Today, there are already some practical applications of blockchain for small and medium-sized enterprises. Huge potential and opportunities are hidden in this technology, and they can be used. After all, blockchain technology, which according to the data of Coinmarketrate.com, was originally developed as a technical basis for cryptocurrency management, can be used wherever information is transmitted and permanently stored. But first about the main thing.
Blockchain is nothing more than a database whose data records are cryptographically interconnected. When the blockchain is publicly distributed, it creates a decentralized organized network in which anyone can participate, and in which data is stored in a form protected from hacking. These characteristics allow technology users to guarantee data integrity, reliability, transparency and real-time storage.
Thus, it opens up its potential, in particular, for small and medium-sized enterprises, and finds possible applications for companies, freelancers, artists or inventors for truly legal and tamper-proof document storage. Because after the correct data entry into the blockchain, they cannot be changed in the future. This opens up many specific application possibilities for companies, for example, for storing files in an audit-proof form, for confirming authorship, for optimizing data exchange with tax authorities, or for automatic payroll tax calculation and reporting.
For example, every company has data that must be stored in a form protected from unauthorized access: important receipts, contracts, documents and patents must be stored in a legally protected form, and the integrity and authenticity of these documents must be preserved even after the statutory retention period. It is this task that can be solved with the help of blockchain technology, or rather, blockchain distributed ledger technology. It is this technology that provides the maximum possible verifiability and eliminates manipulation.
The secret of blockchain is its decentralization
The blockchain database consists of interconnected data blocks. Multiple data records, such as transactions, are combined into one block. Each block contains a timestamp and is linked to other data blocks in the chain. Each block knows the hash value, i.e. the checksum or digital fingerprint of the previous block. If the data set is subsequently changed, the hash value of the data block will also change. This hash then also needs to be adjusted in a subsequent block, which in turn changes its hash value, and so on. A link in the chain opens, and the whole chain breaks. In order to manipulate the data, no matter how small the changes are, all subsequent data must be rewritten on all computers involved in the process.
This is the key to the decentralized blockchain: everyone who owns a computer can take part in it. Thus, the blockchain is not just a database, but a decentralized database distributed on thousands of computers around the world. Therefore, the hash values stored in this database are not stored in a central location. Each participant has a complete copy of the data. This makes it impossible to overwrite the blockchain for subsequent modification. The computers of other participants do not accept this, the technology does not allow any subsequent modifications and allows only those data that comply with the guidelines of the corresponding blockchain.
Distributed blockchain is the most famous example of using distributed ledger technology (DLT). Unlike the classic cash book, where only one central copy manages the general ledger, in DLT any number of copies of the cash book are maintained by equal parties.
Blockchain for storing documents with tamper-proof
If you realize the advantages of this technology, the possibilities for document management become obvious that you can not only store money transfer transactions, as it happens in the blockchain of the BTC and other cryptocurrencies. You can store any other data, for example, hash values of documents.
In daily activities, a number of important documents must be kept in a legally protected form, and the integrity and authenticity of these documents must be maintained even after the statutory retention period. This problem can be solved with the help of blockchain technology: the contract concluded today remains on the user’s computer in accordance with data protection laws. In the data block of the decentralized blockchain, only the hash of the file is stored, which uniquely identifies the document, but does not allow to draw any conclusions about its content. At any subsequent time, it can be proved without a doubt that this contract existed in this version at the time of its preservation.
In corporate practice, documentchain, a decentralized blockchain specially designed for document management, offers the ability to permanently store encrypted descriptions and hash values of a document file along with timestamps in a distributed database and subsequently compare them with the original document. Thus, proof is provided of when the document existed.
This opens up great opportunities. After all, we are talking not only about the implementation of the storage rules, but also, first of all, about copyright protection. This can be illustrated by an example: a designer has an idea of a new revolutionary device. He describes his idea, perhaps even creates the first sketch, and enters all this information into the blockchain.
Keep in mind that it is not the document itself that is stored. This is a secret and remains with the designer. Only a unique hash value is published, which receives a timestamp in the data chain. A few months later, he takes up this idea again and creates the first CAD calculations and drawings. They are also saved. He discusses detailed problems with others and gradually comes to a finished project.
However, unexpected problems arise when applying for a patent: he is suspected of having adopted this idea from someone else. At this stage, he can prove how long he has been working on the project. The date of the appearance of his idea and any progress of his invention are documented beyond any doubt.
To use this technology, you need application software or access to the corresponding web service. In the case of documentchain, it is an open source “DMS Core” wallet software for Windows, Linux or macOS and a web service api.documentchain.org . The document chain can be integrated as a technical basis for auditing documents with tamper-proof protection into existing archiving software or for the rights protection service into existing accounting or project management software.
Thus, professional document management solutions and web services can interact with the wallet via the API and store information about documents in the blockchain. Developers can use the system for their own solutions.
Potential in taxation
However, the opportunities that blockchain offers to SMEs go far beyond the revision of documents. With the help of so-called smart contracts, you can automatically calculate the amount of tax and social insurance, report and pay it to various authorities, such as the health insurance fund, the tax service and employees.
Smart contracts are self-executing contracts in which the benefit depends on certain, previously clearly defined conditions. Perhaps these are still dreams of the future, since the complexity of developing appropriate solutions lies in the fact that, for example, when calculating wages, many variables must be taken into account, such as overtime or wage changes, which cannot be automatically determined using blockchain technology.
The great potential of blockchain lies in the work of companies with VAT, because here the risk of fraud can be reduced: if invoices and invoices are automatically processed by the blockchain, fraud and abuse can be reduced. This is due to the fact that you can immediately check the VAT identification number. There will be no need for time-consuming manual verification of the VAT ID or delivery confirmation, instead it will be automated.
However, one should not place too much hope on appropriate solutions in the near future. The limits of blockchain technology definitely lie in the field of registration of monetary transactions. For example, the entrance tax may be fraudulently declared without declaring cash transactions. Blockchain can also create automatic documentation on checks, which not only stores invoices, but also verifies them. The use of blockchain will allow checking each invoice in real time.
Perhaps this is a real challenge: the acquisition of real estate in a few minutes
Thus, the blockchain will become the basis for all conceivable legal transactions. The real estate sector is also increasingly relying on the use of a decentralized network: lease agreements, contracts with service providers or contracts for the purchase and sale of real estate or payment of deposits can be recorded in the blockchain in a tamper-proof way in the form of smart contracts.
It can also be assumed that with the help of blockchain in real estate trading, it will be possible to do without estimates of the cost of buildings, checks of land cadastres and notaries, since the blockchain “spits out” all the stored data at the touch of a button. A property purchase can be completed in minutes, not weeks or months. This is already technically possible, but the big problem is the management or alignment of technology with legal standards and the transition to digital contracts. Here the text should be converted to code.
In terms of data protection, the law also lags behind technology: the right to be “forgotten” does not exist in the blockchain. After the information has been saved, it stays here forever.
Around the world on a cargo container thanks to blockchain technology
The route of a cargo container around the world can also be tracked much easier with the help of blockchain technology than with the help of cargo and customs documents. After all, in the logistics industry, one transaction follows another: goods produced at a Chinese factory must be packed, loaded on pallets and delivered to the port of Shanghai, where they are packed in containers and sent to Rotterdam. There it is reloaded into a freight train to Hanover, where it is reloaded into a truck that delivers the goods to the destination — a medium-sized company in Erfurt.
If the digital image of the pallet is now in the blockchain, all trading partners can trace the route of the goods: the QR code that is attached to the pallet at the Chinese factory can be scanned during each transshipment process, so that the location of the pallet is very accurately recorded in the database. Since there is no need to manually document the unloading and reloading of the pallet, this process saves time – and, ultimately, money.
Speaking of money, those who are interested in blockchain technology will also find favorable investment opportunities in it. For example, the chain of documents described above contains cryptocurrency. This is primarily used to charge for deposited documents, but is also used as a general means of payment.
Well, the interested parties can generate their own coins by mining, manage masternodes or buy coins at a discount on trading exchanges.