How the Fundamentals of Cryptocurrency Impact Corporate Payment Solutions

Before money as we know it ever existed, we relied on bartering for a direct exchange of goods. The money that we use today is a currency issued by governments where the supply is managed by a centralized bank and the value of the currency is based on the power, social prosperity and future potential of the specific government managing it. The value of the currency is all based on trust and if that trust is lost, the value of the currency will fall. Monetary policies are often put into place to stabilize the economy in the event that trust is lost. Governments and policy makers keep a tight control over the centralized systems, but electronic payment systems are making it harder to control the exchanges, and business is taking note. As a result, corporate payment solutions are evolving from barter to Bitcoin.

Corporate payment solutions are evolving from barter to Bitcoin.

Some would say that digital currency and Bitcoin is the next generation of our monetary system. Bitcoin and other digital money transactions change the system all together. Although some may dismiss digital currency as a viable corporate payment solution, many businesses see the advent as real and viable progress. As the name suggests, digital currency is money that has no physical properties. A digital currency exchange has no borders and is not managed by a government. Users can send their money anywhere in the world just as easily as sending an email.

The Bitcoin network is peer to peer, where transactions take place through the use of cryptography which is what gives it the name cryptocurrency.

A decentralized network of computers around the world that keep track of all Bitcoin transactions runs the cryptocurrency system. The record of all Bitcoin transactions that these computers are constantly updating is known as the blockchain. The blockchain database can attain independent verification of the chain of ownership of any Bitcoin amount. It is this technology that is driving the change already influencing electronic payment and ERP systems globally. Blockchain technology makes financial transactions and electronic payments faster and more efficient by using secure data transfers while eliminating multiple intermediaries that usually exist within corporate payment solutions and singular transactions.

So, while it is easy to see that blockchain technology is enhancing financial systems, the principles used for blockchain validation can also be translated to the broader approach in enterprise resource planning (ERP). The result is an even more robust business system.

ERP systems, software and other resources used to organize day-to-day business operations like accounting, procurement, project management and manufacturing, create a flow of data and collective transactions through a centralized platform, eliminating duplication and mitigating human error.

Because ERP systems provide data through a common structure or cloud applications, they allow companies and individuals access to the same information and data with the security and integrity necessary to avoid breach and chaos. These ERP systems allow alignment that will improve workflow while gaining efficiencies to help strengthen every aspect of the financial supply chain.

ERP Systems improve workflow while gaining efficiencies to help strengthen every aspect of the financial supply chain.

The centralized process by which ERP systems eliminate data duplication in the collection of multiple transactions through multiple sources is already successful in organizing operations internally. So, it would make sense that utilizing a decentralized system to manage secure data transactions externally would simplify business even further. The process would act to eliminate intermediaries, saving time and money in the process. Blockchain could help enormously in the efficiencies of global transaction by eliminating channels like banks, wire services and exchanges. It would also eliminate the fees associated with those channels. Corporate payment solutions and exchanges in the financial networks might one day become as easy as exchanging an email.

Corporate leaders who see it as critical in managing business of any size across all industries have already embraced the blockchain technology currently used in some ERP systems. The immeasurable benefits include:

Improved Business Insights – Information in real-time
Reduce Operational Cost – Defined and more streamlined financial applications and payment execution
Enhanced Collaboration – Shared data and communications
Improved Efficiencies – Common user experience across all business functions and managed business processes
Mitigated Risk – Increased control and visibility for improved data integrity
Lower Costs – Uniform and integrated systems to maximize operations and management efficiencies
Revenue Growth – Margin improvements, optimized payable and increased manufacturing
Global Reach – With borderless protocol, access to the global market increases

It is clear that with the advancement of core information technology and the continued use of an open source architecture, blockchain and cryptocurrency could become one of the biggest innovations in connecting the world economy. As an article in the Harvard Business Review claims, “The blockchain will do for the financial system what the Internet did to media.”

Resources:

http://www.businessinsider.com/how-to-buy-Bitcoin-using-coinbase-2017-2

https://www.sciencedirect.com/science/article/pii/S1877042815037507

https://news.nationalgeographic.com/news/2013/10/131014-Bitcoins-silk-road-virtual-currencies-internet-money/