The advent of digital and mobile technologies, the increase in cross-border e-commerce, increased regulation, and the proliferation of products manufactured in Asia demonstrate that more businesses are considering where they want to be on a global map concerning their supply chain. The latest trend in the crypto world is Ethereum, and you can purchase them using this link.
Businesses who use Ethereum have three goals: firstly, they want to create financial instruments that are as liquid as possible; secondly, they need ways of insulating themselves against price volatility when holding these assets; thirdly (and most importantly), they need mechanisms for trading with each other. As a result, the number of companies using the Ethereum blockchain is growing daily.
The below-mentioned portion will provide an insight into how Ethereum works, how companies have adopted it and what its uses for these companies are. Finally, a few case studies will demonstrate how these businesses use the ETH platform to issue bonds, create decentralized exchange platforms, and manage multi-million dollar supply chains without leaving the home office.
How does ethereum work?
At its core, Ethereum is a platform that enables you to create smart contracts and raise funds through ICOs. It also provides a platform for developers to build decentralized apps (DAPPs) and smart contracts, increasing their global reach. It is also the first to use this unique game theory arrangement known as proof-of-stake (PoS) consensus. But, the more tokens one holds, the more power one gets. You can think of it quite like owning shares in a company. Vitalik Buterin designed Ethereum, and many other developers from around the world who form the Ethereum GitHub.
Value Proposition
Ethereum facilitates token creation through the use of Smart Contracts. These contracts are self-executing programs executed on the blockchain if specific prerequisites are met. Smart contracts can be considered decentralized versions of ITAs (Initial Term Agreements) in the real world; they are contracts that lead to specific outcomes based upon pre-arranged terms. Ethereum provides a distributed ledger technology for financial transactions and supports smart contracts as a natural extension.
The value proposition for companies is threefold: firstly, it helps them to implement agile business processes in their supply chain, which means faster decisions and greater efficiency. Secondly, it helps them build new products adapted to local markets and are market-friendly. And thirdly, it provides insurance against price volatility. As a result, many companies have taken advantage of Ethereum’s innovative contract capabilities in the financial services industry, quickly becoming a standard in identity management and permissioned ledgers.
Financial Supply Chain
Financial supply chains are heavily controlled by national governments, which require a lot of regulation and compliance. It is estimated that businesses spend between 10-15% of their revenue on regulatory compliance alone! It can be attributed to the fact that national governments are focused on prevention rather than cure – so they tend to focus their time and effort on preventing bad things rather than fixing them when they do. As a result, the future of financial supply chains will be a hybrid one. While it is unlikely that they will be completely decentralized, businesses are becoming more open to collaborating with other companies and using decentralized technologies to make their processes more efficient. There are many examples of blockchain technology being used in financial supply chains, the most prominent one being the digitization of securities through tokenization.
Why have companies adopted ethereum?
Companies have started applying the Ethereum blockchain in the following three key ways:
- Issuance of Security Tokens
Companies can raise money by issuing tokens and securities on the ethereum network. It is cheaper to do this than it is to go through an IPO or raise capital from venture capitalists, this is because IPOs are estimated to be around $ 10 million, whereas if a company issues its own security tokens they only need approximately $200,000! They also get access to a global investor base they wouldn’t have had access to before.
- Smart Contracts and Decentralized Exchange
Intelligent contracts are excellent at facilitating financial transactions. Recently, they have been used for digitizing assets and securities, decreasing costs and increasing speed. In addition, decentralized exchange (DEX) is a new way of trading that uses smart contracts.
DEXs solve the issue of inter-exchange transaction fees associated with regular exchanges. In addition, they allow user-to-user trading without the need for a third-party exchange operator. Brands can also use the Ethereum network to test new blockchain features or applications before migrating them to their corporate networks.
- Framework for running Apps
Ethereum is becoming increasingly popular as a framework for building decentralized apps (dAPPs). DAPPs function similarly to standard Web apps but are programmed for decentralized operation. Running dAPPs on the Ethereum blockchain offers tools that can be used to store, transfer and trade applications of any type via its innovative contract platform. In addition, it includes file storage, digital currency exchange and other functions.
Companies leverage the blockchain to retain complete control of their network architecture and technology infrastructure and ensure greater customer operational efficiencies. The technology enables everything from customer data integrity to cost reduction, asset auditability and employee accountability.