According to the Association for Financial Professionals (AFP), 80% of organizations experienced fraud attacks in 2023.
While it is still in the early stages of development, Web3 technologies like blockchain and smart contracts are revolutionizing the way we do business. In addition to helping prevent fraud, here are some of the most significant advantages of adopting blockchain for your business transactions.
How Does Blockchain Log Business Transactions?
Blockchains are public, distributed, immutable ledgers that log important information for permanent storage. It’s impossible to go back and change a block once it’s been created — if you want to edit any of the information there, you have to create a new block that overrides the original one.
For example, let’s say your company makes a purchase using cryptocurrency. This transaction would follow the process below:
- Verification: The blockchain verifies your purchase across a distributed network of computers.
- Storage: The system assigns a unique identifier known as a hash to the block, which it then adds to the chain.
- Completion: The transaction record is now permanently locked into place on the blockchain. When new transactions are added to the chain after, they provide extra layers of security that prevent would-be hackers from tampering with the information.
The details of that transaction are then permanently available to anyone who wishes to view them.
The Benefits of Using Blockchain for Business
Why should you consider adopting blockchain technology in your financial processes?
Some of the most notable advantages of using blockchain in business include:
- Streamlining business processes: Through the use of smart contracts, which run automatically when specific conditions are met, you can automate time-consuming and repetitive tasks in your typical operations and increase the value of your business.
- Fraud prevention: Because blockchain data is distributed and locked in, it effectively prevents fraudsters from tampering with transaction details. Plus, its distributed network makes it nearly impossible for hackers to go back and edit any information stored on the chain.
- Improved traceability: A blockchain provides an immutable chain of transactions across an entire network, which enables anyone to trace products or services all the way back to their point of origin.
- Cost savings: Blockchain can help reduce transaction processing fees by streamlining clearing and settlement processes, eliminating the need to go to third parties for assistance.
- Increased control: Blockchain-based smart contracts give individuals and companies full control over what data they share with business partners and how long that information remains accessible.
How Companies Are Using Blockchain Right Now
Today’s top companies are already looking to the future with new concepts for blockchain applications. Here are some examples:
- Visa: Visa has been using blockchain for transactions since 2019, when it launched Visa B2B Connect, a blockchain-based B2B payment services platform.
- Coinbase Global: A leader in Web3 business technologies, Coinbase uses blockchain for various transactions such as purchases, investments and savings.
- Singapore Airlines: KrisFlyer, Singapore Airlines’ blockchain-based frequent flyer program, uses the technology to track transactions and award loyalty points. Members can then use the connected app to redeem their points for qualifying purchases.
That said, there are many potential business applications for blockchain that have yet to be discovered. As more companies begin investing in their own blockchain solutions, we are likely to see significant movement in this space.
Is Blockchain a Good Business Investment?
Ultimately, blockchain is a promising solution for businesses looking to gain a more competitive edge and improve their financial security. If you’re considering implementing it into your business, working with professional blockchain app developers to build a proprietary platform — or developing one yourself if you have the skills — can help you future-proof your organization.
Read Also: How Will Web 3.0 Impact Businesses?
