THE BLOCKCHAIN TECHNOLOGY — BUSINESS BENEFITS

The blockchain is a cryptographic technology that decentralises the processing of transactions. It can be used to shift information more quickly, improve security and deliver a new form of business process automation through Smart Contracts. These contracts use pieces of code which adopt the blockchain as a database and lines of code for process governance and execution. They create a new paradigm in business processes, improving performance and security.

The trouble is many people in business have difficulty understanding the blockchain. This is why we will try to illustrate, in the most pragmatic way possible, what are the real benefits that lie behind this new concept.

Demystifying the common hype around blockchain, we can simply affirm that it is “just a database”, a secure, decentralized and transparent container of data that introduces a smart concept — link each data with the previous data using cryptography. So, each transaction is linked to the previous transaction via the hash algorithms that reduce the amount of data contained in the transaction to a single and fixed length string. This string is then added to the next transaction and recalculated creating the chain.

However, rather than exploring how blockchain works, let’s delve into how it can be adopted in the enterprise business model to harness the many benefits this interesting technology has to offer.

Since an enterprise is a complex set-up, it involves processes to connect people and their use of information for various day-to-day purposes. When we talk about processes, we are referring to formal procedure used to fulfill a specific action or transaction. Sometimes the processes may only need coordination with people within the organization, and at other times these processes may require collaboration with other organizations to achieve business goals.

These “Business Processes”, as commonly termed in an organizational atmosphere, could be orders, invoices or payments — all transactions that involve people and data. Here the blockchain comes into play, helping organizations protect all these transactions.

But, can transactions be secured using a database? No they can’t! There needs to be a layer of logic, more precisely business logic, to merge this data with the actions that people can take using it. Smart Contracts are this layer of business logic, which enables blockchain to support a business process fulfillment.

Simply put, Smart Contracts manage transactions in a pre-programmed, automated way. The common logic used to complete a transaction is either ‘If-this-then-that’ or ‘after-this-then-that’. Hence, it’s a logic orchestration between subjects (or things) involved in the transaction.

As can be seen, Smart Contracts offer the flexibility that makes their adoption easy in almost every industry — from financing for various trades to energy distribution, from insurance to loyalty and rewards operations in retail and e-commerce and for digital rights management (DRM) and micropayments systems as well. Indeed, they can adapt and be shaped based on business requirements.

Smart Contracts will be the way to live in the very near future. Looking forward to see what’s next!

Thanks for reading :)

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