Until recently, the fact that it is possible to create money and currencies and even carry out financial transactions without any cooperation on part of banks and governments seemed incomprehensible. Yet, this is precisely what Bitcoin and other crypto-currencies have achieved throughout recent years. The blockchain technology underlying this new trend has since developed into one of the most important disruptors of our times, with potential for changing the economy as a whole in the near future.
Blockchain as a basis for what was previously impossible
One of the greatest challenges in the digital world is the creation of safety. A digital signature that can be copied by anyone is worthless. Likewise, virtual money, which can be copied within a fraction of a second, has no value. When it comes to contracts, signatures or money, it is essential that they are clearly matchable and protected against unauthorized copying. That’s exactly what blockchain technology has made possible. The irony here is that blockchain technology protects sensitive data from unauthorized copying by storing copies of one and the same piece of information across different locations within a distributed system. Any information and any changes to it can thus be checked at any time, consequently protecting them from counterfeiting.
Smart Contracts and the reinvention of the insurance and financial sector
Blockchain technology makes it possible to store sensitive information in a cost-effective and secure manner. This doesn’t merely facilitate the reorganization of payments and other transactions. Smart Contracts, i.e. contracts in the form of computer protocols, are also made possible on the basis of the blockchain. An intelligent contract features defined rules, monitors them and automatically performs pre-determined actions according to their fulfillment – the crediting of a payment, the legal conclusion of a contract, the modification of a property relationship, the granting of a loan and so on.
In the banking and finance sector, Blockchain is now able to fundamentally reorganize all existing organizational, contractual and security systems. However, blockchain technology is still far more capable and universally applicable. Particularly in the case of insurance, blockchain technology will have a lasting impact on current business models. Smart Contracts allow one to offer highly individualized contracts or even insure small events, such as a 5-minute car trip, without major administrative expenses. Peer to peer Insurance, namely policies with the possibility of direct payment, open up enormous potential for new business models.
Trade, cooperation and transactions between corporations
Security, trust and efficiency are the three key benefits that blockchain has to offer the field of B2B. Just as the exchange of a coin between two people, the blockchain principle works simply and directly. The technology itself is secure and, as all contractual conditions and changes of transactions can be stored, overall trustworthy. It makes the entire supply chain transparent. As a result, the status of an order or the current location of individual components can be verified at any time. Simultaneously, the administrative costs and the associated costs are reduced. Transfers are automatically executed as soon as goods arrive at a certain location.
Thus, in the future, trade and cooperation between companies will rest on a new foundation. Blockchain technology is particularly interesting in complex business environments, such as the international network of relationships between large corporations and trading companies. Here, monitoring of contracts is time-consuming and a major cost factor. If contracts are automatically monitored for compliance, economic transactions will become faster in the future. Even an employee’s sick or holiday leave no longer has a negative impact on process and the reviewing of contracts.
The blockchain is similarly as revolutionary as the internet
Certain technologies are more significant than others. Open platforms and systems with generalizable benefits make for particularly powerful instruments. The Internet allows people, businesses, machines and other things to be connected for any conceivable purpose. In comparison to other phones, the iPhone didn’t just serve a specific purpose, but potentially infinitely many. These types of technologies have enormous potential for economic and social transformation. The same is true for the blockchain. In principle, any information can be stored in the blockchain. As a result, the fields of application are virtually unrestricted.
Die Autorin: Michaela Tiedemann, Chief Marketing Manager bei der in Deutschland führenden Data Science Beratung Alexander Thamm, hat Betriebswirtschaft mit Schwerpunkt Marketingmanagement studiert.