The disruptive potential of blockchain is immense, but how should businesses harness it effectively? The blockchain revolution is going full steam ahead, and as we move away from the bitcoin-as-blockchain conversation, the more we uncover the scope of what this technology can really do for businesses, governments, and everyday people. Blockchain, the brainchild of Satoshi […] The post What businesses need to know before integrating a blockchain solution appeared first on e27.
22 Oct, 2018E27.CO
The blockchain revolution is going full steam ahead, and as we move away from the bitcoin-as-blockchain conversation, the more we uncover the scope of what this technology can really do for businesses, governments, and everyday people.
Blockchain, the brainchild of Satoshi Nakamoto, is a digital ledger which transforms the manner in which people store and transact value and information, reducing the need for middlemen in any given transaction to potentially zero.
Blockchain has the potential to unlock a number of functionalities that were previously deemed cost inefficient or difficult to perform. It is clear that blockchain has already made inroads into traditional financial markets, its most well-known industry application, but it is by no means limited to financial transactions and institutions.
Blockchain’s disruptive potential is influencing almost every industry sector, and the startups and traditional businesses within them. Businesses all over the world are exploring the potential of this innovative technology and how they can meaningfully incorporate it into their longstanding business models. And the ‘why’ behind blockchain integration is becoming clearer by the day.
One of these key reasons is data storage and ownership. Due to its public, permanent, and decentralized nature, blockchain can eliminate the misuse of one’s data by enabling the individual, business, or consumer to view, own, and control the flow of their personal information. This technology will ensure complete transparency of how consumer data is used, and when or where it is sent.
Take the automotive industry for example — when a machine is being manufactured, an automotive part’s production data is recorded on the blockchain; its part number, production date, function, factory ID, etc., will be documented on this public ledger. Numerous separate supply chains down the line, a mechanic in another country can very accurately identify the faulty component, order a new part, and provide a maintenance record that can be analysed by every participating vendor and manufacturer throughout the supply chain.
Blockchain is also about making the ‘big data’ available to the public and giving the control of the information to the hands of the individuals, as opposed the giant service providers. Personal information such as spending habits, credit history, and medical records can be shared with the intended service provider, at will, by the customer, as opposed to the data collection ‘agency’ monetizing and sharing this data as it deems fit.
A hospital in a different country, for example, could decide on the appropriate treatment for a new patient based on past medical history, which will all be stored on the public ledger. The key is that all this private, crucial information currently recorded in individual institutions, hospitals, vendors, department stores, banks or credit card companies can now be safely stored on blockchain networks and be shared with the consent of each user, and ultimately, benefit them.
We must consider what it actually means to integrate blockchain. This must involve successfully utilising the technology to methodically store and manage data, in a secure manner. While the entire network and the backend do not need to be on the blockchain, management of specific sets of data must be carried out on a blockchain network. These data sets should ideally allow anyone with the right access to have the ability to update them with ease.
This, understandably, requires thorough preparation and understanding of how blockchain works. Therefore, the initial wave of commercial adoption we are witnessing is predominantly that of private blockchains. If utilised by multiple independent organisations, private blockchains can provide greater data transparency and collaboration without necessarily having to ‘trust’ a middle agent, such as the government.
Blockchain can be implemented at a number of levels across numerous industries. In the initial phase of adoption, the majority of the development will be done in the form of new data management network services, or by existing large institutions collaborating to improve user experiences.
Many of these blockchain-based network services have recently launched or are in development, while healthcare providers and banks are working together to share private information in real time and in a secured manner. In the current blockchain landscape, the best way to creatively leverage blockchain into one’s business model is to think about how you can best utilise big data in a way that can strengthen the value proposition for customers.
One of the key difficulties I envision occurring is identifying the clear utility of a blockchain network in one’s business, and implementing it in an effective and targeted way. Understanding the value and proper usage of public blockchain is highly challenging to any businesses as the behaviours of both the users and the business become starkly transparent within the selected premise of blockchain.
Many service providers have traditionally been taking the stance of ‘trust me, I will deliver the service as promised,’ without necessarily sharing the proprietary data that would be required to make an objective conclusion by the users. Shifting out of this mindset and being comfortable with a certain degree of data transparency is a difficulty that all those looking into blockchain must overcome – slowly, but surely.
While these obstacles to blockchain adoption are faced by businesses of every size, across every sector, there are of course more specific issues faced by both large corporations and SMEs. Particularly from a resource standpoint, one has a clear advantage over the other when it comes to the time, effort, expertise, and capital required to successfully incorporate blockchain into business models
Large companies, as a result of their size and organisational complexity, require a working blockchain which offers flexibility and a high level of performance to suit their needs. There is a limited number of blockchains with notably high performance available in the market at present, making it difficult for established companies to justify a blockchain-based overhaul.
As the blockchain industry races to provide greater levels of scalability, blockchain projects building highly flexible and performative solutions will emerge, which will soon make the benefits of commercial adoption more apparent to corporate actors.
SMEs and startups with limited resources face a different set of challenges. SMEs do not generally require the creation of their own blockchains, but an easy to deploy, high- functioning solution which gives them the flexibility needed to compete with established businesses. This means that ready-made, easy to use blockchain applications are invaluable to SMEs seeking to leverage disruptive technologies.
The present scarcity of easy-to-deploy and easy-to-use blockchain applications is a significant obstacle to the technology’s adoption by SMEs. As many projects remain in the development stage, the collaboration of industry actors to develop technologies and applications which present the real world benefits of blockchain most desired by enterprises is a clear way of accelerating adoption and presenting SMEs and startups with the tools they need for success.
It must be said that although blockchain may not necessarily change the current ‘way of doing everything’, it will ‘unlock’ untold potential in the way private information is handled, and the possibilities are worthy of vigorous exploration. Just like the internet, the creative application of blockchain will continue to expand, and sooner rather than later it will become ubiquitous.
This article is written by JB Lee, who is Head of Global Operations at aelf, which provides decentralised cloud computing blockchain networks for businesses to run smart contracts.
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Image Credit : Allan Swart
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