Blockchain For Business
Figuring Out if Your Company Needs It
Public interest in blockchain seems to swing along with the price of Bitcoin. However, businesses are proving to be less fickle. A 2018 PwC survey showed that 84% of executives said their company was actively involved with implementing blockchain for business technology. The International Data Corporation predicts global spending on blockchain solutions will hit nearly $2.9bn in 2019, up around 89% from 2018 levels. This will more than quadruple over the next five years.
However, adopting emerging technologies involves a leap of faith for companies who must invest considerable time and resources in implementing new solutions. Furthermore, blockchain has come under criticism for being a “solution looking for a problem.” Perhaps not unfair, when some proponents are guilty of touting it as a panacea for any and all corporate problems.
Therefore, there’s a significant challenge for executives wondering if they should implement a blockchain platform for their business. They first need to understand what technology can and cannot do. In this article, we will examine the role of blockchain in business, including for which use cases the technology is best suited.
Features And Benefits Of Blockchain For Business
A blockchain is a form of distributed ledger technology (DLT). Transactions are bundled together in blocks, and on the consensus of the distributed network, they are added to the ledger. Each block generates its own hash, and each hash is fed into the data comprising the next block. Therefore, the blocks are tied to one another through this hashing mechanism, which gives us the “chain” in the blockchain.
Tying the blocks together makes blockchain highly tamper-proof. If someone tries to edit a transaction in any previous block, it will alter the hash value of all subsequent blocks. Given that a blockchain depends on the co-operation of a network, such a change will be visible to the entire network, which would reject it.
That each transaction is witnessed by the network also means that blockchain can be used to transfer value between parties without the use of a bank or other intermediary. Parties can interact on a blockchain, safe in the knowledge that their transactions are witnessed, and secure against tampering.
Furthermore, a distributed ledger is well-protected against hacks and downtime. Every machine on the network holds a copy of the ledger. If it goes down, all the other machines simply carry on. For this reason, blockchain is highly resilient against external attacks.
Smart contracts are a feature of blockchains. They are agreements, written in code, and automatically executed when certain trigger conditions are met. For example, if you set up a smart contract to pay someone $10 on their birthday, the code will send the payment on the same day each year.
Taking into consideration all these features, the maximum value can be extracted from a blockchain solution where any or all of the following apply:
- Enabling multi-party transactions
- Eliminating the use of middlemen such as brokers
- Automating routine transactions with smart contracts
- Reducing transaction costs
Blockchain For Enterprises
To visualize how blockchain can and does bring value within enterprises, it’s worthwhile looking at some real-world applications of the technology across different industry sectors. Insolar is an enterprise-grade blockchain platform that supports each of these use cases, and more. Insolar is designed for customizable domain-level governance, meaning each organization can have rules and processes tailored to their unique needs.
Supply Chain And Logistics
Blockchain supply chain and logistics is a massive growth area. A recent market research report put the estimated CAGR of the blockchain in the supply chain market at 87% over the period 2019 to 2025.
Parties in a supply chain network can use blockchain to record the transfer of assets around the network. With every movement recorded on a shared database, companies can realize benefits including better inventory management with reduced shrinkage, reduced risk of counterfeiting, and full product traceability. Smart contracts can manage payments automatically on confirmed receipt of goods. Maersk is one example of a company already utilizing a blockchain logistics platform.
Insolar is highly scalable, capable of handling thousands of transactions per second. So regardless of how large or complex your network, the platform can handle the demand. Insolar was recently accepted into the Blockchain in Transport Alliance, joining members in the transport, freight, supply chain, logistics, and blockchain development.
Energy And Utilities
Growth estimates for blockchain in the energy sector are just as promising, with Research and Markets predicting a 79.2% CAGR up to 2024. This is partly due to the existing fragmented state of the global energy market, which also relies heavily on wholesale energy brokers as middlemen.
A blockchain business model in the energy market changes all this. Blockchain opens up the potential for peer-to-peer energy trading, eliminating the need for middlemen. Smart contracts can manage to buy and selling activities, while there are vast opportunities for improved energy efficiency through better transparency of supply and demand.
Insolar was voted among the top 100 green energy innovators by the Start-Up Energy Initiative, an international initiative supporting the transition to greener energy.
Retail And Consumer Goods
As businesses dependent on supply chains, retailers can also benefit from participating in a blockchain-based supply chain network. However, there are other applications of the technology in the retail and consumer goods sectors. Loyalty programs are just one robust use case for blockchain. Users can accrue reward points as tokens to their own personal encrypted blockchain wallets.
With customer data stored securely on the blockchain, a business doesn’t have to worry about data breaches. At the same time, the company can run analytics on loyalty program data that will help drive business decisions.
Automotive
The automotive sector is one that relies heavily on quality and safety. Supply chain transparency reduces the chances of counterfeiting, which is critical in the automotive industry where counterfeit vehicle parts can be substandard and unsafe.
Whereas many vehicles still rely on paper maintenance records, there are valuable reasons that the future could see blockchain-based vehicle ledgers. Keeping an untamperable record of maintenance, parts, and service history would offer a great deal of assurance to buyers of second-hand vehicles.
Options For Incorporating Blockchain Into Your Business
If you’re considering incorporating blockchain into your own business, it isn’t necessary to go to the time and expense of developing a customized blockchain. For all but the biggest corporations, this would be prohibitively expensive anyway.
If someone wants a customized solution, they could contract a developer to build them an application on an existing public blockchain, such as the Ethereum blockchain. This is far less costly and time-consuming. However, public blockchains also come with some challenges around speed and data security.
For most enterprises, blockchain-as-a-service is likely to be the most flexible model. Blockchain services offer the opportunity for customization to particular business requirements for speed, security, or other considerations. At the same time, the enterprise isn’t holding any proprietary software, and it reduces or eliminates the need for in-house developer expertise.
There are various blockchain technology groups to choose from, Insolar is one. The enterprise-grade, customizable blockchain platform can cater to a broad range of requirements covering speed, scalability, security, auditability, and more. More details showing the applications of Insolar across different industries are available via the website.
For any organization, adopting a new technology comes with the potential for significant benefits, but also risks. Ensuring that the technology is the right one to solve the problem, and making the right selection of product to meet the business needs will help to offset the risks and secure a long-term return on investment.
