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Blockchain technology was conceived 40 years back though implemented of late has truly facilitated digitization across industries enabling easy, secure, trusted flow of information & funds. This has been possible due to the high speed of data transfer, low cost of data usage, high-end computing, affordable computing technology, IPV6 connectivity, Cloud Technology & advent of Industry 4.0. Let's understand the fundamentals in first place. BlockChain “& “BitCoin “sometimes are used colloquially by amateurs, but they are different. This article is aimed at highlighting the differences & dispelling the interchangeability that exists between the above terms. “BitCoin “, a Digital Currency, albeit Virtual in nature is the output generated by leveraging the “BlockChain “Technology.
What is BlockChain?
Blockchain is a distributed ledger platform where exists no central authority to validate Transaction but multiple users who validate, certify & encrypt the transactions as it passes through the Chain – the benefit lies in the trust generated through confirmation by multiple users, security of unique encryption & the tamper-proof nature of the digital ledger running at the backend. Alteration of the ledger would require the approval of more than half of the total users or nodes which is practically impossible.
Now elaborating on the “Trust“ Quotient further the software is Open sourced allowing more participation – the embedded rights as approved by the users engage more users from contributing to the algorithm –so this builds up trust in the system as more & more users are added. The user has to certify the transactions or solve gaps in existing Codes. This practice also ensures the computing power of the whole Chain is harnessed. This activity is also termed “Crypto Mining”. On Successful mining, the nodes offer “Crypto Coin “to the user. This “Crypto Coin” may be generated by the Nodes in the Chain or the existing “Crypto Coin” may be allotted to the miner by one or more than one node. The other means of Acquisition of a “Crypto Coin” is trading –just like Shares trade the usual buy or sell as per stock sentiment in the grey market.
Digital Currency is the Future
Listed Benefits below:
- There is No Waste. (Mfg. point of view)
- No consumption of resources for physical currency – At a time when Circular Economy is the need of the Hour transitioning from a Linear Economy.
- From the empowerment point of view, its adoption is more democratic in contrast to the hegemony of Central Banks of each Nation or Bodies like IMF, ADB, etc.
- It also runs on open-sourced software where algorithms are contributed, updated by the users the verification is also done by the users.
- Monetary Transfer between Parties can easily be done at any time anywhere independent of High transaction value in contention at a fraction of existing Transaction Cost.
- The question of Counterfeit Currency & Fraud does not arise due to the Concept of Double spending –the same as the idea of double bookkeeping.
The valuation of “Crypto Currency” is furthering its popularity – the quintessential question of the valuation method or the measure of how the price of “Crypto Currency” can be arrived at in times of inflation or deflation across without political boundaries in absence of any regulatory authority like central banks. Traditionally the measure of minable Gold was used as a benchmark or the conversion rates of One Nations Currency w.r.t the other one. This also determined the sum or the Count of Currency Notes they can print or have in circulation. From Gold, the shift has been to “Fiat Economy”.
What are the merits of Bit-Coin?
BitCoin is highly Divisible in that it can be scaled Down to 1/8th of its denomination – which makes it easy for transactions making it possible to continue transactions without Over Supply or Over Generation.
1/8th of BitCoin is termed as “1 Satoshi “alike Cents make up for a Dollar & Paisa make up an Indian Rupee. Satoshi the denomination of BitCoin is named after “Satoshi Nakamoto” (a Pseudonym) who developed bit Coin, implemented, devised the first BlockChain Database.
Though BitCoin & other Crypto Currencies have a long way to Go in terms of acceptance & mode of transaction, yet the concept of BlockChain has truly made its mark across industries for distinct activities.
Used cases of Block Chain Implementation
Few of the Cases are registered as below with a Small brief elaborating the “as is” to “to be” Condition Post BlockChain technology implementation.
- Smart Contracts – Procurement & Supply Chain- Applicability- Across industries (Detailed)
- Sustainable Sourcing & Visibility – Ann Bev –Breweries Industry (Detailed)
- Used Parts Re-Sale in Market Place-Honeywell Aerospace- Applicability across industries espousing “Circular Economy”
- Traceability in Health Care - Concept of Hyper Ledger-IBM as Tool Implementer- Across Health Care Industry Insurance, Hospitals the whole ecosystem.
Smart Contracts
Smart Contracts are automated workflows with execution based on Distributed Ledger Technology (DLT) allows data to be stored globally across servers & relies heavily on the store information for Confirmation of Transaction.
Smart Contracts Enable 2 or more parties to execute Contracts without the concept of Trust, as per the code written in the ledger based on pre-conditions as approved by the involved parties, the execution takes place as the logic inserted in the Code it has a lot of potentials to transform the insurance & Property Companies.
E.g. - In the case of a Car Loan – Lot of Paperwork can be solved by implementing Smart Contracts:
First Salary Slip, Credit Rating of the Car Buyer is Checked for Loan Approval, Now we have a Program or a block Chain dedicated for Car Loan Only, the buyer needs to get himself added to the existing block Chain, the block Chain fetches data from another block Chain that Contains the Salary details, the Credit rating of the user, When the user approves the sharing request the data is shared automatically & Checks with the Car Loan Company which is also added in the Car Loan BlockChain – Once the Credit Score is above the Cut off the Loan gets approved instantaneously.
Further Downstream the Savings/Current Account of the Car Owner gets added in BlockChain, Repayment terms are agreed upon, as soon as the total Loan is repaid, Loan Repayment Certificate is issued to the owner as well rights to Resale the Car with digital No Objection Certificate issued & other Govt. Departments are also intimated the same.
Automation saves Lot of Non-Value-added activities reduces Overhead, the blockchain code is Open Sourced, hence no investment, Only Computing Power is utilized. The Block Chains written in different Codes may be competing among themselves for adoption here the investment lies from the banking & car Companies to invest in a middleware that is compatible with the Original Source Code for the Longest Chain among the available ones.
Sustainable Sourcing
The Supply Chain Today is Globalized & the breweries being no exception, ABIn Bev produces popular beers like Corona, Budweiser, etc. They source Barley, Sorghum & Cassava crops from Africa not directly but through Tier 2 or Tier 3 Suppliers. Corruption, Human Rights violation are endemic an ABIn Bev as a Company had visibility till its Tiered Suppliers to enable responsible sourcing it introduced BlockChain to have 100% visibility in its supply chain by partnering with blockchain firm Ban Qu. Ban Qu has helped digitize the daily transactions enabled the small African farmers it also provides a platform where the farmers can offer their products Tiered Firms can bid both the parties can see the prices, qty.& the payment made – All these payments are in form of digital cash & direct credit to the Farmer–All this information are received recorded in Block Chain and Forwarded as the product moves across the value chain allowing 100% visibility to ABIn Bev, a responsible sourcing Organization. On the Beer Bottle, there will be QR Code when scanned opens up an application that details its sourcing journey from Source to the Depot/Restaurant/Liquor Shop.
Digital Currency is the future – But BlockChain is one of the biggest disruptions across different industries – it is a tool that will unleash the fullest potential of “Digital”.
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