The Sky's the Limit for Legacy Businesses Eyeing Blockchain Legacy industries can use these remarkable and versatile shared databases for their own purposes.
By Farhana Rahman Edited by Matt Scanlon
Opinions expressed by Entrepreneur contributors are their own.
Even as the price of Bitcoin rises and falls tumultuously, virtually no one believes any longer that media giants like Bloomberg will one day have to remove "crypto" sections from their websites. Meanwhile, blockchain, the technology powering such digital assets, has expanded far beyond cryptocurrencies or even their surrounding ecosystem; legacy industries are gradually beginning to eye blockchain for their own purposes, and there's slim reason to think they'll hesitate in adopting it.
In fact, blockchain was always better positioned for mainstream adoption than the idea of decentralized money, which is a potential headache for economists working in traditional finance. The idea of a decentralized database or even a runtime environment, however, does not look as scary for the typical Wall Street type. Blockchain is, after all, a decentralized database that was first used to store transaction data, and now that it's improving has the potential to hold pretty much anything else.
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Blockchain is powering a revolution
Just as crypto made it from obscurity to riches, blockchain is powering an evolution, even if it's happening at a slower pace than its most fervent advocates may hope for. And soon enough, it will prove to be powerful enough to change the entire paradigm of how we do business.
Right now, there's a budding industry focused on setting the stage for blockchain's adoption in business. Its major promise in this respect (and keep in mind that this feature is not necessarily inherent to all blockchains) is a combination of the decentralized consensus mechanism and smart contracts. The former is an algorithm enabling all nodes to agree on the current state of the system (including the number of tokens in everyone's wallets), while the latter are decentralized applications deployed on the blockchain as executable code.
Today's business paradigm heavily relies on a trusted middleman. As a crude example, when paying for a fresh supply of bricks, a construction company will hardly be sending trucks filled with cash. It will turn to its bank to handle the transaction, which will in turn reach out to the bank the supplier is using. In a somewhat similar fashion, when tapping a software as a service (SaaS) platform, the client has to trust that the services which they pay for will indeed be granted in due time and in due volume for the duration of the subscription period.
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The many benefits of blockchain
Blockchain removes the need to trust any entity other than the code powering it, and a smart contract that runs on it is executed automatically based on specific conditions and triggers, and there is little either of the parties can do about it once it has been uploaded on the blockchain. In other words, for example, a smart contract monitoring a hosting arrangement between the host and the client will monitor how much workload the client is using, and will charge automatically as much as the client is due to pay based on the terms and conditions coded into it. The transaction itself can be handled on the blockchain as well, as long as both parties agree to do so and settle all the necessary legalities with their respective tax authorities.
The benefits of doing business in a trustless way have not been lost on companies around the world. In fact, the blockchain model is now making inroads into a plethora of industries and is championed by players of all sizes. Microsoft is working to incorporate enterprise-grade smart contracts into its Azure cloud platform, Watr Foundation is bringing commodities trading on the blockchain, infusing the market with more transparency and versatility, and ClearX is helping telcos and legacy enterprises interact through smart contracts, automating its interactions with clients in secure and transparent ways.
While some of the above examples seem more geared toward large or at least medium-size companies, blockchain offers promise for small businesses as well. With smart contracts, they can get more certainty in day-to-day operations as long as they find ways to source the data on such operations to the blockchain. For a small consultancy, this could be as easy as integrating a smart contract with whatever platform it is using for e-meetings. The contract will keep track of the number of presentations and brainstorming sessions taking place, and once it hits a milestone agreed upon in advance, the consultancy will automatically receive its pay. With other businesses it may take more creative approaches, but the idea is the same: Once you supply the smart contract with the tools to track interactions with a counterparty, it can make sure both sides follow the rules to the letter… or at least to the line of code.
Forming decentralized autonomous organizations (DAO) could be another interesting opportunity for small businesses — a collaborative community with token-based governance, with processes defined by and run on smart contracts. This allows for a high degree of independence for DAO members, which could potentially pave the way for small businesses coming together to form trustless networks and quasi-franchises to take on corporate competitors while maintaining their own brands and identity.
The blockchain has a lot of potential, and we are still early in exploring how many processes it can work as the foundation for. And while this exploration may not be moving at a pace that one would expect from a revolution, the changes that it could eventually bring about are all-encompassing enough to impact the very basics of how we do business, and other things.
