According to Statista data, spending on blockchain solutions is expected to rise from $4.5 billion in 2020 to $19 billion in 2024. But why is this technology so exciting, and what does it have to offer businesses? On this occasion, we will tell you what blockchain 4.0 is and the opportunities that you can access with these solutions.
What is blockchain?
A blockchain or chain of blocks is a database that is transmitted between the nodes of a computer network. It acts as a distributed ledger (DLT) that stores information electronically.
The main characteristic of block chains is that they guarantee computer security and fidelity without the need to trust a third party to intervene. Therefore, they play a crucial role in cryptocurrency systems , since they make it possible to keep track of transactions in a decentralized way.
How does blockchain work?
The purpose of the blockchain is to facilitate the recording of digital information , but without the risk of it being maliciously edited or destroyed. How is this achieved?
When data in a blockchain is altered, the record is stored in a new “block”. The stored transactions are then encrypted using hashes. If you’re not familiar with this term, it’s an encryption function that generates a code with a fixed length, making it almost impossible to guess. This reinforces computer security .
Now, the new blocks of data do not overwrite the previous ones, but are added together to keep track of the changes. This is key to understanding how the blockchain works: any unwanted tampering can be recognized and rejected.
When new data is added to a blockchain network, most nodes must verify and confirm the legitimacy of the new data. If there is a consensus, a new block is generated and attached to the chain. Afterwards, all nodes are updated to reflect the most recent ledger.
Blockchain applications in companies
Blockchain technology and DLT can create attractive opportunities for businesses. These are some examples of uses that we can extrapolate to the business context:
1. Improvements in KYC (Know Your Customer) processes
Many companies depend on identification processes to attract and retain their customers, but these processes sometimes generate too high costs or take a long time.
DLT-based systems can help improve the transparency of these processes and the customer experience. In addition, they reduce costs, because it is possible to summarize everything to only one identity verification per client.
2. More profitable transactions
Digitizing records and issuing them on a blockchain saves time and money.
In one case study , a $100,000 letter of credit transaction between two companies that took up to ten days was reduced to less than four hours with a blockchain-based solution.
Image from Unsplash .
3. Automation of processes with Smart Contracts
Smart contracts (in Spanish, intelligent contracts) are computer codes that verify and enforce the negotiation of a contract.
When the conditions are met, the terms are carried out automatically, helping to save time and money on paperwork.
For example, a distributor of goods can streamline their processes by registering them in smart contracts . The distributor agrees to ship a certain number of products each month, provided the customer makes payment by a specific date.
The smart contract will then automatically process the order if payment is received within the contract term.
Blockchain 4.0: what does the latest generation offer?
Doing a brief review of the previous generations of blockchain:
Version 1.0 made the world of cryptocurrencies possible .
Version 2.0 started the era of smart contracts.
With version 3.0 came dApps (decentralized applications), which have various use cases such as DeFi platforms, crypto lending, and NFT markets.
Until now, blockchain has faced some obstacles, not minor, such as low speed and the small number of people who have the knowledge to develop in this technology. And it is here where the blockchain 4.0 comes to innovate to solve these problems and incidentally improve the user experience , generalizing the technology completely.
In this way, in its version 4.0, the blockchain goes from being seen as a platform to a business ecosystem where its advantages such as security, automation and immutability of records and the ease of carrying out procedures such as payments and contract signing are used.
How do companies benefit from blockchain 4.0?
Now, companies will not require great experience or special skills to develop, implement and use Decentralized Business Applications (DApps). Therefore, they will be able to create applications by setting up permission hierarchies and establishing self- executing contracts for different situations, as easily and quickly as if they were doing it on a website they are used to browsing, with the security and automatic data logging, reliable and encryption that characterizes the blockchain.
Undoubtedly, blockchain has the potential to reinvent economic, social and technological interactions thanks to its role in information security . It is a disruptive process that aims to change entire industries as it continues to advance, helping companies to have more efficient and transparent processes.