Businesses and individuals no longer make expensive long-distance phone calls, but instead use Skype, Viber, WeChat, or Whatsapp to communicate with people around the globe. Instead of taking sketchy taxis or buying their own cars, commuters found a more convenient alternative in ride-hailing apps such as Uber and Grab. Although traditional service providers opposed these technologies at first, burgeoning partnerships between the two are now charting a new course on how they can use technology together to enhance people’s lives.
But even in Southeast Asia where there persists a strong standoff between governments and operators of disruptive technologies, the idea of a smart and connected nation is now becoming an exciting prospect. Even blockchain, a technology that’s practically unheard of until the last two years, is now quickly being adopted by companies worldwide to reinvent their business models and deliver new value to their customers.
But what really is blockchain?
Blockchain is “an encrypted database of agreements” that can be used to monitor transactions between parties involved. Without institutional authority required, it has the potential to facilitate dealings in a quick, secure, and more transparent manner, and democratise, so to speak, access of people to digital platforms.
In the next ten years, blockchain is predicted to be worth $2 trillion, enough to sustain the growth of the global market.
Watch this video to learn more about blockchain’s capabilities to optimise your business, as explained by Upen Barve, Director, Head of Customer Office, SAP Innovation Center Network.
Here’s how the blockchain technology works:
Let’s say you are in Singapore, and you want to send a payment to a supplier in Manila. Under a traditional financial system, you could take the money to your bank, which records the transaction, then sends it to another bank in Manila, which then releases the funds to your supplier. As the transaction goes though different parties, you, the supplier, or both, will have to pay the banks certain fees to make sure the transaction goes smoothly. If anything goes wrong, then it’s up to the banks to correct and trace any errors.
In a blockchain transaction, however, you can directly deal with the person you’re transacting with, minus the third parties. That’s because each step of the transaction is stored in a public ledger accessible to anyone, rather than just in the records of one or two private banks. You don’t have to worry about privacy, because each footprint is encrypted in codes that can be translated by only you and the party you transact with. Unlike private records that can be tampered by hackers, the blockchain records are permanent and virtually impossible to tamper, since it isn’t just stored on a single database.
More than cryptocurrency
Aside from simple, straightforward transactions such as buying and selling, blockchain technology can definitely change the way we transact in many other ways:
1. Secure, trustworthy property management. In Upen Barve’s talk during the Asian Innovator’s Summit 2017, he demonstrated how blockchain can boost efficiency and liquidity in the rental market. Blockchain technology eliminates the need for third-parties to facilitate payments or verify contracts and titles. It can also be used to protect vulnerable land owners from land grabs. By storing contracts and titles in a transparent, tamper-proof system, records and titles will be virtually impossible to tamper, resulting in fewer land disputes.
The decentralised nature of blockchain empowers individuals and small businesses to do away with bureaucratic red tape to move their businesses forward.
2. Fewer opportunities for corruption. Corruption is a huge barrier to development, especially for Southeast Asia’s emerging markets. The decentralised nature of blockchain empowers individuals and small businesses to do away with bureaucratic red tape to move their businesses forward. Because anyone with a smartphone and internet connection can transact on the blockchain, even small-time farmers without access to banks can now have access to larger markets.
3. Faster, cheaper remittances. Enhancing financial inclusion is one of the benefits of blockchain use. Take this as an example: through the mobile app Coins, which uses cryptocurrency and blockchain technology to facilitate payments and remittances, Filipino customers are now able to reduce their remittance costs from 7-8% to 2-3%, allowing them to spend their money on something else that’s more valuable. The platform likewise eliminated the need for people in remote areas to keep returning to remittance payment centers to claim just a single payment. This allows blockchain to lessen financial shortcomings of many Filipinos in the rural areas, as well as close, albeit gradually, the technology gap in the country.
4. More transparent supply chains. More and more people are starting to care about the source of the goods they consume. Producers, suppliers, and distributors of products can benefit from the transparency and convenience of blockchain technology to trace every step that each product goes through in the supply chain. A British company, for instance, set up a blockchain technology platform in Indonesia to “smart-tag” and certify sustainability claims on the fish caught, in every step of the supply chain.
Sustaining blockchain momentum
Although blockchain technology is still in its infancy, it is, indeed, here to stay. Governments, along with IT experts and the business community, should cooperate in reaping its benefits, rather than resisting its disruptive effects to traditional financial and information infrastructure.
Companies also need to develop their technological backbone in order to make it blockchain-ready, while also spending resources on informing its customers on how easy, affordable, and secure the technology is.
Are you ready to use blockchain to drive your business forward? Learn more here.