Blockchain technology aims to digitize worldwide contracts and agreements and store them in public databases without interference, tampering, or revision.
Every contract, business process, online task, fund payment, and transaction of the future will be represented by a single digital record that is traceable and valid. In the future, technology will enable us to save billions, if not trillions of dollars annually, by eliminating middlemen like lawyers, brokers, and banks.
Blockchain technology could certainly have a great effect on several industries. Here are some of the ways blockchain will achieve this.
Eliminating Third Parties
With blockchain technology, third parties will no longer be necessary, and exchanges will no longer be subject to trust issues.
Any transaction between two or more parties on the blockchain can be handled without official oversight or intervention from an external party. Consequently, counterparty risks will be significantly reduced or even eliminated.
Whenever a counterparty fails to live up to its contractual obligations, each party to the contract faces a counterparty risk. Both parties share the risk, so it should always be taken into consideration when assessing a contract.
Control Over Data
Blockchain gives users more control of their data and empowers them. Users are in control of all their information and transactions with blockchain protocols.
Uber is an excellent example of this. Uber is the world’s largest car service company; though they do not own any of the cars they use, they make billions of dollars through rides that drivers log using the Uber app.
Better Data Quality and Integrity
The structure of blockchain technology requires that data always be validated. This is due to the reason that a subsequent block can’t be mined or created without first having a connection to a verified block. In this manner, the chain is built.
It is also consistent because all data must conform to protocol standards, or else it won’t be recorded in the chain and widely accessible.
Durability and Reliability
There are no single points of failure in blockchain technology, and it is capable of withstanding malicious exterior attacks effectively.
In contrast, closed systems contain multiple points of failure and potential weaknesses.
The Integrity of Data Processing and Transfers
The unchangeable blocks of a blockchain system guarantee that every transaction on the network will occur as intended. Users can therefore trust that their transactions will never fail.
In this way, no third party must oversee the transactions, maintaining the integrity of the data being processed and all transfers.
Transparency and Auditability
In a blockchain, all transactions are made on an open ledger that is open to everyone. This allows for a highly transparent system that anyone can search.
The use of services like etherscan.io allows users to search the vast databases and transactions on a blockchain so that everything that happens within and on it can be audited.
ACH transactions (automated clearinghouse transactions) between banks can take days to clear. This is especially true if the transaction takes place outside of regular working hours. Take the example of sending a wire or making a purchase at the end of business on Friday.
A blockchain enables you to keep track of your funds in real-time. Typically, you do not receive an update until Tuesday or Wednesday. Blockchain technology allows transactions to be processed in minutes and sometimes seconds.
Lower Transaction Costs
As blockchains have no outside parties overseeing transactions, they can potentially reduce transaction fees significantly. With fewer transaction fees, it could result in billions of dollars being saved annually.