to scramble to incorporate blockchain-related technology right this minute. However, you might want to get ahead of the curve by learning more about it now and pondering some ways that blockchain could affect your company. Let us know if you need further information or other ideas on the future of business.