Blockchain and digital currency are merged. Neither exists without the other. How do blockchain and digital currencies impact businesses and their transactions in a multi-chain world where we can see various fees and the internet being redesigned completely by multiple blockchains?
Actually the most outstanding technological innovation of today, blockchain technology, has revolutionized business relationships.
While ordinary people may ask what blockchain is exactly, businesses may be curious about their options for using blockchain technology. Start-ups may decide from the beginning whether they want to do business on a blockchain basis in the future.
In general, blockchain is essential to businesses because it is:
- Open: Public blockchains feature transparent transactions and data records.
- Trustless: Blockchain records are censorship-resistant and immutable.
- Permissionless: Users can interact with each other without the need for centralized authorities or thirdparty intermediaries.
This article aims to provide you with an overview of how and on what platform companies can launch blockchainbased businesses focusing on one particular blockchain.
You can also find the latest trend of raising capital, and the impact digital currencies have on businesses regarding their finances, leading to the adoption boom of all blockchains and digital currencies. I will also explore a few of the security issues associated with it.
The greatest use case for digital currencies and blockchain itself at a skill is entrepreneurship. We are right now living in probably one of the best times to start building on blockchain technology. There are so many use cases that need to be met right now in the market, and the beautiful thing is that businesses finally have the tools to do it.
This article has been written on the day when the Ethereum London fork took place, which increases the scalability of Ethereum. Thus more and more apps can be developed on an Ethereum basis. Ethereum has already been having numerous similar challenges; for instance, Cardano has attracted significant attention recently, especially with high gas fees and network congestion on Ethereum, pushing applications to seek alternatives.
One such alternative for enterprises or low-budget businesses is the BSV blockchain, which is perhaps a better solution as development is cheaper while onboarding is relatively seamless.
The BSV blockchain is a platform created specifically for businesses. All digital transactions like payment transactions, value transfer, or asset registration take place on one blockchain. BSV believes their blockchain, where data and value interact seamlessly, requires a protocol designed with base layer stability that can enable massive scaling. More and more companies decide to leverage BSV blockchain tech to deploy their businesses.
They can use complex smart-contract applications as the BSV blockchain can be scaled unbounded, so no transactions are limited. Micropayments are also a feature, and the capabilities of smart contracts enable businesses to deliver value to customers in various industries like healthcare, supply-chain, big-data, gaming, and fin-tech.
The number of transactions on BSV is continuously counting, while its transaction fee remains at rock bottom.
The team behind BSV tries to do its best to develop and maintain a secure blockchain; however, the BSV network has suffered many attacks because of the code’s vulnerabilities.
The fundraising of digital currencies is associated with Initial Coin Offering (ICO) and, unfortunately, with the associated fraud. The most well-known risk was the socalled rug-pull when the issuer sold many worthless native tokens to investors and then ran off with the investor’s money, leaving them holding a worthless token.
An innovative new blockchain-based method of raising capital precludes this. However, while the ICO boom could almost wholly be linked to the Ethereum blockchain, this new method uses the Kusama network of the Polkadot ecosystem.
The Polkadot ecosystem manages a multi-chain system, so capital raising can already take place on different blockchains. The ongoing multi-chain world encourages innovation. The central to this system is a relay chain, and multiple external parachains, e.g., Ethereum or any custom blockchains, can connect to this relay chain via a bridge.
Thus, there is no need to focus on security since the established connection to the Relay chain shares the security and scalability of the leading network.
Businesses can take part in an auction where they get a place to join the Relay chain. Once they get connected, they can crowdfund Kusama token (KSM) to raise money with their community.
Projects don’t get access to the funds they raise from investors; they can’t just spend the funds on anything they want. Funds are loaned to them for the specific purpose of the auction. If they win the auction, then they are connected to the relay chain. And that gives them the opportunity to build on the Kusama network.
This discourages fraudulent projects whose only goal is to cash out from investors.
Parachains are only given access to relay-chain for one year and may eventually renew it. During that year, they must lock up their KSM for the duration of the lease. That means the funds cannot be used in staking or trading.
The KSM is returned to its original owner at the end of the lease, so those who contributed KSM to a parachain will receive KSM back. They never actually spend their crypto.
This new form of fundraising is called PLO, Parachain Loan Offering. This can disrupt the crowdfunding market.
Follow all the incentives
By eliminating a trusted third party, firms can significantly reduce transaction costs, and now we are in a position when transaction fees could not be charged at all. Distributed ledger technology used by blockchains allows for instant transactions and control without the intervention of a central ledger or authority. It can process a sizeable number of transactions quickly, making it a prominent area of applications for instant money settlement and clearing.
Blockchain is a decentralized database. This database is transparent, immutable, trustless, and very often can be public. Advantages include a highly secure network, transparency, privacy, no need for intermediaries, 24/7 availability, and accessibility for anyone with the internet.
Key benefits include increased trust in the system thanks to traceability of goods and services, substantial transparency, and cost reduction by replacing manual and paper-based administration.
Low transaction costs mainly reflect in international transfers. Still, the speed of transactions and the almost immediate timing of their settlement are critical. Traditional payment systems usually have several clearing sessions per day and do not function during holidays and weekends.
Moreover, the use of digital currencies enables the involved parties to avoid costly conversions of currencies.
Financial transactions in digital currencies can also provide different levels of anonymity to their users, depending on the digital currency that is used. In contrast to knowing that the Bitcoin network is fully transparent and traceable, by using networks such as Monero, transactions and participants can remain completely hidden, and all this contributes to a higher level of personal data protection.
An additional advantage is that due to the nature of the blockchain, the transactions do not require unique identification. Thus the theft of personal data is impossible.
Blockchain can also record and transfer everything of value, so businesses can potentially put all their activities to the blockchain. Digital currencies can contribute to greater financial inclusion, which is perhaps the most significant benefit of all.
While digital currencies bring us so many advantages, disadvantages can also arise. These are price fluctuation, potential theft of funds. Currently, the consumption of a massive amount of electricity is also a hot topic. However, it must be mentioned that the traditional banking system uses a lot more energy than all of the entire digital currency and blockchain space.
Another must for businesses and companies is the incorporation of Decentralized Finance (Defi) in their operations. Defi provides financial freedom and credibility to users that the current financial system lack. Defi is gaining traction in investing, trading, borrowing, and lending. Businesses can take massive advantage of integrating Defi results into their balance sheet.
We are still at the beginning
The knowledge of the complexities of the blockchain industry will allow companies to start their own business or raise capital using this technology to make their business more profitable, so we can say that there are no limits to using digital currencies and real applications. Its rise has only just begun. There will be many ways for businesses to be incentivized to use digital currencies, which we have to really rely on. The adoption curve of blockchain and digital currencies has already taken off and is increasing insanely as institutional and retail investor capital flows into the system in a big way. Digital currency could become the new conventional financial system in the future.