Beyond Bitcoin — Blockchain Means Business
While Blockchain is mostly known to be the technology powering Bitcoin and other crypto currencies, it has also been touted to have the epochal potential to impact governments, transform macro financial and economic systems and drive widespread social change. While on the business front, though financial technology players have been the harbingers of Blockchain, the adoption of this transformative technology is expected to pervade way beyond Fintech with a multitude of compelling, tenable use cases already identified and being worked upon, across multiple industries. Gartner, the leading analyst, Blockchain’s value-add to businesses will grow to $176 billion by 2025 which bodes well for this space.
At a fundamental level, Blockchain is a technology that enables secure, reliable transactions between any parties without the need for trust or an intermediary (like a bank) between them. It serves as a shared ledger that records information on in a transparent and verifiable manner without the intervention of a central authority. Further, it uses cryptography to secure information in a way that makes it immutable and tamper-proof. Modern programmable versions of Blockchain also enable you to create self-executing, self-regulating smart contracts that automate execution of agreements between parties once the programmed terms and conditions are satisfied.
These salient capabilities of Blockchain collectively have far-reaching implications for businesses across industries. At the core of it, the overall decentralized nature of Blockchain makes it way more secure, efficient and cost-effective than the centralized, intermediated systems that currently prevail. Blockchain-based systems can transform how enterprises share information, move value, collaborate with each other and create new innovative business and operating models that enable them to thrive in the modern decentralized economy.
Today, companies are increasingly engaging with external organizations to create and deliver value efficiently through decentralized and globally distributed business networks. And in doing so, they face many challenges that accompany decentralization including the need to reconcile data across multiple systems, potential for data loss / IP theft, inefficient inter-org processes, contract disputes, high transaction costs and times all this leading to billions of dollars lost globally due to these increased costs and lost revenues.
While current systems do not solve these problems, Blockchain technology can be seen as the antidote to address many of these challenges. Following is an elucidation of some of the ways Blockchain alleviates these problems and disrupts the status quo:
· Secure data exchange — companies, their partners and customers can cryptographically secure any sensitive customer, deal or IP information and fully control who or what can access this information — ensuring data security & privacy while making customers and partners more confident in sharing data with whom they want to
· Easy data reconciliation –Serving as the central, shared ledger of recorded information, Blockchain solves the current challenges involving data inconsistencies, duplication and reconciliation
· Efficient processes — The combination of instant access to accurate data, self-executing smart contracts and independence from intermediaries help make the various shared business processes including transactions more accurate, efficient and cost-effective
· Contract Disputes — Data provenance, immutability, smart contracts and verifiable data help minimize or even eliminate potential disputes with customers and other businesses
· Compliance and Governance — Blockchain’s immutability and provenance attributes create a reliable audit trail of processes making it verifiable by customers, partners and regulators in real-time. Combine this secure data access and automatic contract execution drives improved compliance and efficient regulatory reporting
These characteristics of Blockchain technology finds immediate and relevant application in use cases across multiple industries — whether it’s client on-boarding with KYC and AML compliance in financial services; issuing policies as smart contracts or fighting claims fraud in insurance; finding counterfeit drugs in pharmaceuticals or delivering better coordinated and higher quality patient care with greater patient privacy in healthcare; identifying and tracking source of defective products in the supply chain for retail; improving record keeping and retrieval in legal and real estate industries, minimizing contract disputes in complex multi-million dollar, multi-vendor software projects in the technology industry, and the list is endless — further amplifying the significant potential that this technology extends to businesses en masse.
But, despite the hype, it’s important to note that Blockchain technology in its current form is mostly suited for ‘public blockchain’ use cases like Bitcoin where all the data is public, users are anonymous or pseudonymous, anyone can read and write to it and the performance is not so much of concern. Whereas in enterprise world, the requirements are markedly different — for example, within a business network, all participants need to be identified, data read and write access permissions are role-based, performance demands are exponentially higher than the current levels prevalent in public blockchains and there are other unique needs based on industry and business use case, regulatory environment and other considerations.
For blockchain technology to be successfully adopted by enterprises at scale, it needs to be adapted to meet these fundamental requirements and in case of distributed business networks, blockchain will need to be sensitive to the various business relationship structures, multi-dimensional business contexts, the need to deliver personalized customer & partner experiences and governance requirements that are essential for the operation of these networks. There are noteworthy solutions that are already being designed and developed to meet these very needs and will help fuel the explosive growth in blockchain adoption within and across enterprises in the months and years to come.
