Categories: Business

Blockchain Has Practical Use In Record Management

All traditional transactions are complex and carry an inherent financial risk due to the many ways suppliers could fail or lie about their data. A website like CryptoSoft is a wholly automated cryptocurrency trading platform offering the best features like liquidity, trading tools, and customer support.

Blockchain technology is being explored to reduce those risks by providing transparency at every process stage. Records are stored on blockchain databases, eliminating the need for paper records and manual data entry, making fraud nearly impossible.

Additionally, using “smart contracts” allows for pre-agreed conditions between all parties so that everything happens automatically when one party’s obligations are met (i.e., a customer payment).

Blockchain has been likened to the “internet of value,” which is supported by a growing ecosystem of solutions and services changing how we approach trade finance, supply chain management, and logistics. Many industries are now evaluating how to use this new technology to streamline operations and reduce costs.

This post will discuss how companies can make the most of blockchain technology and how implementing distributed ledgers can improve their business processes. This post isn’t seeking to provide a detailed explanation of blockchain technology but will instead introduce four critical use cases that businesses are exploring today.

IMAGE: PIXABAY

How Blockchain Improves Record Management?

Businesses today have a large volume of data kept in different records management systems, spreadsheets, and even emails. This data can span from product information to financial records and contractual agreements. Due to the variety of these legacy systems, it is often difficult for businesses to share this information with their partners effectively.

In addition, when trying to collect data from various companies and commodities, there is no guarantee that the company still exists or where the information is located.

It’s challenging for partners to run complete trade screening and sanctions checks because they rely on internal resources, which are typically unavailable at short notice.

Blockchain allows companies to share information quickly and securely, potentially reducing costs and inefficiencies. People can easily share the data via secure blockchain-based applications (apps) and use immutable records in dispute resolution to prove that a product was sourced correctly.

Blockchain has the potential to improve many facets of trade finance as well. For example, a company could tell its supplier that it is interested in buying 20 boxes of a particular item at a specific price per box. Then the supplier could set up an app with the relevant parameters (e.g., quantity, price per box) and send an invoice which the buyer would deposit using their bank account.

Four Use Cases Of Blockchain In Businesses

1. Payroll Management

Blockchain technology could allow companies to automate and securely keep track of their payees. For example, a company might send salary payments to one person via emails or physical checks in the current system. However, the recipient may only sometimes have access to all the information in that email or check, and a team member may have left the company without ever receiving their pay.

This knowledge gap can create financial and morale problems for companies with large amounts of payroll information in legacy platforms. Blockchain technology solves this issue by allowing multiple parties to share real-time data, which companies would fully document on blockchain databases.

2. Supply Chain Finance

Companies within the supply chain finance space typically have to deal with contracts and collateral agreements that are very specific to each product or service. As a result, it is challenging for companies to follow through by tracking down all their agreements and managing the disputes arising from non-compliance.

Using blockchain technology, companies can have a secure, transparent ledger of all their agreements and allow everyone involved in a contract to track its progress.

3. Product Traceability

Product traceability is a valuable tool used by many businesses, especially those involving food items, pharmaceuticals, and other high-risk products. However, traditional systems are often expensive for some commodities (e.g., corn and rice), and the quality of data shared with partners usually leaves much to be desired.

Using blockchain technology, companies can capture product information, including origin, transport condition, the identity of the individual package, etc. This type of data is precious as it can help them determine the source of defects in their products or ensure that they buy from the correct suppliers.

In many cases, companies are currently using their internal resources to comply with regulations by checking other parties that may not even be available for these services (e.g., due to a lack of personnel).

4. Funds Management

Companies can also use blockchain technology to simplify funding and settlement processes between companies. Businesses often go through a long process of identifying funding sources, requesting that the company send checks, making sure the check has cleared, etc.

Blockchain technology could make all these processes transparent and automated by creating a single ledger for all parties involved. It would allow businesses to see who is owed money by their counterparties and when companies will pay that balance out.

Blockchain is seen as a trusted alternative for many companies because it uses encryption techniques and other security measures to guarantee the security of transactions.