You may be familiar with blockchain technology, commonly associated with Bitcoin and other cryptocurrencies, but that only begins to scratch the surface. Blockchain is much more than simply the technology behind digital currencies. In fact, many people believe it could soon end up driving global business and transforming a number of vital industries, from politics to health care. No matter your industry, there is no better time than now to start learning about blockchain.
What is blockchain?
Blockchain, also known as “distributed ledger technology,” was introduced in 2009 to support digital cryptocurrencies such as Bitcoin, Ethereum, and Ripple. Like much of the technology world, virtual cryptocurrencies rely on a database that tracks large volumes of transactions and keeps them secure. Blockchain is this database.
The technology behind blockchain consists of a series of blocks, which are essentially records of new transactions. Each block contains a timestamp and provides a link to the previous block, thus creating a chain of blocks (hence the name).
Blockchain is typically managed on a secure peer-to-peer network with procedures for validating each block. Once data is recorded, it cannot be changed without altering all the other blocks, which requires the approval of most network participants. This process supposedly creates a fraud-proof system and essentially authenticates all information exchanged, giving it tremendous potential for use outside the digital currency world.
5 industries that blockchain may soon drastically transform
- Financial Services
With blockchain technology being able to send digital assets securely, it could eliminate the need for trusted third parties such as banks and financial institutions. It’s no secret that today’s financial systems lack inclusion and fairness and that customers gain little from their interactions with banks. However, with a smartphone and internet connection, users could execute transactions without relying on banks and other third parties, eliminating excessive interest rates and middleman fees. Thus, once the power is shifted to the individual, people would no longer need banks to make loans, provide credit, or cover intermediate payments. This means that payments, clearance and settlement systems, securities, fundraising, loans, and credit could all be disrupted by this disintermediated technology.
- Supply Chain Management
The supply chain industry as a whole is riddled with challenges, particularly the rising cost of doing business, efficiently supplying products, leveraging mobile devices, and learning how to use data proficiently. For manufacturers as well as supply chain businesses, blockchain presents promising opportunities to provide safeguards against errors, tampering, or fraud. This could build trust among supply chain partners and ultimately eliminate the need for third party payment processors. It could also enhance transparency and traceability while reducing administrative costs.
- Health Care
Another major industry that blockchain may soon radically transform — and perhaps the most promising — is the healthcare industry. The healthcare landscape is currently filled with massive inefficiencies including obsolete processes, outdated infrastructure, and legacy data management systems. It has been extremely challenging to modernize the entire industry on a large scale, but blockchain could soon change that. Blockchain technology could be used to improve billing and claims processing, establish integrity in the prescription drug supply chain, and better secure electronic health information. All of this would undoubtedly impact the healthcare insurance market for employers as well.
- Real Estate
Real estate transactions are generally conducted through offline, face-to-face interactions with various entities, but blockchain is disrupting this, too. Blockchain platforms now offer “smart contracts” which would allow assets such as real estate to be traded just like digital currencies. It also offers the ability to streamline many processes in the real estate industry by enabling people to securely and efficiently share money and data. With blockchain technology, real estate transactions can be made more secure and equitable and may soon become a true peer-to-peer activity, with blockchain platforms doing most of the middleman work.
Just as in other industries, the opportunities for decentralized systems in governance are endless. In many countries around the world, voting is manipulated in favor of certain parties or individuals. However, blockchain platforms could bring about a more honest political voting system. Blockchain technology could also make its way into our taxation systems, allowing transactions to be tracked and taxed almost instantly. By automating the process, this could one day make annual filings a thing of the past. Utilizing blockchain technology would also create more accountability for those in power through the transparent nature of blockchain ledgers.
Stay ahead of the curve
Because blockchains are digital ledgers, the technology can be used for countless things other than currency and therefore may end up forever changing the business world as we know it. A host of industries could utilize blockchain technology to manage transactions faster and more securely or simply to track data more proficiently.
Yes, blockchain technology has the potential to shape many aspects of our future lives, but keep in mind that this is not an immediate, overnight change. As a business owner, you don’t need to be scrambling to incorporate blockchain platforms right this minute. However, we at MGA want to make sure you stay ahead of the curve by making you aware of what is to come. This way, you can start planning now about how this technology could affect your business in the future.
As always, don’t hesitate to reach out to us if you have any specific needs you’d like to discuss further. At MGA, we are here to take the complexity of this ever-changing world and make it simple for you.