Cryptocurrencies open new opportunities not only for making international transactions but also for business. Technologies used in cryptocurrencies can be used to optimize business processes as well. For example, with blockchain, it is possible to reduce the cost of maintaining infrastructure, speed up the documentation processing, and make it more secure.
Large and medium-sized enterprises are already trying to use blockchain in various business processes. But they are still researching the efficient practical use of blockchain and cryptocurrencies. Therefore, the full blockchain potential in business optimization has not been revealed yet.
Besides, cryptocurrencies expand the range of capabilities of existing technologies such as IoT (Internet of Things) and Fintech. However, the biggest cryptocurrency innovation has a social focus. Cryptocurrencies make finances more accessible to people and also try to solve a problem that few people think about — trust.
Let's try to figure out how cryptocurrencies can affect business and various aspects of our life.
Resolving the trust issue as innovation
Trust is the foundation of business and human relationships. However, trust does not always exist between people, especially if they do not know each other well. That is why we often use intermediaries who are trusted by both parties to resolve this issue. But sometimes, using intermediaries can be quite complicated and expensive.
What if the business always had the opportunity to interact with each other without intermediaries and thinking about the trust issue? This problem can be solved by the blockchain, which is commonly used in cryptocurrencies.
You may think that internet platforms have already helped with interaction. For example, e-commerce platforms such as Amazon have already made it easier for sellers and buyers to find each other, platforms like Uber ease the interaction between drivers and passengers, etc. However, Amazon and Uber are centralized platforms that mediate between businesses and consumers. And like any intermediary, they require their commission. So, we can say that trust still has a price.
But with blockchain, it’s possible to create an innovative platform that is decentralized and connects sellers and buyers directly without the need for an intermediary or some authority. This concept can change the way of doing business and open new opportunities for free platforms that strive to simplify the interaction in various industries.
Also, the approach to build internet platforms may shift from centralization to decentralization. Decentralization allows improving security as most of the data won’t be stored in one place. In addition, there won’t be a single point of failure that can be attacked and compromise the entire system.
Technologies used in cryptocurrencies as innovation in other industries
Blockchain is considered as one of the most promising technologies used in cryptocurrencies. But it is worth remembering that for the most part it is a database and it is not always more efficient than a similar centralized system. So, blockchain is unlikely to be able to completely replace existing systems. Still, businesses continue to experiment with blockchain and try to test for which tasks it is best suited.
For example, the blockchain has already been able to show its efficiency in documentation processing. In 2018, Maersk together with IBM have launched blockchain to help modernize global supply chains. It was used to create a digital process where documents for customs clearance can move seamlessly between the parties involved in import and export. These documents were visible to all participants in logistics operations, confidential, and could be easily verified.
International trade involves a large amount of documentation and its verification by different authorities. The blockchain allows you to monitor all changes in real time in one place and enables all participants to have the full amount of necessary information that is generated with each block. Such an experiment has become so successful that even other global shipping leaders are starting to use the same system.
This is just one example of how blockchain can help to optimize business processes. Blockchain also has been used in elections voting, healthcare, energy sector, and many other areas.
In terms of cryptocurrencies, you shouldn't think that only blockchain is capable of innovations because not all the cryptocurrencies use it. For example, Ripple tries to simplify international bank transfers using its XRP coin. Ripple does not use blockchain but uses a distributed consensus LEDGER with a network of validating servers. XRP coin is available not only for banks, you can easily buy XRP with credit card.
Moreover, don’t forget about directed acyclic graph (DAG) technology, which is used in IOTA cryptocurrency. With this technology, IoT can become more useful and get access to new opportunities. For example, cars are already capable of purchasing fuel or charging services with crypto automatically.
A lot of altcoins are created specifically for a particular industry to make it more innovative and solve its problems using cryptocurrencies.
Cryptocurrencies as a path to financial freedom
Many people in first-world countries don’t grasp how much of the world lives in countries with national currency hyperinflation, no secure banking infrastructure, and no trust in local arbitrators. That is why a significant number of people are still unbanked and tied to their not so very stable national currency.
So no wonder why in countries with a high percentage of unbanked population and unstable political situation cryptocurrencies cause more interest. Cryptocurrency usage allows people in these countries to access international markets and get rid of dependence on the national currency and the local banking system issues.
Thus, innovative business platforms that use cryptocurrency as a payment option are likely to form and become commonly used in countries where political, social, and financial instability exists. In turn, the cooperation of fintech and crypto technologies can make it possible to create alternatives to local banking systems, as M-Pesa did in Kenya.
Cryptocurrencies are still in their early stages of development, so the innovations they bring have not shown their full potential yet. However, the increase of crypto adoption may turn cryptocurrency and its technologies into an excellent alternative to the current approach of doing business and creating new technologies.
