When online banking first came about, it drastically cut down on time it took to for businesses to transfer money. This made companies more nimble and allowed them to be more efficient.
Now with blockchain, we are looking at the same type of innovation that will drastically improve efficiency within an enterprise, both domestic and international.
In business time is money and sending money via traditional methods can be slow and lack security. This is where blockchain can be utilized to cut costs, time wasted, and possible security threats. Making an international payment or money transfer can take up to five days to be completed.
With blockchain technology such as Ripple, it can cut that time just 4 seconds. This is why blockchain is the next significant innovation for businesses as a whole.
Blockchain for Enterprises
In both business and banking, we have seen a lot of interest in implementing the technology into two specific areas. The first being banking and the second being business to business transactions.
When it comes to institutional use of blockchain coins like Bitcoin or Ethereum are not what is used. Preferably, stable coins are what is used. Because coins such as bitcoin are so volatile, it simply isn't practical for banks to use.
For example, in banking, if a company operating in the U.S. wants to send money to a subsidiary that is outside of the U.S. then it needs to make an international money transfer. However, we have recently seen the adoption of blockchain technology in the banking world with IBM bringing their new Stellar blockchain to market.
This new blockchain is used by financial and in a recent article by Coindesk.com , Philippines bank RCBC, Brazil's Banco Bradesco, and Bank Busan of South Korea have all been approved to use the new stable coin.
Moreover, "Amazon Web Services has partnered with Kaleido to offer a full-stack blockchain enterprise platform on the cloud that integrates blockchain services with AWS services" - Moonwhale.io. This is a sign of the times and how the landscape of business is quickly changing because of blockchain.
In the coming years, we are likely to see adoption on a much larger scale. The use of blockchain has become a competitive advantage in enterprise, allowing banks and companies to beat out their competition purely through speed. The technology is robust and functional, and ultimately, those who don't use it will be slower and less efficient, making them obsolete.
Domestic and International Payments
The main issue with the traditional form of transferring money, whether in enterprise or banking, is that it is slow, especially when it comes to international payments. To complete an international payment, the money has to go through multiple institutions. This takes a lot of time and is costly.
An international payment takes anywhere from three to five days. This is extremely inefficient when compared to the literal minutes it would take with business to business blockchain transactions. A coin such as Ripple can get the job done in about 4 minutes, so why use the traditional method.
The same goes for domestic money transfers. While they may not be as complicated or resource intensive, they still take time, which is a valuable commodity in any industry. Implementation of blockchain in this instance could drastically speed up a business. For example, if a company wanted to purchase goods or services from a vendor, they would either have to send a physical check or wire money. The check will take days to arrive, and it could also bounce creating unnecessary work for everyone involved. The wire transfer could take up to 24 hours. With a coin such as Ripple, the transfer of money could take only a few minutes.
In essence, whether it is a domestic exchange of money or an international one traditional payment methods are slow, and blockchain ones are lightning fast. They are also just as secure if not more. It truly is the future of how we will do business.
One of the great things about blockchain technology is that it is not just fast, but it is cheap. Because the money doesn't have to pass through bloated financial institutions, the cost is much lower. Blockchain is new and streamlined, meaning that it has gotten rid of a lot of the unnecessary fees associated with doing business and moving money around the traditional way.
In the case of Ripple, a money transfer cost only $0.00001. Yes, that is not a typo that is the actual cost to move money across the Ripple's nodes. The reason for this is because it helps to keep scammers at bay and fight off DDoS attacks. Cointelegraph did a great in-depth dive into the tech and how Ripple may be making a name for itself in the global transaction space. Cointelegraph article.
Besides being fast, technologies like this are what help businesses cut costs. In fact, across the board, blockchain transactions are significantly cheaper than traditional transfers.
Another big selling point of blockchain is that it is decentralized and more secure than big banks. Doing business has become more secure with networks being harder to hack and unique wallets being almost impossible to access. However, there is no impenetrable system. Ultimately blockchain is not 100% safe but its better.
The combination of speed and security makes blockchain technology the perfect tool for enterprise and banking to become more efficient and therefore, more profitable.
It Is The Future
We have already seen that banks and business are using the tech, and some storefronts and online stores are accepting different cryptocurrencies. With every new breakthrough, there are the early adopters and those that come after.
Right now, we are seeing the early adopters who are on the cutting edge. In the future, we are going to see widespread adoption.
If you want to learn more on blockchain and its role in enterprise, the book Blockchain For Business by Jai Singh, Jerry Cuomo, and Nitin Gaur is a fantastic resource.