Don't Fear the Auditor. Blockchain-Based Models Rely On Accurate Risk Assessment
A business model is any strategy a company uses to sell products and services to make its owners or shareholders filthy rich. That’s how it used to be in the old days. But a blockchain business model, which includes decentralization, immutability, and transparency, transforms businesses as we know them today. This article discusses what you need to move your blockchain-based business model into full swing.
Why Everybody’s Talking Blockchain
Blockchain technology is being used in more and more industries because it helps organize data so well. By making a shared digital ledger for your business, blockchain makes sure that important information is easy to find and lets employees keep an eye on how the business is run.
On top of that, blockchain technology is changing the way organizations do business and helping companies rethink how they manage when it comes to brand, provenance, professional certifications, copyrights, and other physical and digital assets.
“The best businesses to run on the blockchain are ones that solve a problem of trust between multiple parties or have a peer-to-peer element. When switching to a decentralized business model, you should think about the peer-to-peer incentive structures instead of going through a big middleman,” said Igor Mikhalev, partner at EY-Parthenon.
Blockchain Is Trendy—Should My Company Adopt It?
Of course, cryptocurrencies and nonfungible tokens (NFTs) make headlines when it comes to blockchain use cases, but there are other blockchains and distributed ledger technologies (DLTs) that are also making waves in the business world.
Increased traceability and transparency help a lot of businesses do well, and this isn't just true for businesses in the finance or technology industries. First-generation blockchains and DLTs have shown that they can be used for things like trading, clearing, and settling cryptocurrencies.
Outside of crypto, mobility is one of the most interesting ways to use blockchain. For example, the supply chain for the BMW Group was very complicated. The company uses a complicated global supplier network to make about 10,000 cars a day in 31 plants in 15 countries.
Fraud, a lack of visibility into second-tier suppliers, and a mismatch between supply and demand were all common problems that could stop production and cause quality problems. But over time, the BMW Group made it easier for a few of its suppliers to share information by putting it on a blockchain. It turned out that overstocking and shortages were avoided because everyone in the supply chain could see what was going on in real-time.
What’s Driving the Blockchain’s Adoption
As the number of DLT platforms has grown, so has innovation, and a large, thriving ecosystem has grown up around them. Its members are making decentralized apps that do specialized things like managing identities and managing supply chains.
Today, enterprise adoption is being boosted by technologies that are getting better, changing standards, and new ways to deliver services. For example, there are private and public networks.
Members of the Forbes Technology Council named the companies or fields that will benefit the most in the future. Law enforcement and security, supply chains, identity management, software security, media, messaging apps, SaaS companies, and real estate are some of the things on the list.
Experts also mean Travel and Mobility, Banking and Finance, Shipping and Logistics, Government Operations, Healthcare, Product Development, and Higher Education.
Auditing: Reducing the Fear of Blockchain
Adopting blockchain technology, however, is not always a picnic in the park. In fact, studies have shown that the main reason blockchain technology isn't more popular is that its users don't trust one another. People and corporations alike are hesitant to adopt blockchain-based systems for fear of being forced to make costly or inconvenient adjustments in the future to comply with government regulations.
Therefore, it appears that confidence in the blockchain system is key to its widespread implementation. Security is what can boost confidence in addition to feelings of safety. Nonetheless, it is not external authority but rather the community's own internalized norms and practices that are responsible for this.
Auditing is one such example. There would be much less trust in global financial systems if companies weren't required to have their financial statements audited by an independent external auditor. An audit's value lies in the fact that it verifies management's depiction of a company's financial performance and position as being trustworthy.
Thus, it would appear that good old-fashioned auditing is the way to go. Some of the most successful companies today are spending heavily on cutting-edge research and development and innovative strategies to meet the challenges of the present. Additionally, as the nature of auditing and financial reporting continues to change, audits have become more intricate.
“Blockchain is a more inclusive way to do business, and we see it as a new generation of business models. We help our clients get ready for the future with decentralized technologies. It helps to know this now so that we can get more out of it as we go. On top of that, there are already business models in use, like Helium or Uniswap vs. Coinbase, where we can see that decentralized business models are more profitable than traditional ones,” said Mikhalev.
For that matter, while the blockchain infrastructure helps ensure data is kept private, this does not make the blockchain's applications impenetrable. Also of interest is the fact that making blockchain applications attack-proof is a difficult and time-consuming process.
By verifying the integrity of the blockchain protocol, we can be sure that the underlying layer of the entire smart contract ecosystem is safe. Code review during blockchain development, which typically involves a great deal of reliance on static code analysis tools, is the most effective method. Expert security professionals and blockchain developers bear the primary responsibility of auditing code for vulnerabilities.
As time has passed, blockchain technology has gained widespread attention. Cryptocurrencies aren't the only thing it's used to support, though; blockchain technology has many other uses. Banks and financial services, healthcare, food safety, and video games are just a few of the sectors where blockchain has found widespread and fruitful implementation.
While blockchain itself is highly secure, there have been cases where security flaws have been uncovered, particularly when it comes to how it interacts and integrates with third-party applications and servers. This highlights the importance of conducting a blockchain security assessment to plug these security holes and prevent vulnerabilities from being exploited in the software.