Blockchain 4.0 Technology: What Will Be Its Contribution?

According to Statista, spending on blockchain solutions is expected to grow from $4.5 billion in 2020 to $19 billion in 2024. But why is this technology so exciting, and what does it offer businesses? On this occasion, we will tell you what Blockchain 4.0 is and the opportunities you can access through these solutions.

A blockchain or chain of blocks is a database that is transmitted between nodes on a computer network. It works as a distributed ledger (DLT) that stores information electronically.

The main feature of blockchains is that they guarantee the security and trustworthiness of computers. And without this need to trust a third party to intervene! Thus, they play an important role in cryptocurrency systems, since they make it possible to keep track of transactions in a decentralized way.

The purpose of blockchain is to facilitate the recording of digital information. But without the risk of it being maliciously edited or destroyed. How is this achieved?

When data on a blockchain is changed, the record is stored in a new “block”. The stored transaction is then encrypted using the hash. If you’re not familiar with the term, it’s an encryption function that generates a code with a fixed length, making it nearly impossible to guess. It strengthens computer security.

Now, new blocks of data do not overwrite previous ones but are added together to keep track of changes. It is important to understand how blockchain works: any unwanted tampering can be recognized and rejected.

When new data is added to a blockchain network, most nodes must verify and confirm the validity of the new data. If there is a consensus, a new block is created and added to the chain. Afterward, all nodes are updated to reflect the most recent ledger.

Blockchain technology and DLT can create interesting opportunities for businesses. Here are some examples of its use that we can extrapolate to a business context:

Improvements in KYC (Know Your Customer) processes

Many companies rely on identification processes to attract and retain their customers. But these processes sometimes generate high costs or take a long time.

DLT-based systems can help improve the transparency of these processes and the customer experience. Also, they reduce costs. Because it is possible to boil everything down to only one identity verification per client.

Digitizing records and issuing them on blockchain saves time and money.

In one case study, a $100,000 letter of credit transaction between two companies that took up to ten days was reduced to less than four hours with a blockchain-based solution.

Automation of processes with Smart Contracts

Smart contracts are computer code that verifies and enforces the negotiation of a contract.

If the conditions are met, the conditions are processed automatically, helping to save time and money on paperwork.

For example, a distributor of products can streamline their processes by registering them in smart contracts. The distributor agrees to ship a certain number of products each month, provided the customer pays by a certain date.

The smart contract will automatically process the order if payment is made within the contract period.

To better understand how blockchain can benefit e-commerce, it is important to explore the reasons. Unlike other promises of security and performance, blockchain does not rely on specific programs or subscriptions to operate, making it a particularly valuable resource. We will explain this to you in more detail.

Encryption is the foundation of security for every block that makes up the chain. When a block is filled with data it is closed with encrypted code. This becomes a unique password for user access. Crackers are also very difficult to crack with programs that use alphanumeric codes to decipher.

Thus, every transaction between an online business and its clients is much more secure. They don’t need to give their personal data, just having their own wallet is enough to make secure purchases. The same biometric registration through a single manager or electronic wallet will be enough to guarantee the operation. Thus, it will be known that he is a trusted user, but without needing to know his identity details.

Businesses must pay a portion of their profits to banks or platforms that handle payments. Sometimes they assume them as a loss or pass it on to the client at the final price. Using blockchain and paying in cryptocurrency removes this barrier. In this way, it is possible to adjust the price with the customer and improve the profit margin for the company.

Transactions are made directly between merchants and clients on the blockchain. You don’t have to use intermediaries. This is especially advantageous when trading abroad, as commissions are high. The use of blockchain and cryptocurrency represents great savings in this area. Also, they have no waiting time; They are done instantly no matter which country you are in.

A major problem in electronic commerce is consumer insecurity. Sometimes they go to the big online stores and discard the smaller ones because they want to get the highest quality without the risk. The blockchain can record the origin of each ingredient that makes up an article, a spare part, or processed food. Traceability is essential to know whether the quality is as promised. This validation can save online small businesses.

The traceability of a product is essential to know whether a product is fully legal or not. It can also be a solution to comply with specific guarantees for each sector and country. An auditor has the opportunity to immediately verify the source and follow up the process. With the full guarantee that there will be no subsequent manipulation of the documentation.

Decentralization adds security to encryption. This decentralization means that information is stored on many nodes at the same time and not on a single server. To reopen the file, it is verified on multiple nodes, so if one breaks or becomes corrupted, the others will serve as backups.

Validation of files or contracts and transactions is kept on the decentralized chain. This guarantees that there will be no damage due to any kind of breakdown or cyber attack. Nodes that work properly will guarantee that everything in the blockchain network is always secure. It ensures compliance with contracts and ensures additional security for electronic commerce and marketplaces as well as their customers.

Doing a brief review of the previous generations of blockchain:

● Version 1.0 made the world of cryptocurrencies possible.

● Version 2.0 started the era of smart contracts.

With version 3.0 came dApps, which have various use cases such as DeFi platforms, crypto lending, and NFT markets.

So far, blockchain has faced some obstacles, not least, such as low speed. Few people have knowledge of the development of this technology. And this is where Blockchain 4.0 comes in to innovate to solve these problems and incidentally improve the user experience, generalizing the technology altogether.

So, in its version 4.0, the blockchain remains visible. Because a business ecosystem is a platform that utilizes benefits such as security, automation and immutability of records, and ease of performing tasks such as payments and contract signing.

Now, companies do not need great experience or special skills to develop, implement and use decentralized business applications (DApps). In this way, they will be able to build applications by setting up permission hierarchies and setting up self-executing contracts in different situations.

Undoubtedly, blockchain has the potential to renew economic, social, and technological interactions. Thanks to its role in data protection. It is a disruptive process that aims to transform entire industries as it progresses, helping companies achieve more efficient and transparent processes.

Originally published at https://blockchain101.famecoin.ai.