Blockchain – innovative technology that could cut business costs dramatically

man contemplatingThe holiday month is a time to ease back, refresh and perhaps explore new ways of doing business and this includes innovations in technology.

Many people will be aware of the virtual currency Bitcoin, but how many have heard about the underlying technology that made Bitcoin possible?

This is Blockchain, a secure digital and publicly accessible registry or ledger system, also known as Distributed Ledger Technology (DLT), that will allow sharing of everything from confidential documents to financial transactions to all those who are authorised by being given the access codes.

Its secret is in its decentralised nature, which means it operates without a central authority, such as a bank or a legal notary. A copy of the entire registry, updated in real time, can be saved to the computer of every authorised member of the Blockchain. Transactions are checked against previous activity and verified before being added.

How will Blockchain help businesses?

Most importantly it will provide the basic infrastructure on which businesses can build secure, trackable and verifiable records of everything from contracts and agreements to payments.

It is expected to reduce transaction costs as well as the time needed to verify details of interactions where multiple parties are involved.

Professional intermediaries, such as banks, lawyers or brokers, would not be needed to verify contracts, agreements or payments and this would reduce fees and transaction costs for businesses.

The Blockchain infrastructure can be used to create secure storage for public records and binding promises, something the UK Government has been exploring for use in the public sector potentially by the NHS and for recording such things as welfare payments.

Many banks have already started to experiment with using Blockchain technology and Santander analysts have estimated that the new technology could save banks more than $20 billion per year in transaction and other costs.

In the coming years it may well prove to be as great a revolution as the internet has been in the way businesses operate.

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