How to harness blockchain for your business contracts
We have previously looked at the development of blockchain here in the DCSL blog, and we take a keen interest in how this technology continues to impact the world of business. In this blog post, we explore how organisations like yours can take advantage of the blockchain revolution and use it to improve your delivery of products and services.
The origins of blockchain
When blockchain was originally created, it was tailored for the process of financial transactions – specifically using the crypto currency Bitcoin. It functions as a digital ledger that keeps an ever-growing list of historical transactions, also known as ‘blocks’, throughout any number of network connections. However, this sequential recording of events is also what makes blockchain such a dynamic and flexible technology, extending its potential functionality beyond the world of finance.
Using blockchain in business
With the increasing threat of hacking, data loss and security breaches, blockchain is in many ways setting a whole new standard for all types of transactions and business interactions. Thanks to the level of security it can offer, blockchain allows organisations to not only place complete trust in their own data but to also extend that trust to customers and suppliers. This uncompromising trust is fast becoming a powerful competitive advantage for organisations that are adopting blockchain.
Contracts and agreements
Aside from financial transactions, contract handling has quickly become an area of huge potential business benefit with blockchain. Today we are seeing four specific aspects of how blockchain can improve security, productivity and profitability when working with contracts:
- Complex contract chains
For many businesses, the products and services they offer depend on sub-contracts and deliverables from partners, suppliers and contractors – often in a chain of several agreements along the way. This is not normally something that the end customer would see, as they only engage with the business at the point of sale. By using blockchain technology, the business can provide the customer with a transparent overview of the product as it moves through the supply chain. If a delivery is delayed or a product is defective, you can quickly determine which part of the chain has failed and take corrective action. This can help to provide clearer terms of engagement, as well as establish financial liability for all members of the contract chain.
- Smart contracts
A smart contract is effectively an automated contract fulfilment. Unlike the manual handling of a regular contract, blockchain technology can be used to automatically approve and fulfil agreements in order to trigger a service or product delivery. This process is increasingly used for services such as rentals of properties, vehicles or other short-term resources.Blockchain can allow an immediate connection between a service delivery and a payment, where all the end user needs to do is confirm the successful delivery of their order. This in turn approves an automatic payment, which not only bypasses the need for invoicing or chasing payments but also makes the whole service delivery process faster and simpler.
- Sensitive data protection
Blockchain technology is of course already used for high-privacy transactions in the world of finance, and highly trusted for sensitive data. This makes it ideal for protecting contractual information.In many cases, there are elements of a contractual agreement that should not be readily available for all members of a supply chain to see. This could be personal data, intellectual property, financial records or other sensitive information. With the help of blockchain technology, a company can select what data should be released to other service providers, and what should be withheld. Companies can also limit any information access to a certain space of time before blocking it, or they can link access to other transactional triggers.
- Ethical supply chains
For many customers today, business is about more than just business. There is mounting pressure on suppliers of all sorts of products and services to prove that they comply with fair trade policies, that they don’t harm the environment and that they use ethical manufacturing methods.By using blockchain throughout your supply chain, your organisation has the ability to provide a consistent, truthful record of how each element of your service or product is being sourced. If a sustainable, ethical delivery is central to your competitive advantage, blockchain offers a way to prove to your customers that you truly comply with all the ethical standards set – and that your suppliers do the same.
Blockchain technology builds trust
Blockchain technology builds trust on several levels. It helps your customers trust your brand, and it helps your business trust in your own processes.
By creating a tamper-safe, permanent record of contractual activities, you will always have an automatically populated history of events to refer to, which helps your organisation to stay committed to your promises to clients as well as partners and suppliers. This will only ever become more important in today’s marketplace.
The future of blockchain
We will continue to keep a close eye on what’s happening in the world of blockchain technology and explore new ways that your business can benefit from its many uses. We may not know today what the next stage of blockchain will look like, but we do know that the benefits of this technology are much too powerful to ignore.