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Is blockchain useful for every industry?

Blockchain could change all industries out there. Is it true, though?

The idea behind smart contracts is to reduce transaction costs associated with typical contracts while offering stronger security levels Blockchain will be able to provide a digital work trail of every candidate that gets into a hiring process The techniques blockchain uses in combination with its decentralized nature, make it a lot harder for hackers to access or steal sensitive data

By: BairesDev, a leading Nearshore Outsourcing Software Development and IT company 

Since its first appearance in 2008, blockchain has surely been the basis of lots of promises. First and foremost, it fueled the launch of several cryptocurrencies, all of which wanted to revolutionize the financial industry and the whole world with it. However, we’re still waiting for Bitcoin, Ethereum, Litecoin and the like to bring that massive change. This doesn’t mean that blockchain, the technological foundation for those currencies, isn’t worth the hassle.

In fact, if there’s something to be taken from the bitcoin phenomenon is the huge possibilities brought by blockchain itself. The secure ledger behind those cryptocurrencies has enough potential to change a lot of industries. In fact, ask Blockchain consulting firms and they’ll say that Blockchain could change all industries out there. Is it true, though? Let’s check it out.

Some basic concepts

To truly grasp the potential behind blockchain, you need to understand what it is all about. Basically, a blockchain is a series of immutable data records that are managed by a network of computers that don’t have an owner. In other words, each of the computers (also known as “nodes”) connects with each other, transferring blocks of data that are secured through cryptographic principles (AKA “chains”). 

Thus, a blockchain is a decentralized network with a sophisticated security level that prevents people from tampering with the data.

Those features (decentralization, cryptographically protected storage, immutability) are the basis of blockchain’s charm for a lot of people. All of them provide a secure environment for data storage and transfer, and grants enough transparency for everyone involved to know what’s happening at any given time – without giving them the possibility to change anything. 

Read: Blockchain-based startup offering tokens as financial awards to excel at university

The blockchain potential

All of the features mentioned above are enough for several companies to invest in Blockchain development for their own projects and products. That’s because Blockchain can work as the foundation for a multitude of uses. That’s right. Even though you may think the technology is just a facilitator of bitcoin, there are plenty of potential uses for it.

In fact, these applications are so broad that they can be used in a lot of industries. Thus, Blockchain is starting to feel less and less associated with the financial world in an exclusive manner. Now, this technology is starting to be seen in varied industries through projects related to telecommunications, healthcare, manufacturing, data management, logistics, and more.

Here’s why that’s happening.

1 – Blockchain makes smart contracts possible

Though smart contracts preexist the creation of Blockchain, it was this technology that has taken it to the spotlight. Per Wikipedia, a smart contract is a “computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract.” All of that allows for credible transactions without the monitor and control of a central authority.

The idea behind smart contracts is to reduce transaction costs associated with typical contracts while offering stronger security levels. Thus, a smart contract sets out the relationship between parts through the cryptographic code of a Blockchain. This allows for participants to “sign” any agreement and transact with each other without any mediator.

The very nature of smart contracts turns them into great alternatives for various uses across several industries. Thus, smart contracts can be used to govern insurance deals, mortgage loans, purchases made through the Internet of Things, and even employment contracts in any modern industry.

Read: AI arbitrage trading opportunities gain high profits in new blockchain asset class

2 – Blockchain can be used to aid hiring processes

If you ever had to hire someone for any kind of position within a company, you know how hard that process can get. It’s not just getting the right candidate that makes it so difficult – verifying what candidates say in their resumes can also be time-consuming and prone to errors. People tend to get “creative” with their titles, their education, and their references, and you may end up wasting a lot of time and money separating the real candidates from the ones that aren’t precisely truthful.

That’s when Blockchain can come in handy. In the future, this technology will allow employers to quickly establish a potential candidate’s identity and eligibility. There won’t be any need for you to verify the candidate’s credentials or his/her references. Everything will be available in a distributed ledger that won’t be able to be tampered with. 

Additionally, Blockchain will be able to provide a digital work trail of every candidate that gets into a hiring process. That trail will include the positions held, the time during which they held them, and the different companies for which the candidates have worked in the past. This will bring further transparency to the whole process and shed better light on all the candidates’ past careers. 

Finally, and as mentioned above, all new hires will sign smart contracts that will govern the relationship between the company and them. This will happen regardless of the timeframe for which the candidate is hired, meaning that even gig workers will be regulated by smart contracts on the Blockchain.

3 – Blockchain can potentiate accounting

Almost every company out there has an accounting area, regardless of its industry. That’s because keeping records of assets, transfers, and everything related to the company’s financial information is of vital importance. Accountants are tasked with measuring, communicating, and analyzing the financial information of every company activity. They are responsible for measuring rights and obligations over property and financial results.

If you have read that closely, you’ve surely noticed that accounting is a perfect fit for Blockchain. In fact, you could argue that, given its record-keeping nature, Blockchain is an accounting technology. Thus, the technology could increase the profession’s efficiency by providing absolute certainty over the ownership and history of assets. It could also serve to make clear the rights and obligations of the company, leaving accountants to focus on analysis tasks, as recordkeeping would be done through Blockchain.

This will also mark a major improvement for external auditors, as Blockchain will track and offer trails of every transaction and every asset owned by a company. That way, auditors will have the absolute certainty that companies won’t be able to conceal information from them, making the job a lot easier.

In a certain sense, Blockchain will replace bookkeeping and all tasks related to reconciliation that are so common for modern accounting. Of course, this will bring a massive change in how accounting is done across all industries since accountants that are now devoted to records will have to shift their focus to provide value to the company. 

Read: How UAE investors can benefit from blockchain investments – A new asset class

4 – Blockchain will improve security for data backups

If you’ve been paying attention to digital news lately, you’ve surely seen that one of the rising concerns among executives and business owners is the security of their data. Hackers and malicious actors are very active lately getting their hands on millions of records and sensitive data across all kinds of industries. That’s what forces companies around the world to invest millions of dollars to enforce their digital environments. With Blockchain, that could change for good.

Though in theory, a Blockchain isn’t necessarily safer than centralized cloud storage, the techniques it uses in combination with its decentralized nature, make it a lot harder for hackers to access or steal sensitive data. That’s because all the data that’s uploaded to the Blockchain is encrypted and distributed in pieces across different nodes. So, if a hacker wants to access one of those nodes, he’ll only gain access to a part of a bigger file. If he wants the whole thing, he’ll have to hack all nodes and decrypt them – without getting caught.

Getting all the encrypted pieces together from all the nodes that make a Blockchain is possible, but it certainly takes a lot of time, effort, and money to do so, especially when compared with centralized databases. That’s why so many people are starting to see Blockchains as great alternatives to store backups – they are hard to hack, they are always available, and they can’t be tampered with. A win-win for any kind of company.

5 – Blockchain could work as the bridge for nationwide data exchange

Given its high levels of security, the identification of every participant, and the impossibility to tamper with the existing data, Blockchain could serve as a means of communication, especially for organizations on a nationwide level that need that kind of security. The shared nationwide interchangeability roadmap issued by the Office of the National Coordinator for Health Information Technology can serve as the perfect example of this.

The idea is to create a network on a national level to securely transfer health records from patients from all over the country in the easiest possible way. The Office proposed the use of Blockchain as the basis for such an exchange, as it could comply with 3 main principles:

  • Ubiquitous, secure infrastructure
  • Verifiable identity and authentication of all participants
  • Consistent representation of authorization to access electronic health information

It’s true that the current Blockchain doesn’t fully comply with the 3 of those principles, but it’s the closest technology available. This example shows that this technology is on its way to becoming a secure bridge for sensitive information even for government agencies and institutions. This, in turn, could have a lot of various effects, especially in how the government works and gathers information (i.e. in voting elections or carrying out census).

Is Blockchain useful for every industry?

It’s important to remember that Blockchain is still in its infancy. Though it has been around for almost 12 years, people are starting to realize its full potential right now. Theoretically, there’s a lot that can be done with this technology and whose ramifications could change all kinds of industries for good. 

It’s also true that we’re closer to practical changes in certain industries and farther away from others, but the potential is undeniable. And while caution is mandatory when making grandiose claims about how Blockchain could change the entire world, one thing is certain: the potential is there and it’ll be to the different companies, institutions, organizations, and governments to see if it’s fulfilled.