Blockchain uses a shared and immutable ledger that can only be accessed by members with permission. Network members control what information each organization or member may see, and what actions each can take.
Blockchain is a trustless network — not because business partners don’t trust each other, but because they don’t have to.
This trust is built on blockchain’s enhanced security, greater transparency, and instant traceability. Beyond matters of trust, blockchain delivers even more business benefits, including the cost savings from increased speed, efficiency, and automation. By greatly reducing paperwork and errors, blockchain significantly reduces overhead and transaction costs, and reduces or eliminates the need for third parties or middlemen to verify transactions.
Operations often waste effort on duplicate record keeping and third-party validations. Record-keeping systems can be vulnerable to fraud and cyberattacks. Limited transparency can slow data verification, says IBM Research.
And with the arrival of IoT, transaction volumes have exploded. All of this slows business, drains the bottom line — and means we need a better way. Enter blockchain.
1. Greater trust
With blockchain, as a member of a members-only network, you can rest assured that you are receiving accurate and timely data, and that your confidential blockchain records will be shared only with network members to whom you have specifically granted access.
2. Enhanced security
Your data is sensitive and crucial, and blockchain can significantly change how your critical information is viewed. By creating a record that can’t be altered and is encrypted end-to-end, blockchain helps prevent fraud and unauthorized activity. Privacy issues can also be addressed on blockchain by anonymizing personal data and using permissions to prevent access. Information is stored across a network of computers rather than a single server, making it difficult for hackers to view data.
Consensus on data accuracy is required from all network members, and all validated transactions are immutable because they are recorded permanently. No one, not even a system administrator, can delete a transaction.
3. Greater transparency
Without blockchain, each organization has to keep a separate database. Because blockchain uses a distributed ledger, transactions and data are recorded identically in multiple locations. All network participants with permissioned access see the same information at the same time, providing full transparency. All transactions are immutability recorded, and are time- and date-stamped. This enables members to view the entire history of a transaction and virtually eliminates any opportunity for fraud.
4. Instant traceability
Blockchain creates an audit trail that documents the provenance of an asset at every step on its journey. In industries where consumers are concerned about environmental or human rights issues surrounding a product — or an industry troubled by counterfeiting and fraud — this helps provide the proof. With blockchain, it is possible to share data about provenance directly with customers. Traceability data can also expose weaknesses in any supply chain — where goods might sit on a loading dock awaiting transit.
5. Increased efficiency and speed
Traditional paper-heavy processes are time-consuming, prone to human error, and often requires third-party mediation. By streamlining these processes with blockchain, transactions can be completed faster and more efficiently. Documentation can be stored on the blockchain along with transaction details, eliminating the need to exchange paper. There’s no need to reconcile multiple ledgers, so clearing and settlement can be much faster.
With a distributed ledger that is shared among members of a network, time-wasting record reconciliations are eliminated. And to speed transactions, a set of rules — called a smart contract — can be stored on the blockchain and executed automatically.
Transactions can even be automated with “smart contracts,” which increase your efficiency and speed the process even further. Once pre-specified conditions are met, the next step in transaction or process is automatically triggered.
Smart contracts reduce human intervention as well as reliance on third parties to verify that terms of a contract have been met. In insurance, for example, once a customer has provided all necessary documentation to file a claim, the claim can automatically be settled and paid.
by Peter Sonner