This chapter provides an exploration to the enormous potential of blockchain and its strategic benefits. The application of blockchain has the potential to revolutionize existing business models. Blockchain is a peer-to-peer model that can speed up processes resulting in robust tracking and reducing costs of transactions. It is essential for business professionals to understand the significance of the implications of this far-reaching technology on business activities. Consequently, it is imperative that business leaders comprehend aspects of the technology to be integrated in strategic initiatives. The purpose of this chapter is to inform readers about the strategic benefits of blockchain technology. The chapter explains blockchain in the context of business strategies while highlighting its applications. This chapter is structured to explain the idea of blockchain technology, expound on the importance of the technology's business applications, and illustrate how professionals can integrate this technology in business.
TopBlockchain Explained
Blockchain is the underpinning technology for cryptocurrencies such as Bitcoin (Nakamoto, 2008). However, the technology has diverse applications far beyond Bitcoin (Zheng, Xie, Dai, Chen, & Wang, 2017). The genesis of blockchain type of technology might be traced to an article, titled, “How to Time-Stamp a Digital Document (Haber & Stornetta, 1990). They proposed the concept of blockchain – a system consisting of a chain of blocks connected by cryptography and timestamps that cannot be modified (Deshpande, 2019). The Bitcoin White Paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System,” was published in 2008 (Nakamoto, 2008) provided the modern foundations for the technology. Blockchain was envisioned as a way to send payments digitally, securely, and anonymously between parties without needing third-party verification.
Initially, blockchain was defined as a “digital, decentralized and distributed ledger in which transactions are logged and added in chronological order with the goal of creating permanent and tamperproof records” (Treiblmaier, 2018). Similarly, the authors of Blockchain Revolution defined blockchain as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value” (Tapscott, 2018). It is a trusted decentralized peer-to-peer (P2P) network of shared ledgers thereby assuaging the need for certain third-party dependent activities (Linn & Koo, 2016). Blockchain systems do not require a central authority and interparty conflicts can be resolved based on the collective opinion of all parties involved. The technology facilitates the distribution of auditable ledgers in an immutable (unchangeable), transparent, and secure way (Reyna, Martín, Chen, Soler, & Díaz, 2018).