How Blockchain Can Simplify Your Business
Blockchain adoption across the board is showing no sign of slowing down. A PwC survey from 2018 showed that 84% of their respondents, which included 600 executives from 15 territories, were already actively involved with blockchain. That number has since grown, and the survey adds that 10% to 20% of global economic infrastructure will be using the technology by 2030.
Most people looking to start using blockchain don’t know what problem the technology actually solves. Once prospective users realize what blockchain’s use cases are, they can see whether it can be applied to any of the issues they’re already facing within their business.
The Three Use Cases
Although blockchain can theoretically be applied to a wide range of issues, there are three use cases in which it excels:
- Records of ownership let all participants with access to an asset clearly see who it belongs to, without the need to update internal systems. This reduces redundancy, removes any third-party costs, and increases transparency. Keeping an asset unconfined to a single entity or organization, yet no less secure, means that every process relating to the asset is vastly simplified.
- Cross party business processes allow businesses that oversee multiple entities to keep them all synchronized more quickly and efficiently. Again, third party solutions can be minimized or even eliminated, while offering a tamper-proof record of events, useful for our next use case.
- Digital fingerprints in blockchain mean that every recording is tamper-proof and transparent, which can be useful for dispute resolution. In many cases, knowing that there is an irrefutable source of proof is enough to dissuade most malicious actors from even attempting to cheat. Even if it doesn’t, the whole process of verifying information is almost eliminated thanks to blockchain’s trustless design.
The three categories tie into each other, as they all derive from blockchain’s basic properties: transparency, immutability, and security. You don’t have to face all three problems at once, but you can keep in mind that blockchain can fit the bill of more than one issue you’re having.
Where to Start
The first step is always identifying the pain points of your business. When coming up with potential solutions, you should then check to see if they fall into any of the aforementioned use case buckets (or a combination of them, as many are interconnected).
Your pain point examination can include the following questions:
- Would we benefit from records of ownership? Do you deal in assets that need to be clearly and transparently labelled in order to be shared? This is the case with Central Bank Digital Currencies (CBDCs): they use a blockchain-based token to represent a fiat currency, regulated by the country’s monetary authority, and distinguishable to prevent imitation (in the same way that paper money needs to have a unique serial number). While no bank has yet officially launched a CBDC, many banks have pilot programs already running. This includes the central banks in England, China, Russia, Venezuela, Sweden, Thailand, and more.
- What is our current reconciliation procedure for different entities within the business? Could we benefit from removing intermediaries and speeding the process up? These are everyday issues for many businesses handling and coordinating subsidiaries, multiple locations, etc. Many of them are already overspending on third-party services and would like to be able to bypass them altogether. For example, Xbox game publishers are receiving their royalties nearly instantaneously thanks to the Microsoft Azure Blockchain Service—a process which used to last 45 days before this innovation. This also offers real-time insight into customer demographics and campaign success, helping publishers adapt their approach accordingly.
- Do we need better insight into events that happened and the accuracy of the information? Would our customers benefit from authenticity guarantees? Businesses that claim integrity as one of their key properties can take this a step further by introducing blockchain into their model. The permanent record of truth can also be used in dispute resolution, like insurance claims. With the importance of ethically sourced materials, blockchain’s proof of origin can be of immense help. As an example, in 2018, the world’s leading diamond company, De Beers Group, announced they had tracked 100 high-value diamonds along the value chain during the pilot of its blockchain platform—from mining to retail.
Common Objections (and Their Counterarguments)
Some arguments concerning blockchain crop up relatively often when the technology is mentioned, including:
- Isn’t it just a slow/complex database? In short, no. Blockchain can do things beyond the scope of a simple database, including (but not limited to) spanning the boundaries of several organizations, while remaining safe from malicious tampering from any of them. Media reports usually revolve around bottlenecks in public blockchains during periods of high transaction volumes. Important to remember, however, is that these are public, while many businesses who opt for blockchain will choose a permissioned variant. This way, they do not depend on the events in the rest of the network, plus they can always adapt it to their specific needs.
- It’s really complex! Strictly speaking, it is—but so are most technologies. When you select the right type of blockchain solution for your use case, along with the right team to handle it for you, that complexity is significantly reduced. Using it in its completed form is no more difficult than adapting to any other newly introduced technology in the workplace.
These, as well as a number of other common concerns, are non-issues as soon as people understand what blockchain does. While it’s not a panacea, it is exceptionally well-suited to the use cases already listed, and is widely and successfully used to help with those problems.
We’d love to hear your views on blockchain use cases—are there others that you believe we should have mentioned? We’ll be exploring these further in other articles. If you’d like to learn more about how different companies are exploring these use cases, you can sign up for one of our upcoming Principles of Successful Blockchain Deployments Webinars.