9 Ways Ethereum Can Supercharge Your Enterprise
Disclaimer: Breakfast Leadership Network and its affiliates are not financial advisors, so the information in this post is for information only. Please consult your own financial/investment advisor before making any investments.
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Bitcoin might be dominating the headlines, but Ethereum is perhaps the most exciting technology from a business perspective. Yes, it’s a cryptocurrency, but it’s also an entire blockchain ecosystem, capable of doing all sorts of things that simply weren’t possible before.
Enterprises currently do a lot of things that risk security. Many have to manage data in high volumes, maintain health and safety, and abide by regulatory standards in their industries. It’s incredibly important for them. They also do things like track shipments, label products, and transact with parties that they don’t know.
All of these operations are risky and put firms at a disadvantage. However, Ethereum offers solutions. Its blockchain platform makes it possible to cut or eliminate the risk of transacting globally, helping firms secure their supply lines at low cost, improve network security and boost relationships with all their stakeholders.
What Does Ethereum Offer?
Ethereum is much newer than many entrepreneurs realize. It started in 2015, nearly six years after the introduction of Bitcoin. The technology sought to improve the blockchain ecosystem, looking for ways to leverage the distributor ledger format in a way that would help businesses. The platform knew that if it could produce an immutable ledger, then it wouldn’t need intermediaries for transactions.
Other systems were already offering this technology, but only in niche applications. The beauty of Ethereum was how it generalized the ledger and made it programmable. Companies could finally create smart contracts or digital agreements in whatever format they wanted. Practically any industry could benefit, from trade finance to real estate to law.
Despite all of the volatility in the markets, Ethereum remains strong. It currently operates more than 40 million unique addresses and has a daily trading volume of more than $1.5 billion. It operates more than 1,900 decentralized applications and has over a quarter of a million developers to its name, more than any other network out there.
How Ethereum Is Helping Firms Meet Their Objectives
As a business concept, it is extremely exciting. But how, exactly, is it helping firms reach their objectives? That’s a slightly more complicated question. Answering it feels a bit like trying to explain all the possibilities of the internet and digital marketing in 1995. Nobody really knows the answer. But we have some clues, so here goes:
It’s Open Source
Like many other blockchain networks, Ethereum is open source. That means that firms aren’t locked into a single vendor where they have to pay high prices. Instead, the technology is free for people to use and manipulate how they want for their own purposes.
This is possible because of the existence of the Ethereum token. The originators of the network know that as they add functionality and make it more useful to clients, the value of ETH will increase. Therefore, the more of the currency they hold, the more money they have.
Ethereum also operates similarly to other leading open-source technologies, such as Java. It welcomes contributions to the codebase and has a community-driven philosophy. It actively seeks out contributions and asks people to forward their code ideas to its database. Therefore, companies can actually fundamentally change the way the system works with their bespoke ideas, which is impossible in most vendor relationships.
It’s The Home Of Blockchain Standards
While the blockchain ecosystem is growing all the time, Ethereum is really the home of modern standards. Accepted industry norms, such as ERC20 and ENS all originate from the platform.
The wonderful thing about these standards is that they help to prevent the system from fragmenting. Enterprises get access to the Enterprise Ethereum Alliance’s Client Specification 1.0. This architecture determines precisely which components are necessary for business-based blockchain projects, making it easy for firms to standardize their approach. The Ethereum framework ensures fair play and the integrity of the network while being flexible enough for companies to experiment.
It’s Easy To Tokenize Digital Assets
The ability to tokenize digital assets might not sound all that important, but it’s actually surprisingly useful.
The reason for this is simple: it lets firms unlock new incentive models.
Let’s say, for instance, that a firm wants to offer customers a share in real estate properties that it owns. In the past, doing this was administratively complex. You had to engage in some sort of shared ownership scheme, requiring solicitors and a lot of paperwork.
But with tokenization, it’s substantially easier. All firms need to do is divide up “shares” in assets and then distribute them to customers. Then individuals can trade these tokens with each other to build or reduce their equity. It’s like a stock exchange, but with none of the usual brokerage overheads.
There are also some pretty wacky business models that firms can play with. For instance, tokens let firms crowdsource data management.
Improve Business Network Activity
There are other benefits, too. For instance, businesses operating on the Ethereum framework can improve the status of their network activity. Right now, there is no way for them to punish nefarious activity and reward users who are doing verifiable things. But in the future, they may be able to add incentive layers. These would actually reward network users for taking desirable actions, all administered through smart contracts on the Ethereum blockchain.
You can imagine, for instance, a company rewarding staff for regularly changing their passwords or avoiding opening unvetted email attachments. You can also imagine them creating incentives for employees to be more available by providing them with blockchain reward tokens for their time and energy. At present, no such incentives are in place.
It Provides Tamper Proof Transaction Histories
Digital transaction histories are risky. In theory, anyone could tamper with them to display events that never happened. Hackers, for example, could claim they purchased a service they didn’t and then ask for a refund.
With Ethereum, though, these kinds of nefarious activities become virtually impossible. Since no single entity controls the network, transaction histories are permanent. That’s part of the reason why people call blockchain technology an “immutable ledger.” You simply can’t change it.
It Lets You Transact Privately
Sometimes, businesses want to make off-the-record transactions. However, that’s hard under traditional setups and in other blockchain environments.
With Ethereum, though, it's possible. Systems are now available that allow companies to form private consortia. They can then use these to transact permanently and securely, without information going on the public ledger.
If you are new to transacting on the blockchain, there are plenty of resources available online. Read through tips to selling Ethereum before you start trading.
There’s No Need To Code From Scratch
While enterprises can code Ethereum from scratch, they don’t have to. That’s because of the presence of rapid deployment SaaS. These services let firms create blockchain-based applications and systems using higher-tier implementation tools that are more intuitive, a bit like conventional app builders. This means that there’s no need to do any implementations from scratch. It’s all done directly through these secondary applications.
It Makes It Easy To Comply With Regulations
Today’s businesses expend enormous quantities of energy attempting to comply with regulations. In fact, it’s so intense that they sometimes have to dedicate entire departments to it, often at tremendous cost.
But that could change with blockchain-based technology. That’s because blockchain lets companies operate permissioned networks. These systems allow firms to build solutions to fit any security or regulatory requirement that they might have. And they can either do it publicly, perhaps for shareholder interest, privately on the blockchain, or in coordination with government bodies.
It's Scalable
Another nice thing about the Ethereum network is its scalability. The proof of authority consensus mechanism and custom block time means that networks built on the Ethereum platform can easily outperform the main net. Furthermore, companies can scale them to operate hundreds of transactions per second, allowing them to meet high demand.
The potential for this kind of scalability is tremendous. It means that firms are in a position to radically adjust their operations and give clients more power. It also means that they can improve their internal economies considerably in ways that were hard to imagine before.
Conclusion
How precisely Ethereum will improve businesses is a work in progress. As we stated in the introduction, the entire scheme is still very new, a bit like the internet in 1995. Nobody can really see precisely how to use these technologies in a business context.
Slightly worryingly, though, blockchain technology has been around for nearly seven years yet the Ethereum ecosystem is nowhere near as developed as the internet was after the same amount of time.
Practically speaking, this mainly comes down to the technicality of the system, and a lack of knowledge among regular firms. Many small businesses are still playing catch-up with blockchain technology. Furthermore, many don’t really understand what it has to offer. They understand that it is a powerful technology, but they don’t quite know how to implement it in their personal enterprises. And that’s a problem.