A blockchain is a”dispersed ledger” –i.e., data spread across several computers — which may be used to record any transaction, like a money transport, a contract between two parties, or an order dispatch. A number of parties can upgrade the data simultaneously with no fundamental party controlling it. Every update is secure and reliable, by encrypting data and verifying each transaction based on set of predefined rules.
Each data record is known as a”block” and a string of these blocks form a”chain” — hence the title”blockchain.” Each block is made up of three objects: (a) an identification code, also known as”proof of work” since it could only be generated using a set of complex algorithms, (b) a pointer to the previous block’s code, and (c) transaction information.
Each block is time-stamped and can’t be changed, but it’s open for anybody in the series to view. New blocks can only be added to the chain when they’ve been validated by complicated algorithms.
Bitcoin, the cryptocurrency, utilizes blockchains. Blockchains are appealing, in part, because they enable secure transactions without involving a third party middleman. Thus transaction costs are reduced. Industries that have traditionally required a third party, such as escrow for home mortgage, can be disrupted using blockchains.
Blockchain for Merchants
Blockchain is a new technology, with new use cases appearing frequently. Here are 10 examples of how blockchains could benefit merchants.
Mobile payments. A drawback to mobile payments has been security risk. Blockchain eliminates mobile payment fraud by listing all transactions in the dispersed ledger and otherwise allowing peer-to-peer money transfers.
Loyalty programs. Loyalty programs have two main functions: accrual of loyalty points and salvation of these points. Blockchain can ease having the ideal contracts in place to control both functions. Also, blockchain may be used for effortless redemption of loyalty points by using a cryptocurrency, such as bitcoin.
Supply chain. Blockchain may be used to trace the journey of every product in the distribution chain from producer, to the distributor, and ultimately to a merchant’s warehouse. This can monitor the product to prevent tampering or losses and to raise alarms if there’s a health issue, like an E. coli breakout for food products.
Authenticity of products. As blockchain can catch every touch point in the life span of a product, which makes it easier to find out whether a product is authentic. This capability may be used for luxury goods and for one-of-a-kind product, such as artwork, or time-sensitive pieces, such as concert tickets.
Intellectual protection. Sites and mobile apps often use original content that should be secured. This content can be enrolled on blockchain, providing an immutable evidence of ownership of the content. This use case is already being used in the audio industry to monitor royalties.
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Identity management. Identity theft could be removed by using blockchain. The technology assigns a unique code to a individual and that code can be used to confirm identity. Financial services organizations are already using this capacity.
Crowdfunding. Crowdfunding is a favorite with merchants and inventors to raise cash. Blockchain has made it much easier to raise funds through cryptocurrencies.
Advertising. Retailers can provide a few bitcoins (or some other cryptocurrency) to customers who click on an advertisement or see an advertised video for a few seconds, which makes it easier for advertisers to get clicks and customers to find out more about products displayed in the ads. This enables the advertiser and the consumer.
Marketplaces. Marketplaces take a cut of every transaction. A good example is the Apple App Store, which receives a part of every app that’s purchased. Blockchain can remove these third parties by building a market that supports peer reviewed sharing.
Do you have experiences with blockchain? Please share in the comments, below.