Smart contracts, or contracts built with a code on a decentralized blockchain network, enable a new approach toward developing business value, trust, and integrity. How are they different than the traditional way of doing business?
Businesses build a reputation based on past successes, effective networking, continually meeting customer needs, and by overextending the efforts for the service they provide to their customers. A major part of business success is based on a trial-and-error system. The more businesses make errors, the lesser are their chances of success. However, making errors is not always dependent on the business itself. Companies typically exist in complex social and economic ecosystems where multiple players create and execute rules – governments, corporations, financial institutions, international organizations, competitors and customers with ever-changing, growing needs.
Most of today’s businesses exist in hierarchical systems. Hierarchies are centralized systems where top players have greater control over how the business game is played; this sometimes counters the interests of lower-level participants. Rigid centralized control can create a stalemate environment where market rules discourage healthy competition. Eventually, a change, an industry shift, or a new technology (blockchain is a good example), breaks this inflexible state, opening new vistas for businesses, leaving less room for error. dApp development is a great example of how conventional business rules can change in a jiffy.
dApps and Smart Contracts as Business Concepts
From the emergence of Bitcoin and cryptocurrency back in 2009, blockchain developers have been working to turn this powerful new technology into practical ideas. In the beginning, the successful application of dApp (decentralized apps) development has stood on shaky legs, enduring security, ethics, and scalability challenges. However, dApps are now slowly becoming mainstream. This is because business executives are more open-minded to smart contracts, understanding that they can improve business efficiency, lower fees, and eliminate intermediaries in the business ecosystem.
Smart contracts are designed to bring contract parties together faster and without the chance to wiggle out of the contract rules by engaging in fraudulent activities. Smart contracts are, basically, the piece of code that supports the execution of dApp development. dApps are built on decentralized networks where each participant has the same level of control over the full blockchain decision-making process.
Thinking Outside the Finance Box
Although it’s customary to think of dApps as distributed ledgers and associate them with financial transactions, this is not their sole use. Storing identical copies of the same general public ledger in the local nodes is only one way of keeping the trust in the business system. The key point is that such ledgers are immutable and self-executable according to the rules set by all network nodes. (A node is each computer that’s connected to the blockchain network).
Out of the financial domain, dApps can be used to create decentralized databases where parties conclude business agreements without the need to meet local or international regulations, pay intermediary fees, or get various approvals and licenses. Simply put, smart contracts are capable of surpassing some regulations, reducing certain fees, and reducing the number of criteria a business must meet to be able to operate. Having said that, dApp development has, in a way, shaken current business ethics in the sense of what is acceptable and what’s not.
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dApp Development: New Possibilities
To generate new dApp business ideas, you must keep in mind the changed rules of the ecosystem and follow what’s happening in the area. Multiple projects such as Ethereum and Hyperledger are making more powerful strides as days go by. New business ideas crop up constantly, competing with traditional apps. Here are a few ways you can use dApp development to upgrade how you used to complete transactions in centralized networks.
Supply chain management. Having all records and transactions stored across the network in identical ledger copies eliminates the possibility of fabricating dates, quantities, qualities, and the origin of goods. A dApp can be created to connect participants in an organic food network, verifying that the supplies are stored, shipped, and delivered according to the rules set by each party, guaranteeing that the food that reaches your plate meets the organic food criteria. Such supply chain dApps would be able to connect international participants in a transparent way for reduced costs.
Democratic digital voting. By creating a “one vote, one computer” voting system that cannot be manipulated or censored, organizations (both governments and companies) can make decisions with public visibility and unmistakable evidence that the process has been completed by following democratic principles.
Personalized cloud storage. Since blockchain networks use the computing power of each network node instead of central servers, nodes can rent unused cloud storage. This concept can be interpreted as a micro cloud-based computing business.
Monetized intellectual contribution. dApps that reward scientific or expert skills will remove the danger of posting anything on the Internet. The more referenced, peer-reviewed or mentioned a piece of content is on the public web, the less it can be overruled as an irrelevant resource.
Sharing economy concepts. An exciting promise of dApp development lies in using smart contracts to connect individuals and small businesses in a more direct way, without the need to rely on central authorities as trust enforcers. Think of Airbnb and Uber on a minor scale – such dApps can basically include a variety of goods and services where you don’t need to go to the bank, get a credit card or pay very expensive taxes to get what you need.
These are just a few of the examples that businesses can use as basic blueprints to think outside of the box and generate new dApp development ideas. Decentralized apps allow conducting business with strangers over the Internet in a more secure, faster and cheaper way than ever before. Once you understand the technology concept, the next steps are simple. Skilled blockchain developers can explain dApps in more detail. Consulting with an experienced team can help you clarify how feasible, secure, and profitable your new idea is.