How Blockchain Can Secure Your Business Transactions
June 23, 2022
It’s no secret—your business relies on clear and easily accessible information. From customer orders to payments, these records are essential for planning strategies and monitoring past performance.
Many businesses are investing heavily in blockchain technology because they understand how important secure transactions and information are. In 2008, developers originally introduced blockchain as support for Bitcoin. But it’s evolved over time, revealing an unmatched potential to streamline just about any industry.
We’ll show you how blockchain can become a key tool for your business, helping you secure all your transactions.
Understanding the Basics: What is Blockchain?
Think of blockchain as a ledger that others can view but can’t change. It’s shared only between members who have access and records transactions across a business network. Blockchain can also track tangible and intangible assets as they move through the network. Processes like trading and tracking are the core functions of blockchain. Your business can apply this technology to almost any product or service with a market value.
The Advantages of Blockchain
The concept of blockchain is interesting, of course, but can it make a difference in your business? The answer is a resounding “yes.” Here are a few of the key benefits of incorporating blockchain technology in your operations.
With information constantly changing hands from vendors to suppliers, there are undeniable holes in your typical supply chain. Blockchains level the playing field. They allow the decentralization of data when multiple entities play an important role in contributing and reporting information.
Since everyone in the network has access to records, data is more easily shared, reviewed, and controlled between functional components. Everyone can see updates, and that transparency breeds trust.
Blockchain is connecting the digital dots itself, removing the need for any “middle-man.” You can say goodbye to third-party vendors who only make tracing transactions more complicated and expensive.
And thanks to the trust that decentralization brings, there’s no need for outside vendors to help establish policies or mediate transactions—essentially, that’s already being done for you through your network. Getting rid of these vendors can bring significant cost reduction, making space in your budget for the things your business actually needs.
Digital Record Preservation
Your information is a precious commodity. You will need to have a good, reliable cybersecurity strategy to protect your data from an attack. But blockchains can also help protect your records from human error.
No member of your blockchain can permanently change any part of this ongoing record. If someone discovers that one of the blocks contains an error, a new block has to be added that shows the correct information. The original mistaken block remains visible so that everyone can see where the error occurred.
When two parties involved in a transaction don’t trust each other, blockchain makes it possible to complete that transaction with confidence. If someone attempted to sneak in a change to the transaction, the change would be seen and rejected by the network.
You don’t need to worry about paying exorbitant fees to find someone well-versed enough in your industry to pass along the right data or approve certain types of transactions. Unlike many vendor-operated software programs or platforms that are industry-specific, blockchain isn’t boxed into any one sector.
How Does a Blockchain Function?
When you make a business transaction, like a digitally-signed contract or customer payment, that transaction is recorded as a block of data. That block of data is then sent to a node (or nodes) in the blockchain’s network. The network determines the validity of these blocks, and all the data connected to an asset is linked together. That way the information is preserved no matter how many times it changes hands.
Tracking Inventory and Sales with Blockchain
As an example, let’s say that you’re using blockchain to track a product order. When the shipment arrives, it’s inventoried and priced for distribution. In this case, your blockchain might originally consist of three movements (or transactions):
Shipment: This is a block of data and could include information from the manufacturer. The record might include the shipment number, vendor, and delivery time.
Line Items: The next block might cover the specific items in each order and their quantity or cost as they’re delivered to a warehouse. They could track what products are out and what’s sitting in storage. No matter what information is included, this second block of data is linked to the first.
Sales: The third block might follow the transaction from the retail store to the final customer. The store might include purchase price, quantity, and customer information. Again, this block links to one and two.
Any future blocks that you might create will seamlessly mesh with the existing transaction record. This will form a secure and valuable record of this or any other process.
Different Types of Blockchain
There are three different versions of a blockchain.
Anyone can join a blockchain network—in fact, they’re incentivized to join. Because the network is open to anyone it is essentially decentralized, making it a virtually authority-free experience.
Only authenticated, verified and validated participants can join a private network. The owner or operator has virtually all of the control within the chain, so they decide the protocols, mining rights, and rewards. They can even override or delete entries. If this is the experience you are looking for you might as well stick to a bank.
Also called a consortium, this network is for two or more businesses that are collaborating on a project. They might set up a blockchain so that members on the same project who work for different companies can share information. The downside? You need to closely manage the information you share here.
Getting on the Blockchain Train
If you haven’t looked into implementing a blockchain system, there has never been a better time than now. Your information will be reliable, secure, and available to everyone who needs it. While Blockchain technology is still blossoming, it will change the way we do business by creating information-rich transactions.