When we talk about blockchain, most of us probably think of Bitcoin. This digital currency, which is in the news headlines almost every day, allegedly makes some people quite rich on the one hand and worries banks on the other. However, what is going on behind all these rumors is perhaps what makes us most curious.
Blockchain technology supports cryptocurrencies like Bitcoin. However, the current and potential usage area is far beyond the mentioned currencies.
In this article, we wanted to explain blockchain technology, its place in our business, and most importantly, how consumers can benefit from it.
Decentralized Finance, Smart Contracts, and Blockchain
Briefly, what is a blockchain?
Blockchain provides a permanent recording of transactions in a network. It is similar to the system database but uses a decentralized ledger instead of the traditional end-to-end, allowing each participant in the network to have their own copy of the ledger and be able to see all transactions. Each block is protected by an encrypted reference associated with the previous block, so it is very difficult to attack or hack the system.
We can think of blockchain as a world where every contract, transaction, business and payment is digitally recorded and signed in a way that is identified, verified, stored and shared. Every single step of the blockchain is transparent and secure, as every change in this system requires consensus. This ensures a high level of reliability of the system and eliminates both risks and the need for intermediaries.
Blockchain: Basic concepts from the perspective of data protection
Where does this interest in blockchain come from?
Because there are many problems that the blockchain can overcome. For example, online and offline scams such as cyber-attacks, fake news or misinformation, the current distrust of institutions, companies and governments, and the growing demand for authenticity and transparency in all aspects of consumers’ lives.
How is the industry approaching blockchain technology?
In fact, blockchain technology is still in its early stages, so no one really knows what benefits it can offer. On the other hand, the technology in question continues to develop rapidly, so we can say that everyone is currently trying to discover technology in some way. It is certain that sooner or later the industry or businesses will be affected by the blockchain in some way.
As Gartner explains: “Many companies see blockchain as a game-changing technology, but the nature of that game and the extent of the change are still unclear.”
Financial services was one of the first industries to embrace this technology a few years ago, so applications in this area are highly advanced.
DeFi: the blockchain-based decentralized finance approach
The most well-known of these applications are digital or crypto currencies. The first cryptocurrency was launched in 2009 under the name Bitcoin, but today there are many different cryptocurrencies. These currencies provide fast transfer of funds between parties. In addition, since no financial institution is involved during the transaction, the transfer is not costly.
In addition, blockchain can enable billions of people who do not have any bank accounts or are underserved by the current system to access and benefit greatly from financial services. For example, immigrants can send money to their families easily and cheaply, or small business owners can access credit instead of being limited in a cash-based system.
Banking and payments are just one of the areas where we can benefit from blockchain, but there is much more to it.
Another application area that is being worked on is to simplify and speed up real estate transactions. All paper transactions that are currently done manually can be recorded, tracked and stored in a storable manner using blockchain technology. The fact that these records are verifiable and secure will reduce human errors.
Businesses are increasingly looking to increase transparency in their supply chains to strengthen their sustainability reputation. Consumers, on the other hand, increasingly want to know the origin of the products they buy. Blockchain can help provide both.
How can blockchain benefit the supply chain?
Supply chains are essentially series of transactions, so blockchains can be useful in this area. With blockchain technology, you can prove where products come from, whether they’re sourced through fair trade or certified organic. The governments of the countries that purchase or ship the products can ensure that the companies involved comply with local laws. You can also automatically make supplier payments when certain conditions are met.
Provenance, a company that enables brands to build trust through transparency, has conducted a series of experiments in the blockchain space. In one of the trials, the tuna caught by Indonesian fishermen with blockchain and smart tagging were tracked with verified social sustainability statements. In another application, a small-scale fashion brand wanted to turn its ethics story into a mobile in-store experience to engage its consumers.
Research reveals that shoppers are willing to pay more for products from companies that make a commitment to positive social and environmental impact, but few trust companies that make that claim. At this point, blockchain can provide complete visibility from the source of a product to its production and shipping to the shelves.
As Jessi Baker, Founder and CEO of Provenance, puts it: “Businesses are increasingly looking to increase transparency in their supply chains to strengthen their sustainability reputation and mitigate their risks. Consumers, on the other hand, increasingly want to know the origin of the product they buy, where, by whom and from what it was produced. Blockchain can help provide both.”
Everything You Wondered About Blockchain Technology
What awaits us in the future about blockchain?
Currently, the technology in question has limitations and lacks standards, regulations, and audit mechanisms. On the other hand, the technology in question is expensive and the return on investment is uncertain.
Moreover, all parties must register for the blockchain to be used. In this case, many organizations and individuals in a complex supply chain have to agree to participate in this network.
However, we believe that blockchain has great potential to increase trust and transparency. This technology can fundamentally change our business processes to increase efficiency, reduce costs, and improve both visibility and security within the scope of information tracked by Venice Swap and its partners. We will know more as our trials give their results. Stay tuned for the latest developments.