Many global businesses have turned to futuristic technologies as technology evolves to help them stay efficient, productive, and profitable. Blockchain is one such technology that has a big impact across global sectors, with spending on blockchain solutions projected to reach $19 billion by 2024.
As blockchain technology evolves and matures, more industries are discovering its potential to revolutionize their operations. By enabling secure, transparent, and efficient data exchange and collaboration, blockchain is helping enterprises of all sizes gain a competitive edge and improve customer satisfaction.
One critical focus area must be how this data will be stored, managed, and analyzed. Industries using blockchain technology can gain a competitive advantage in this realm, as the technology provides a distributed ledger that is safe, decentralized, and easy to use.
What Are The Key Reasons Why Traditional Businesses Are Moving Toward The Blockchain Model?
Before we move to understand how blockchain is being used by businesses to gain real-world competitive advantage, let us first understand the need for this technology in the first place.
Traditional businesses face heavy competition, which has more to do with changing business models. Most have limited resources and constrained budgets, which cannot cope with the rise in digitization and the need for extensive data management.
This has led to some key issues, such as:
Lack of Security
With data moving rapidly, most business ecosystems find managing and safeguarding their data challenging. Since data is not stored and adequately encrypted, there is a growing fear of hacking or misusing data.
Even with advanced technologies or systems, the chances of leaks or hacks are still high if the data is not managed or has proper stakeholders.
Need For Autonomy
In a traditional business model, each function or department works in silos. A process or information stored, analyzed, and deployed by one department is often not easily accessible to someone else.
This autonomous nature of working results in lower transparency, and even minor processing requires multiple stakeholders to get involved, leading to delays.
Even if internal barriers to information access are mitigated, traditional business processes are often time-consuming. This is because each team or business function uses information for different purposes and searches, gathers, and analyzes the same data for their needs.
This makes even simple business processes time-consuming and cumbersome.
Payments are a crucial challenge for traditional businesses, as this area is prone to maximum hacks and security challenges. While businesses are expanding to the digital arena, they must adopt a robust payment model.
This model has to include features like multiple payment gateways, currencies, and methods. However, adding new methods is often complex and challenging, given that sensitive data needs to be checked and protected.
Despite not adding new resources or functions, traditional processes are often a burden to a company's budget. This is due to the high involvement of resources and the need for manual intervention at every stage.
Plus, with multiple stakeholders, partners, and providers involved, the costs keep rising over time.
How Can Blockchain Technology Give Enterprises A Competitive Advantage?
Now that we have looked at the key challenges traditional business processes face, here is a look at how blockchain fits into the picture.
Some of the key advantages for enterprises using the blockchain include the following:
Use of Smart Contracts
Smart contracts are self-executing contracts written on blockchain and automatically execute when certain predefined conditions are met. This makes them faster and more efficient than traditional contracts, which require intermediaries and often suffer from delays and disputes.
Smart contracts can help enterprises automate and streamline their operations, saving them time and money. These are also highly secure and cannot be altered or misused, making them ideal for enterprise requirements.
Blockchain is a highly secure technology that uses cryptographic algorithms to protect data from tampering and unauthorized access. This makes it an ideal solution for enterprises safeguarding sensitive data and assets.
This is particularly valuable for finance, as it makes all transactions tamper-proof and secure. By leveraging blockchain security, enterprises can significantly reduce the risk of data breaches and cyberattacks.
Blockchain enables the creation of a transparent and auditable record of all transactions. Any alterations or changes made in a blockchain can be traced easily, and it is impossible for anyone to erase or alter information in blocks that they do not have access to. This can help enterprises increase trust with their customers and partners, as they can quickly verify the integrity of the data.
Additionally, the transparency of blockchain can help enterprises comply with regulations and avoid costly fines and penalties. With detailed transparency, blockchain-based systems are easy to audit and track changes, verify the authenticity of records, and ensure compliance with regulatory laws.
Blockchain can help enterprises streamline their operations by simplifying processes and eliminating any need for continuous manual intervention. This can lead to faster transaction times, reduced costs, and improved customer experiences.
For example, a blockchain-based payment system significantly reduces transaction fees and settlement times and is highly secure compared to most modern solutions.
By automating processes and removing intermediaries, enterprises can reduce the cost of operations and increase profitability.
Additionally, blockchain technology can help enterprises reduce costs associated with fraud, disputes, and other legal issues.
Explore New Business Models
Blockchain is slowly being adopted within multiple enterprises and domains but is still relatively fresh. This makes it ideal for businesses to explore new models and tap into the hidden potential of this technology.
For example, enterprises can use blockchain-based systems to create new digital assets, such as tokens or NFTs, that can be traded and exchanged on blockchain-based marketplaces. These new business models can provide enterprises with new revenue streams and help them to differentiate themselves from their competitors.
Examples of Top Industries Using Blockchain
Due to the several benefits offered by blockchain, corporate interest in the technology is rising. This is restricted to tech or blockchain development companies buteven in traditionally non-tech industries.
Here is a look at some of the Fortune 100 companies that are using blockchain to gain a competitive advantage:
Walmart, a well-known retail corporation, used blockchain to solve one of the pressing issues in the industry - supply chain management. Transportation and supply chains are often challenging for most organizations due to the discrepancies in invoices, payments, and communication gaps that lead to long delays.
Walmart Canada resolved this issue using blockchain to power an automated invoice management system. Before this implementation, invoice disputes were over 70%. This number was reduced to just 1% since invoices were now stored in a secure public ledger.
In 2021, Tesla made news of using blockchain in cobalt and nickel traceability projects across its supply chain. They partnered with Glencore, an Anglo-Swiss trading and mining company, for this project.
The objective was to build a blockchain platform that is a transparent and open global registry to ensure that all the cobalt used in end products is sustainably sourced and used. Although this platform was expected to be rolled out sometime in 2022, the pilot is still underway, and the project details are under wraps.
Another tech giant that embraced the blockchain is Adobe, which started to support NFTs in 2021 with a program called Content Credentials. This helps creators create authentic NFT images in Photoshop and ensure that it has their creator attribution details. This help creators get credit for their creation and allow them to mint NFTs to generate revenue.
With the addition of Solana and Polygon blockchains on its Behance platform, Adobe has taken a revolutionary step to counter fake NFTs and launched the Content Authenticity Initiative for its creators.
The bank has been in the news for embracing blockchain as early as 2015, and it made headlines in 2022 when it used the blockchain for collateral settlements, a first in traditional financial assets trading.
In May 2022, the bank tested this solution by transferring the token representation of BlackRock Inc between two of its entities. They already indicated plans to bring decentralized finance (DeFi) to its Onyx metaverse platform.
During its recent 'Unpacked' event in February 2023, Samsung announced that it would soon enter the Metaverse and Virtual Reality (VR) segment with its extended reality hardware. And this is not the first time news of Samsung's entry into Web3 technology is making headlines.
From a blockchain-based smartphone with a built-in cryptocurrency wallet to partnering with Crypto.com to offer exceptional experiences for crypto traders on its devices, the smartphone maker has shown keen interest in becoming a pioneer in the crypto and blockchain space.
Blockchain offers numerous benefits to enterprises. By leveraging these advantages, enterprises can gain a competitive edge and position themselves for success in a rapidly evolving business landscape. While the technology has great promise, industries using blockchain technology also need to find the right business area for it to be truly revolutionary.
As more companies embrace blockchain, we can expect a greater emphasis on collaboration, interoperability, and standardization, increasing the technology's utility and impact. Its use as a financial asset is already well-known, and we can already see new uses of this technology in NFTs, decentralized marketplaces, and tokenization.
Web3 and Metaverse are seen as the next frontier, but there is a lot more in store when it comes to this revolutionary technology that we still haven't tapped into. This means that the technology advantage may become mainstream in the future, making it essential for companies to focus on continuous innovation and getting a solid head start by adopting blockchain-based solutions.
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