What is a Blockchain?
Blockchain has been dubbed a core of the Fourth Industrial Revolution, comparisons to past industrial revolutions caused by technology such as the steam engine and the internet. It can potentially upend conventional economic and corporate patterns and may be instrumental in developing market countries. Blockchain, according to leading experts, also has enormous potential as a means of combating corruption, particularly in Latin America and the Caribbean, where increased smartphone penetration may aid the adoption of new technologies like a distributed ledger and the internet.
A Blockchain system is a distributed database that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. One key difference between a typical database and a blockchain is how the data itself is structured. A blockchain collects information together in groups, known as blocks, that hold sets of information. These blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain. All new information that follows that freshly added block is compiled into a newly formed block that will then also be added to the chain once filled. This data structure inherently makes an irreversible timeline of data when implemented in a decentralized nature. When a block is filled, it is set in stone and becomes a part of this timeline. Each block in
the chain is given an exact time stamp when it is added to the chain.
Blockchain technologies are best known for their essential role in cryptocurrency systems, such as Bitcoin or Ethereum, for maintaining a secure and decentralized record of all transactions. The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party. An asset might be tangible, such as an office, a bus, cash, or land, or it can be intangible, such as intellectual property, patents, copyrights, or branding. On a blockchain network, almost anything of value may be recorded and sold, lowering risk and costs for all parties involved.
Impacts of Blockchain technology on business?
Blockchain technology provides several opportunities for innovation and new business models like NFT trading. It also offers a variety of incentives for consumers to switch to blockchain-based business models. These may include substantial cost savings via disintermediation, quicker transaction speeds, lower transactions costs and improved data traceability and verification for all involved parties.
Blockchain provides an alternate method for authenticating assets, distinguishing them from centralized transactions dependent on a single entity. The technology
also offers an alternate way to establish assets, and scattered stakeholders influence transactions dependent on a single entity. In addition to substantial cost savings, better traceability and improved security enhancements, blockchains complement distributed autonomous organizations (DAO).
A DAO or Decentralized autonomous Organization is a community led entity with no central authority. It is fully autonomous and transparent with smart contracts as a base, which execute the agreed upon decisions and at any point, proposals, voting, and even the very code itself can be publicly audited. The DAO is governed entirely by its individual members who collectively make critical decisions about the future of the project, such as technical upgrades and treasury allocations
The ramifications for business models and business operations in general are likewise tied to the blockchain’s underlying assets. Physical, virtual, monetary, or user-specific assets may circulate across the blockchain. Implementing blockchain technology for diverse assets open new possibilities for modifying and enhancing fundamental business models and company practices with consumers, rivals, and suppliers.
Finally, the blockchain-based business architecture allows you to leverage cryptography and tokenization. Cryptography may significantly alter the value proposition of a company model by ensuring the legitimacy of all network interactions. Tokenization is the process of replacing a secret data component with a non-confidential data component. The business model’s value may be increased by compensating stakeholders with tokens or accepting third-party tokens. Tokens on the blockchain ledger may also be used as certificates to authenticate asset ownership between the company and its stakeholders. The disadvantages of blockchain technology originate from various criteria, including increasing environmental considerations based on higher energy consumption, platform openness, integration of different aspects, such as identification and privacy, interoperability and performance, scalability, and stability.
Conclusion
Blockchain technologies provide several options to modify current business models and establish new ones. However, empirical studies on how blockchain technology affects business models are few.