Middleman or middle man6/23/2023 ![]() Companies in a number of industries are beginning to shift their dependence from middlemen to blockchain.įor example, pharma companies have begun exploring the use of blockchain to reduce the number of counterfeit drugs that make it to the market, which constitute 1% of sales in the developed world and up to 70% in poorer countries. Supply chain costs represent a massive expense, largely due to middlemen companies that nurture relationships and serve as mediators between different points in the production pipeline. Here are 4 examples of what a world without middlemen might look like: Pharmaceuticals The hope is that blockchain can significantly reduce transactions costs, frictions, and inefficiencies across the board. Every additional layer in a business environment creates costly, and often unpredictable, variability. Everyone involved saves time and money since they don’t need to coordinate – or pay – an intermediary service to facilitate the transactions.Īlthough middlemen often provide value, there’s no getting around the fact that the more people involved in a process, the longer it takes to complete, the more expensive it is, and the more opportunities there are for mistakes. Contracts are virtually tamper-proof and the original agreements, once recorded, are immutable. The details of their agreements are recorded on a blockchain, and both parties have encryption keys that allow them and their authorized users to review contracts at any time. By using a blockchain-based smart contract, she doesn’t need an intermediary to set up the relationship or act as a go-between for her and the shipping vendor. She wants consumers across the country to be able to buy her high-quality products, so she seeks out a shipping company to manage the deliveries. Let’s assume that an entrepreneur decides to open an online business selling handmade, artisanal goods from her hometown. The distributed, decentralized structure reduces the need for an intermediary middleman to transfer information and goods between buyers and sellers. It’s distributed across a series of computers, or nodes, which makes it less vulnerable to corruption. ![]() Data isn’t stored in one single location, either. All relevant parties can access the information and see exactly when and how a payment or transfer of value was processed. When transactions are recorded, no single entity owns the record. One of the most celebrated features of blockchain is its decentralized structure. It’s also transforming how industry supply chains are structured. But blockchain isn’t just reshaping how we build, ship, and secure products. The technology is steadily influencing global industries, and it’s changing everything from how energy grids are managed to how medical records are stored. One such invention is blockchain, the distributed ledger technology on which Bitcoin and other cryptocurrencies are built. While technology consistently improves and gives us new and better ways to conduct business and manage our lives, truly groundbreaking inventions are often few and far between.
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