It’s safe to assume that you’ve heard of Bitcoin – the virtual currency that has sparked a new round of investment speculation and get rich quick schemes – and perhaps Blockchain, the underlying technology that makes it all possible, though you are given a pass if you’ve been in a coma for the past few years or if the deluge of hype has left you stupefied.
According to wikipedia.org:
Bitcoin (₿) is a cryptocurrency, a form of electronic cash. It is the world’s first decentralized digital currency, and it was designed to work without a central bank or single administrator. Bitcoins are sent from user to user on the peer-to-peer bitcoin network directly, without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
Bitcoin has been shrouded in mystery from its inception (the world is still debating the real identity of its pseudonymous founder(s) wikipedia.org:) – until today (is Bitcoin a paradigm shifting digital currency or the modern day equivalent of the infamous Tulip craze where many fortunes were lost speculating on the future investment value of Tulips?).
Bitcoin promises benefits for individuals and business. This article is focused on business decision makers. The subject is vast and the amount of information available online is both a blessing and a curse. The blessing is that there is so much information available. The curse is that there is so much information available that it is easy to get lost trying to piece together a cohesive view of the subject.
This article seeks to provide a comprehensive view of the technology and applications for business decision-makers. It is compiled from a variety of authoritative sources and organized to provide a cohesive overview. Each of these sources are cited and quoted to ensure proper attribution. With that let’s turn our attention to Bitcoin applications and benefits for Businesses.
According to bitcoin.org, Bitcoin is “a very secure and inexpensive way to handle payments” and offers the following benefits for businesses:
There is no fee to receive bitcoins, and many wallets let you control how large a fee to pay when [sending]. Most wallets have reasonable default fees, and higher fees can encourage faster confirmation of your transactions. Fees are unrelated to the amount transferred, so it’s possible to send 100,000 bitcoins for the same fee it costs to send 1 bitcoin.
Any business that accepts credit cards or PayPal knows the problem of payments that are later reversed. Chargeback frauds result in limited market reach and increased prices, which in turn penalizes customers. Bitcoin payments are irreversible and secure, meaning that the cost of fraud is no longer pushed onto the shoulders of the merchants.
Sending bitcoins across borders is as easy as sending them across the street. There are no banks to make you wait three business days, no extra fees for making an international transfer, and no special limitations on the minimum or maximum amount you can send.
Accepting credit cards online typically requires extensive security checks in order to comply with the PCI standard. Bitcoin still requires you to secure your wallet and your payment requests, however, you do not carry the costs and responsibilities that come with processing sensitive information from your customers like with credit card numbers.
Bitcoin is an emerging market of new customers who are searching for ways to spend their bitcoins. Accepting them is a good way to get new customers and give your business some new visibility. Accepting a new payment method has often shown to be a clever practice for online businesses.
Bitcoin also includes a multi-signature feature which allows bitcoins to be spent only if a subset of a group of people authorize the transaction. This can be used by a board of directors, for example, to prevent members from making expenditures without enough consent from other members, as well as to track which members permitted particular transactions.
Many organizations are required to produce accounting documents about their activity. Using Bitcoin allows you to offer the highest level of transparency since you can provide information to verify balances and transactions through the block chain. For example, non-profit organizations can allow the public to see how much they receive in donations.
The feverish attention to Bitcoin as currency has obscured the fact that there is more to Bitcoin than Bitcoin – namely, the underlying technology that gives rise to Bitcoin’s features, the Blockchain.
Per the Bitcoin Wiki:
A blockchain is a transaction database shared by all participating in a system based on the Bitcoin protocol. A full copy of a currency’s block chain contains every transaction ever executed in the currency. With this information, one can find out how much value belonged to each address at any point in history.
Every block contains a hash of the previous block. This has the effect of creating a chain of blocks from the genesis block to the current block. Each block is guaranteed to come after the previous block chronologically because the previous block’s hash would otherwise not be known. Each block is also computationally impractical to modify once it has been in the chain for a while because every block after it would also have to be regenerated. These properties are what make bitcoins transactions irreversible . The block chain is the main innovation of Bitcoin.
From a custom software development perspective, the Blockchain is the main innovation of Bitcoin and is of much greater interest and importance to business decision makers. The Blockchain gives rise to not only the Bitcoin crypto currency; but also the ability to create your own custom or proprietary crypto currency with all of the properties of Bitcoin or custom properties that you deem important.
Because Bitcoin technology is open source, it is also possible to fork it and create your own, separate and independent platform than inherits and can extend bitcoin platform capabilities. This is where the team at Aezion gets excited; but don’t take our word for it – read on to see who else is excited at the possibilities enabled by extending open source Bitcoin Blockchain technology.
The original Blockchain specification has been adopted and used to enable a variety of proprietary and open source blockchain platforms. The open source variations are available as the foundation for custom Blockchain application development. Here are some of the most notable.
Ethereum is among the first extensions to Satoshi Nakamoto’s original Bitcoin specification and the first to extend the specification to permit generalized programmability of Bitcoin-based platforms via an innovation called Smart Contracts.
According to Wikipedia:
Ethereum was initially described in a white paper by Vitalik Buterin, a programmer involved with Bitcoin Magazine, in late 2013 with a goal of building decentralized applications. Buterin had argued that Bitcoin needed a scripting language for application development. Failing to gain agreement, he proposed development of a new platform with a more general scripting language.
This was publicly announced in January 2014 and in March 2017, Buterin and the original Ethereum team’s efforts were bolstered with the formation of The Enterprise Ethereum Alliance, a non-profit alliance of blockchain startups, research groups and Fortune 500 companies including Cornell University, Toyota, Samsung, Microsoft, Intel, J.P. Morgan, Merck, Deloitte, Accenture, and others. The alliance has since grown to include many more global business staples including MasterCard and Cisco Systems.
Hyper Ledger was launched by the Linux Foundation in 2016 to facilitate cross-industry blockchain technologies. The original platform was created by incorporating codebases from Digital Asset, Blockstream, IBM, and Intel.
According to hyperledger.org, The goals of HyperLedger are to:
IBM offers The IBM Blockchain Platform via BlueMix, a cloud based platform as a service infrastructure.
IBM Blockchain Platform is a flexible software-as-a-service offering that is delivered via the IBM Cloud. It enables network members to quickly get started developing and easily move to a collaborative environment. The platform simplifies your blockchain journey of developing, governing, and operating a network.
JP Morgan Chase is a leader in both Blockchain application use and application development enablement. Blockchain powers a number of applications at JP Morgan including inter-bank settlement and private client blockchain networks.
JP Morgan has developed Quorum, a private blockchain platform to support these efforts.
According to JP Morgan Chase:
Quorum™ is an enterprise-focused version of Ethereum. Quorum is ideal for any application requiring high speed and high throughput processing of private transactions within a permissioned group of known participants. Quorum addresses specific challenges to blockchain technology adoption within the financial industry, and beyond.
Like other open source blockchain platforms, Quorum is available for use as a foundation for custom software and application development.
Blockchain technology along with programmability enabled by Smart Contracts or other scripting enhancements, permits creation of scalable, enterprise-class, de-centralized, “trust-less” solutions. As reported on The Mottley Fool, Blockchain application solutions include:
Arguably the most logical use for blockchain is as a means to expedite the transfer of funds from one party to another. As noted, with banks removed from the equation, and validation of transactions ongoing 24 hours a day, seven days a week, most transactions processed over a blockchain can be settled within a matter of seconds.
Blockchain also comes in particularly handy when it comes to monitoring supply chains. By removing paper-based trails, businesses should be able to pinpoint inefficiencies within their supply chains quickly, as well as locate items in real time. Further, blockchain would allow businesses, and possibly even consumers, to view how products performed from a quality-control perspective as they traveled from their place of origin to the retailer.
Blockchain could further revolutionize the retail experience by becoming the go-to for loyalty rewards. By creating a token-based system that rewards consumers, and storing these tokens within a blockchain, it would incentivize consumers to return to a certain store or chain to do their shopping. It would also eliminate the fraud and waste commonly associated with paper- and card-based loyalty rewards programs.
More than 1 billion people worldwide face identity challenges. Microsoft is looking to change that. It’s creating digital IDs within its Authenticator app – currently used by millions of people – which would give users a way to control their digital identities. This would allow folks in impoverished regions to get access to financial services, or start their own business, as an example. Of course, Microsoft’s attempts to create a decentralized digital ID are still in the early stages.
Cryptocurrency IOTA launched a beta version of its Data Marketplace in November, demonstrating that blockchain could be used as a marketplace to share or sell unused data. Since most enterprise data goes unused, blockchain could act as an intermediary to store and move this data to improve a host of industries. While still in its early stages, IOTA has more than 35 brand-name participants (with Microsoft being one) offering it feedback.
In a world with growing internet access, copyright and ownership laws on music and other content has grown hazy. With blockchain, those copyright laws would be beefed up considerably for digital content downloads, ensuring the artist or creator of the content being purchased gets their fair share. The blockchain would also provide real-time and transparent royalty distribution data to musicians and content creators.
Worried about voter fraud? Well, worry no more with blockchain technology. Blockchain offers the ability to vote digitally, but it’s transparent enough that any regulators would be able to see if something were changed on the network. It combines the ease of digital voting with the immutability (i.e., unchanging nature) of blockchain to make your vote truly count [and only count once!]
One of the primary goals of blockchain is to take paper out of the equation, since paper trails are often a source of confusion. If you’re buying or selling land, a house, or a car, you’ll need to transfer or receive a title. Instead of handling this on paper, blockchain can store titles on its network, allowing for a transparent view of this transfer, as well as presenting a crystal-clear picture of legal ownership.
Yet another intriguing use for blockchain could be in tracing food from its origin to your plate. Since blockchain data is immutable, you’d be able to trace the transport of food products from their origin to the supermarket. What’s more, should there be a food-borne illness, blockchain would allow the source of the contaminant to be found considerably quicker than it can be now.
Blockchain might also be the perfect way to back up data. Even though cloud storage systems are designed to be a go-to source for data safekeeping, they’re not immune to hackers, or even infrastructure problems. Using blockchain as a backup source for cloud data centers – or for any data, as Boeing is is considering with GPS receivers on its planes – could resolve this concern.
Have I mentioned how important transparency and immutability are yet? For example, marijuana companies can use blockchain as a means to record their sales and demonstrate to lawmakers that they’re abiding by local, state, and/or federal laws. More importantly, these sales act as a clear record for the IRS that they’ve paid their fair share of taxes to the federal government, assuming they’re profitable.
Another interesting use for blockchain is as a means to bolster the rights of workers around the globe. According to the International Labor Organization, 25 million people worldwide work in forced-labor conditions. Coca-Cola, along with the U.S. State Department and other partners, is working on a blockchain registry complete with smart contracts -protocols that verify, facilitate, or enforce a contract – to improve labor policies and coerce employers to honor digital contracts with their workers.
The good news is the medical sector has already been moving away from paper for recordkeeping purposes for years. However, blockchain offers even more safety and convenience. In addition to storing patient records, the patient, who possesses the key to access these digital records, would be in control of who gains access to that data. It would be a means of strengthening the HIPAA laws that are designed to protect patient privacy.
One of the hot-button topics on any news network at the moment is gun control and/or weapons accountability. Blockchain could create a transparent and unchanging registry network that allows law enforcement and the federal government to track gun or weapon ownership, as well as keep a record of weapons sold privately.
Blockchain may also be able to put your end-of-life concerns to rest. Rather than creating a paper will, people may have the option of creating and storing their digital will on a blockchain network. When used with smart contracts, which could divvy out inheritances based on when certain criteria are met (such as when a grandchild reaches a certain age), wills should become crystal clear and legally binding, leaving no questions as to who should receive what assets when you pass away.
At some point, blockchain could rival or replace current equity trading platforms to buy or sell stocks. Because blockchain networks validate and settle transactions so quickly, it could eliminate the multiday wait time investors encounter when selling stock(s) and seeking access to their funds for the purpose of reinvestment or withdrawal.
Networking giant Cisco Systems may be behind a blockchain-based application that would monitor internet of things (IoT) networks. The IoT describes wirelessly connected devices that can send and receive data. Such an application could determine the trustworthiness of devices on a network – and continuously do so for devices entering and leaving the network, such as smart cars or smartphones.
Even the energy industry is getting in on the act. Similar to the benefits it could bring to equity traders above, blockchain offers the ability to help energy companies settle futures trading considerably faster than they currently do. It’s also worth noting that blockchain could help energy companies with regard to logging their resources and maintaining regulatory compliance.
Smart contracts within blockchain networks also have the ability to be customized to a businesses or consumers’ needs. As a consumer, you could use blockchain as a means to grant access to your house for service technicians, or allow your mechanic access to your car to perform repairs. But without this digital key, that only you possess, these service technicians wouldn’t be able to gain access to your belongings.
Finally, blockchain could be a means of transparently tracking prescription medicines. In a world where prescription returns do occur, and counterfeit medications are a real thing, blockchain offers drugmakers the ability to track their products based on serial and/or batch numbers to ensure that consumers are getting the real deal when they pick up medicine from the pharmacy. Merck is currently testing such a system for prescription drug returns.
This list is of course not exhaustive. Instead it provides some ideas of the types of transaction-based applications for which Blockchain solutions are well suited. Hopefully they will spark your imagination and allow you to visualize ways in which Blockchain technology can help you to advance your business.
If you have found this article informative and thought provoking, we have succeeded. Aezion is your source for trusted software and we would be honored to help you brainstorm and evaluate value-creating Blockchain solutions for your business. Contact us to learn more or to discuss your custom Blockchain application and solution development.
Enter your information to subscribe to the Aezion blog digest.