Blockchain technology is revolutionizing the world of cloud business finance, but many finance professionals don’t fully understand its potential. Below is an overview of blockchain and how your organization can benefit from this cutting-edge technology.
1. Increased visibility
To understand the value of blockchain technology, let’s begin by clearly defining it. A blockchain is a transaction ledger distributed across a network of computers, where no single agent can control the ledger. A blockchain is tamper-proof because every “block” added to the chain must be peer-reviewed and authenticated by the entire network. Once added, a block can never be changed or altered. This radical transparency is at the heart of blockchain technology; it is an intelligent distributed platform that relies on a broad network to ensure the security and transparency of transactions. Companies can use this data to better understand the flow of capital within the organization and identify opportunities for greater efficiency.
2. Tracking the flow of funds
A blockchain is precisely that: a series of economic transactions (blocks) that are permanently arranged in a specific order (the chain) to ensure the integrity of those transactions. While this structure may seem convoluted at first glance, it serves a very important function for intelligent ERP cloud. Tracking the flow of funds normally requires monitoring multiple bank accounts. Blockchain allows for easy tracking from one transaction “block” to another and can reconcile intercompany accounts in real time.
3. Smart contracts
When you think of blockchain, you often think of cryptocurrencies, but that only scratches the service of what this technology can do. One of the most exciting, intelligent applications of blockchain is “smart contracts.” A smart contract ensures the transfer of funds between two parties, but only when certain conditions are met. For example, a specific smart contract will define all the conditions under the agreement between multiple parties. Once those specific conditions are met, the smart contract will execute a specific action – typically an exchange of funds. Smart contracts are an intelligent solution to an age-old problem: how can I trust my counterparty? With a smart contract, you can take that right out of the equation.
4. Biometric identification
Blockchain offers the potential for a whole new level of security when transferring funds. As mentioned above, blockchain makes it easier for CFOs to track the flow of funds and utilize smart contracts. What if we combine those benefits and amplify them with biometrics? Biometrics is an exceptionally powerful means of access control and, when paired with a blockchain, finance professionals can ensure that funds are accessed only by the intended party. A particularly effective way to automate this process is a smart contract. Funds can be placed in an account, and the code can be written so that funds are transferred only when accessed by a specific person using a retinal scanner.
5. More effective record-keeping
Blockchain offers business finance solutions beyond cryptocurrencies, such as record-keeping. The blockchain stores records of all previous transactions on the network, not just transactions that only involve currency. Blockchain technology can be used for secure record-keeping of other transactions, such as those involved in real estate. This is especially useful for global businesses with operations in emerging markets, where record-keeping is often inconsistent. Using a blockchain to record transactions of land or property can be incredibly beneficial because of its impartiality. No local government can tamper with the blockchain, as it lies beyond the control of any central bank.
A blockchain is a secure, transparent transaction ledger that can never be manipulated. While finance professionals can be wary about the security of the new technology, a blockchain is an incredibly intelligent ERP tool for ensuring that funds are quickly and securely delivered to the intended party.