With emerging technologies like blockchain ledgers and decentralized markets taking hold, business managers can fully expect the business contracting environment to change dramatically in coming years.
How can a business best position itself for success in a world where the method of engaging / transacting is changing? Here are a few technologies and trends to keep an eye on.
We’ve all heard of Bitcoin, but what about the underlying technology that makes bitcoin work? Bitcoin is based on blockchain ledgers, which can be used for business transactions that go beyond currency.
Blockchain ledgers, for instance, could be used to verify contracts. They are lists, or “blocks,” of encrypted records that each contain a timestamp and a link to the previous block.
Because of the way blockchains are designed and encrypted, records cannot be altered once a “block” of data is closed off. Doing so would put the altered block out of synch with the rest of the chain, and all parties would know the alteration had taken place.
Another advantage of blockchains is that they are stored in a decentralized fashion. Multiple companies may hold individual blocks, and there may be multiple copies of each. However, the fact that the entire chain is encrypted secures the integrity of the individual blocks.
The vast majority of online commerce is currently centralized, with a handful of large companies responsible for the vast majority of business transactions. However, that is starting to change.
Decentralized markets may be based on blockchain technology and provide secure identities and e-signatures for business transactions executed online. Not only do these decentralized markets provide verified identifications for transaction partners, they also safeguard privacy. Because no one single person “owns” a blockchain, the transaction partners can participate without having their personal information collected by a third party.
Both blockchain ledgers and decentralized markets have enormous implications for the future of business transactions. They are low-cost, nimble and easily auditable methods of conducting business transactions online.
Some in the industry are referring to this as a ‘Smart Contract’, when in fact it’s merely a ‘Smart Ledger’. The real transformation will happen when the Blockchain is leveraged to capture the ‘content’ and ‘context’ from actual legal contracts to execute / close any type of business transaction.
This is the direction ContractRoom is going with the Blockchain, intially with its financial clients; particularly since they have already had significant exposure with this emerging technology. Whether you’re in the financial industry or not, it’s probably a good time to learn about the advances being made in this area.
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