You have probably read many articles stating that blockchain technology is the holy grail for everything. You have had meetings in your boardroom, agreeing that your company needs ‘to do something with blockchain’. Then what? Let me tell you what blockchain can do for your business.
Features of blockchain technology
Blockchain technology, or digital ledger technology, is a kind of database with three special features. The data stored in the blockchain is immutable. The blockchain is distributed. Thirdly, the stored data is safe, because every piece of data has a digital signature and the data can be verified through cryptography.
In the case of a Proof of Work blockchain, like the blockchain of the Bitcoin protocol, miners invest energy to verify and secure transactions in the blockchain. Each new block builds on top of the previous one. If there would be an attempt to change the previous block, it would mean that the malicious miner needs to recalculate all the succeeding blocks. This would cost an enormous additional amount of energy and computing power. Lastly, game theory takes away the economic incentive to cheat. If a party wants to cheat the system it needs more than 50% of the miners to work with this party. Staying honest usually costs less for the miners, so by staying honest they make more money.
These features make blockchain technology a system you can rely on. You can trust the system to work without the need to trust someone. The verification of the information is done by all the nodes in the network. All nodes in the network have access to the same information. The history of the information is immutable.
Effects of blockchain
The features of blockchain technology have unprecedented side effects. It is possible to do triple entry accounting. This gives you a foolproof administration, that can be audited beforehand. Tamper-proof time stamps provide foolproof evidence of, for example, the existence of a piece of information at a specific time. Smart contracts, which are programs that execute upon events recorded onto the blockchain, provide guaranteed processes.
The Blockchain State of Mind
You should look at your company’s processes with the above-mentioned features of blockchain in mind. We have experienced that blockchain technology is useful when there are more than two parties involved. These parties need a shared common truth which they can trust instead of the need to trust each other. The parties should have conflicting interests. And, automation of transactions should have added value.
Does your business need the Blockchain State of Mind? Feel free to drop me a line.