The trending topic in IT, Blockchain, keeps the tech industry currently on its toes, as the distributed, decentralized database of blocks is considered impossible to get hacked: Many different servers verify algorithms for storing and uploading information, besides allowing all users of the network to see all the histories of changes or adjustments to a file or a block. Due to the security of decentralized storage and the elimination of third-party verification of transactions, processes can be automated.
Although blockchain technology is already triggering changes in various markets and industries, it is still in its infancy. However, changing needs of consumers require urgent action not to be left behind. Whoever is waiting to establish the Blockchain to optimize processes will lose his competitiveness. Technologies are already available today that digitize sales and ensure high security and transparency in the execution of contracts.
Without question, the blockchain stands for technological progress and signpost for the future, because the unchangeable database promises high security and automation options. Primarily made famous by the crypto-currency Bitcoin, the new technology seems to be on the rise, creating at the same time other problems. Since there are only a maximum number of currency units, buyers store the acquired bitcoins, resulting in extreme fluctuations in the cryptocurrency market. The dream of a currency free from inflation has therefore ended up with high losses for investors. Instead, the advantage of blockchain technology to be stored decentralized turned out to be a major drawback. At this point, there is no central bank available to stabilize the currency.
One promising use of the technology represents the storage and transfer of personal data, such as smart land registers, digital weddings and electronic voting. Ultimately, the idea of the new technology has the potential to shorten bureaucratic paths, provide manipulation security and create unchangeable filing methods. So far, however, this is still a thing of the future, due to the lack of interfaces and the high computational power necessary to feed information into the blockchain database.
Network without networking?
In addition to cryptocurrency as a useful piece of blockchain, smart contracts are gaining awareness by promising compliance and automation of legally binding processes. Human interface to verify and execute contract options are eliminated, because the source code of smart contracts contains instructions that react to certain conditions immediately. If a condition comes into force or is met, for example, the transaction of a certain amount takes place.
Especially in combination with the Internet of Things in Industry 4.0, there are advantages in favor of more efficient processes, such as supply chain management. However, so far, the widespread use fails due to lack of suitable business models. For various industries, there is currently still no benefit in the technology.
More efficient are intelligent contracts that work just like the blockchain-based smart contracts and are already of good use for companies today. Cheaper and with immediate applicability, the establishment of intelligent contracts is worth the effort, away from the blockchain hype, in existing business models.
Although Blockchain and Smart Contracts are heralding in a new digital era, the technology is still at the beginning of its development and there is a lack of portable business models outside the BitCoin. Even interfaces and components that make their use in everyday work possible are not yet available.
Legitimate, intelligent, and flexible contracts for efficient processing, away from the new technology, are already usable and enrich different industries, like in the energy supply, telecommunications, retail, mobility management, insurance and automotive industries.
Another hurdle is the currently still required high computing power, which turns out to be true electricity guzzler. Companies should therefore use the latest technologies to benefit from compliance and flexibility in contract execution.
For vendors, however, the step towards the digitization of sales is worthwhile, because with the accompanying automation, cases of fraud can be effectively prevented, and sources of error reduced considerably.
In the automotive industry, for example, digital distribution enables optimal resource management of the fleet, with the effect of increasing the profitability of car-sharing providers and car rental companies. This long overdue step not only enriches the automotive industry but also the sales channels across all industries. Individual demands from consumers as well as from suppliers can be easily met today thanks to intelligent contracts.
By Daniela La Marca