Blockchain Solutions | Understanding When to Use Blockchain

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As we move into a brave new financial world with cryptocurrency and blockchain solutions, capturing the essence of crypto in a bottle can be a tricky affair. As the benefits of blockchain and digital currencies are different for everyday users in comparison to businesses, it is important to differentiate between the two and to eliminate the myths and confusion that surrounds the blockchain industry. If you are looking to implement blockchain technology into your already-existing company, it is important to fully understand what blockchain is all about and when and when not to use these solutions to enhance and evolve your business.

Do Not Confuse Blockchain and Bitcoin

Bitcoin is the gateway drug to understanding blockchain technology, but most people do not know the difference between the two. Basically speaking, Bitcoin was the first ever cryptocurrency and uses blockchain as its root technology.

Blockchain is a crypto-encoded digital ledger that enables peer-to-peer transactions through its network. However, Bitcoin is a digital currency that uses the said blockchain technology to enable transactions between two people to take place without a third party such as a bank.

Some people and businesses do not use blockchain because of the volatile nature of cryptocurrencies, but this has nothing to do with the blockchain technology itself, which is merely just the system on which each individual cryptocurrency resides. It is the virtual currencies themselves that are volatile in price, not the technology, which is due to a myriad of reasons.

What is DLT?

Blockchain technology is a type of distributed ledger technology, more commonly known as DLT, which is revolutionizing the financial world and could replace banking institutions in the future. Known for its rapidly-evolving approach to recording and sharing data across multiple ledgers that are maintained and run by a distributed network of computer servers that are known as nodes, DLT technology is changing the economic world as we know it.

Each node is a copy of the entire ledger system that updates the same info independently. This means that the DLT is essentially decentralized and not controlled by a single authority. Blockchain, however, is one form of DLT where entire blocks on the chain are grouped together, organized, and then linked to one another by the utilization of cryptography, hence the term ‘cryptocurrency.’ The blockchain is basically a list of growing and ongoing records.

Although DLTs and blockchain are known for their anonymity, they are actually very transparent as everyone in the network can see the entire ledger, which can help to eliminate fraud and also third-party transaction fees that you receive from banks.

How Can Businesses Benefit from Implementing Blockchain?

Now that we have a more simplified appreciation for blockchain technology, can you incorporate it into your current business model to increase productivity or profits? The answer is definitely maybe. It all depends on your own needs and requirements as a business.

Here are some questions you need to ask yourself regarding your business to realize whether or not your company can benefit from implementing blockchain technology:

  • Is your company transaction-based?
  • Does your company benefit from public scrutiny?
  • Are you looking to implement customer loyalty rewards?
  • Do you deal in digital asset transfers such as digital art?
  • Would your business benefit from a decentralized system?

If the answer to one or more of those questions is ‘yes,’ incorporating blockchain technology could vastly improve the way your company functions. If the core of your company relies heavily on a centralized system, blockchain is not the way forward for your business model.

Loyalty Reward Programs for Customers

If you are looking for a way to offer rewards to your loyal customers, a cryptocurrency with blockchain technology could be the perfect solution. In recent weeks, the fast-food giant McDonald’s has issued a ‘MacCoin’ to customers who purchase a Big Mac, which they then can redeem at any of their other stores in the US. The MacCoin price is also linked directly to the price of a Big Mac.

If you wanted to implement a loyalty-based rewards program using crypto, it’s a great way to introduce blockchain into your company for the first time. You can get a shortcut to implement loyalty rewards by utilizing platforms such as Digitalbits, which can tokenize and manage your loyalty rewards program for you, which will cut down on the headaches.

Digital Asset Transfer

If your business revolves around the transfer of digital assets or even digital artworks, implementing a blockchain system could be a simple way to transfer digital ownership in a decentralized and trustless way. By using the blockchain to verify the transfer of the digital artwork or any digital asset, you can prove the ownership of the product or asset.

As the world is in a state of constant flux due to the evolving nature of technological advancements, incorporating blockchain into your already-existing business could take your company to the next level, both in terms of modernity and maximizing profits.

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Featured image: DepositPhotos /© wutwhan

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