This article discusses all the reasons why blockchain is important, based on different practical real-life use cases in different sectors.
Have you ever wondered why blockchain is important? Or maybe you have asked how it is going to impact our daily life or the lives of different professionals working in different sectors.
In this article, we are going to focus on the importance of blockchain technology, not only in real-life scenarios, but also its importance in business or banks.
Blockchain is now very popular among the general audience. Its popularity started with the rise of bitcoin prices. However, right now, its popularity, according to Google, is now settling down.
However, that’s not the focus of our topic, i.e., understanding the blockchain importance.
A blockchain is a ledger-based peer-to-peer network where each peer has a ledger copy. This drives the decentralized idea into the minds of the
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Why Blockchain Is Important?
At the core, you can find the blockchain’s importance by going through its key features. These features make blockchain irresistible in diverse scenarios and mark itself as the best possible solution.
Blockchain is immutable. This opens a lot of opportunities for platforms that need immutable traits to make their system more functional in a highly competitive market. Take the supply chain, for example. Immutability enables companies to ensure that there is no hamper done to the packages in transit. As blockchain is immutable, it is not possible to alter the package information in any way. Any alteration will alarm the system.
Another crucial aspect that makes blockchain so important is transparency. There are different types of blockchain. Public blockchain provides transparency due to its nature. It is very useful for different functions of our society, including doing elections. Companies can also utilize it to ensure that the end-user can interact with the processes with full or partial transparency.
As a human being, one of your rights is freedom. There are centralized entities that offer connectivity in terms of economy but also take away our freedom. Take your bank, for example. It can block your transactions or confiscate your account if deemed right. There are banks that do so — even when the account holders have not done anything wrong. So, if you are taking blockchain into account, you will find there is no centralized authority.
With blockchain, you get true digital freedom. You are your own bank. You can take out your money when you want and do it without anyone else authorization. With the lack of any central authority, you are the sole owner and person responsible for your assets. It gives you the digital freedom that relies heavily on the backbone of blockchain technology.
Truly Decentralized Services
Decentralized services are the backbone of our futuristic society. Be it asset management or energy management; there will be decentralized services for every sector out there. This will give people unprecedented access to the options that are currently not available in the market. Almost every sector will have decentralized services.
The music industry, for example, can benefit from truly decentralized services where both creator and consumer can participate without the need for any approval from a big centralized corporation.
Blockchain is not confined to just one particular use-case. This makes blockchain excellent technology for the future of our society. It can be used in almost every sector, including trade finance, bank, government, education, healthcare, oil, and so on. These use-cases also have a huge impact.
You can learn more details about blockchain applications and use cases here.
Blockchain uses cryptography to add a layer of security to the data stored on the network. The decentralization feature, on top of the cryptography, makes blockchain provide better security than other systems. Cryptography utilized complex mathematical algorithms that are used to secure the data and systems on the blockchain network.
Also, each block on the network carries a unique hash, which means that no data can be forged or changed by malicious actors or hackers.
Blockchain is inexpensive when compared to other technologies. The removal of centralized authority removes the buffer required to run the network optimally. With no centralization, there is no need to pay a middleman, improving cost efficiency. In the supply chain, using blockchain means less paperwork. The paperwork itself costs a lot. There are other costs associated, including hiring people to do the paperwork and maintain the intermediaries.
Lastly, improved efficiency is another answer to why blockchain is important. The cause is better security, intermediary removal, and overall better processes. Transactions also take seconds rather than a week to complete, especially international transactions.
Why Blockchain Is Important for Business
Now that we understand the importance from a general point of view. Let’s try to understand it from a business perspective. For the most part, it is the business that benefits from blockchain the most. Blockchain is not easy to implement for normal users. It needs to be managed by a team of experts, which makes it ideal for businesses who have the budget and appetite to manage the blockchain project.
The global blockchain market improvement to $20+ billion in 2023 is another sign of how rapidly businesses are adopting blockchain, as per this blockchain presentation.
So, what makes blockchain so lucrative to business? First of all, it reduces operational costs. The removal of intermediaries is a boon for business as it not only reduces cost but also reduces the point of contact — improving efficiency and growth.
Transactions speeds are also improved to a new height. For businesses, it is all about efficiency if they can keep their accuracy intact. The use-cases are also in favor of business. Some companies have already shown their interest in blockchain. The Dubai Blockchain Strategy is one example where the government wants to change its city with the help of blockchain. They want it to become the first city that will be powered by blockchain. They are aiming at 2020 to make it happen.
Blockchain Maturity A Big Concern
However, businesses know that blockchain maturity is a big concern. Blockchain is a favorably new technology when compared to other technologies. It is also suffering from big challenges and disadvantages of blockchain, including scalability and widespread adoption.
Also, blockchain might not be the answer to every industry out there. The finance sector may find blockchain very useful, but not in the art sector. But it doesn’t mean that every sector out there doesn’t benefit from it. The key sectors that can get truly transformed by blockchain include healthcare, transportation, retail, insurance, real estate, and more!
Blockchain As A Service
Blockchain is a disruptive technology. But it is also expensive to implement and manage. But, with blockchain as a service, businesses with a lower budget can also transit to the blockchain. There are popular blockchain-as-a-service (BaaS) services that are trying to solve the demand.
But what is blockchain as a service?
These are the cloud-based solution, which means that businesses don’t have to worry about infrastructure or maintenance. All they have to do is pay for it like a service. Currently, there are plenty of blockchain-as-a-service providers, but the most notable ones include the following:
- Azure Blockchain Workbench
- Amazon Managed Blockchain
- SAP Blockchain (Cloud Platform Blockchain)
- Oracle Blockchain Applications Cloud
Check out the basic comparison between AWS vs Azure vs Oracle blockchain here.
Why Is Blockchain Important to Different Industry Sectors?
Now that we have understood the importance of blockchain for business. It is now time to reflect upon blockchain’s importance to different sectors. Let’s cover four of them below.
Why Blockchain Is Important in Banking and Finance
The banking and finance sector can be drastically improved by blockchain. Digital financial institutes have the most benefits when it comes to smart contracts. The benefits come from digital assets, programmable money, and smart contracts. There are plenty of use-cases that can be used in the banking and finance sector. Especially, trade finance blockchain has gained a lot of traction in recent times.
Some of them are as below:
- Capital markets such as insurance, sales, and trading
- Payments and remittances for both domestic and international
- Trade finance sectors including bill of lading and letters of credit
- Investment management including fund launch, administration, and more
There are also few business benefits, including:
- Authenticity: It helps finance institutes to bring data integrity and ensure proper authenticity in their systems
- Streamlined Process: It improved operational efficiency, including the ability to do a real-time settlement, reporting, and audit.
- Programmable Capabilities: The entire business logic can be coded including data privacy, compliance, identity, and so on
- Economic Benefits: Better operational cost, fewer infrastructure costs, and transactional costs.
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Why Blockchain Is Important in Healthcare
Healthcare is another sector where blockchain will play an important role. Currently, healthcare is suffering from a lack of unity. Patients need to carry their documents, and hospitals put records in separate silos, which takes time to be retrieved when needed. Currently, there are plenty of use-cases related to healthcare, including the following:
- Patient consent management
- Drug traceability
- Secure electronic health records (ETRs)
- Micropayments Incentivization
- Clinical trials data security
Why Blockchain Is Important in Supply Chain
Supply Chain lacks transparency, accurate asset tracking, and enhanced licensing. Blockchain can improve traceability, transparency, and tradability and have a massive impact on every sector that relies on the supply chain. Right now, products can be hard to track due to the unavailability of real-time tracing. Also, it will become impossible for malicious actors to change goods in any form or factor.
- Improved transparency
This leads us to the end of our article, “Why Blockchain is Important”.
Blockchain is undoubtedly important to our society. It’s an impact on the current industries. It is unparalleled. With the growth of BaaS and other improvements, it is the only time when most of the industry will start adopting blockchain.
So, what do you think about blockchain? Do you see the benefits?
Comment below and let us know. Also, make sure to enroll in our free blockchain course that covers all the basic fundamentals of blockchain technology.