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Dec 28, 21  |  Ibrahim Imran

Can Blockchain Transform the Economy? What You Need to Know

How can blockchain transform the economy and what impact will have it on the future of businesses? This is a common question that arises when people hear the word blockchain and cryptocurrencies. Hence, in this article we’re aiming to provide you with some insight which will definitely help you in finding the answer you’re looking for! 

Introduction to Blockchain 

Bitcoin sparked interest in cryptocurrency, which has since evolved through Ether, Ripple, and other technologies to become a prominent issue. Nobody isn't trying to find out how to make money with cryptocurrencies, but serious developers and entrepreneurs are delving even further - into the use cases and possibilities of blockchain, the encrypted database technology that underpins Bitcoin.

In its most basic form, blockchain is a digital and decentralized public ledger. Its major goal is to track record transactions across computers so that if one record is changed, all following blocks in the network are disrupted. This means that because every transaction leaves a permanent record, everything should remain in the ledger and nothing should ever go missing. Let's see how can blockchain transform the economy and how we conduct business in the future.

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Composition of Integrity

At a very high level, blockchain is a chain of blocks in a database, as its name suggests. Each of these blocks comprises batches of hashed and encoded transactions. Each of them also contains the cryptographic hash of the previous blocks in the chain, allowing them to be linked together. Essentially, this is what gives the system its integrity, i.e., the chain can be easily tracked back to the original block.

Due to all of the blocks being linked by cryptography, every change to one modifies the others farther down the chain, making it easier to spot if the data has been tampered with. The data is also copied on every machine on the network, making it simple to double-check each block. All of this results in a shared database that is transparent and protected against changes, tampering, and erasure. 

Contracts can even be incorporated in this database, thus the possibilities for using this technology are virtually limitless. It has the ability to disrupt a variety of industries, change our social and economic institutions, and fundamentally modify how we conduct business.

Corruption's Demise

When implemented as an accounting platform, blockchain has the potential to dramatically alter money and politics. This financial leger's technology is entirely transparent and incorruptible. As a result, it's an ideal weapon for eradicating institutional, political, and financial corruption. Due to its automatic verification and encryption, it can help eliminate errors in payable and receivable accounts. 

Each transaction's data is encrypted, the date and time are verified, and all participants are identifiable. Of course, this will not eliminate the need for accountants and bookkeepers entirely, but it will automate operations and enable real-time monitoring, making it easier for them to remain on top of concerns and developments.

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There is no financial intermediary.

The banking industry will undoubtedly be the most affected by blockchain's mainstreaming. The reason is straightforward: it will effectively eliminate the necessity for any financial institution to act as a middleman between two parties seeking financial exchange. Since the database is essentially a gigantic ledger, no bank account is required; all you need is a smartphone. 

This is significant not just because there will be no more bank fees, but also because some industries that are still fraught with controversy will have more flexibility to operate. If you look at the legal cannabis industry, you'll see that, owing to cryptocurrencies, all of those medical marijuana programs are more accessible than ever before. In general, having no banks means having more flexibility and freedom in many areas of business.

Contracts without the use of a middleman

Blockchain also paves the way for smart contracts, as it eliminates the need for a middleman to carry out contracts, allowing for the automatic exchange of services and goods. These smart contracts will not only automate the delivery of any payments related to them, but they will also hold both parties fully accountable because they are recorded in the ledger. The contract is finalized once both parties have fulfilled their obligations and the deliveries have been received.

Of course, some complex agreements will still require expert legal assistance to draft and implement, so attorneys will not become extinct, but for smaller agreements, parties will be able to collaborate directly and easily.

Without analytics, management is easier.

The blockchain's smart contracts also make it an excellent project management tool. Every project plan might be carried out utilizing a set of smart contracts that make up the project's requirements. It would also be a significant improvement in executive reporting, as it would obviate the requirement for analytics like calculating earned value or percentage complete.

As you can see, the elimination of middlemen is a common thread running through all of these use cases. If records and transactions are preserved and monitored on the blockchain, it is possible that the institutions of investment and finance, banking, and law will be obsolete.