Blockchain is a term that is beginning to increasingly appear in business conversations. Decision makers are starting to consider whether their businesses should invest in blockchain and how using the technology could benefit their operations.
As businesses venture on journeys of digitalisation, we are seeing companies from "traditional" industries such as agriculture and shipping becoming technology orientated as they recognise the potential benefits these new and upcoming innovations can offer.
Those involved in the decision-making process of implementing emerging technologies need to be able to understand both the benefits and risks of adopting new innovations while also recognising that the disruption can only be attempted to be managed by businesses, it cannot be controlled. The technology driving digitalisation is coming, whether we like it or not. Our report 'Tides of disruption: How to navigate business transformation' delves deeper into the forces of digital disruption that have the ability to bring both risks and benefits to businesses across the globe.
Blockchain is just one of those driving forces, yet the impact that it can have across industries is powerful. As more businesses begin to realise the benefits that it can offer, and also where they could be left lagging behind, the different applications of the technology can only increase.
What is blockchain?
Blockchain is a decentralized digital ledger that records transactions that are then managed by a cluster of computers not owned by a single entity. It is a form of distributed ledger technology (DLT) where digital information is distributed rather than copied, ensuring that no copies are created that can then be altered and differ from one another.
If you send a document as an attachment via email you are essentially sending a copy to someone. That copy could then be altered by the recipient, resulting in two different versions of the document. If that original document was a record of a transaction, the provenance of such information would now be compromised as a different version of that transaction now exists. Blockchains remove this risk as they are designed to be immutable. Once a block ('transaction') is written to a blockchain, it cannot be altered.
The information that is stored on a blockchain is shared and maintained in a shared database that can be accessed by everyone in the blockchain's network. A network can either be public and accessible to everyone in the world (permissionless) or restricted to a private membership (permissioned). By the data being replicated across the network it ensures that it is both accurate and reliable, new transactions are also permanently recorded to provide transparency.
How can businesses use blockchain?
On the surface, the application of blockchain in a business can be difficult to conceive. The overall concept and the associations with Bitcoin can initially be hard to comprehend and apply to business processes. However, blockchain is beginning to be utilised across industries to enhance operations and improve services and relationships with customers.
For example, in our report 'The Ultimate Disruptor: How blockchain is transforming financial services' we highlighted that the technology can be used in any situation where it is important to ensure provenance. In the financial services industry blockchain is being heavily invested in. Our report identified that the technology's ability to certify that facts are true cryptographically reduced the need for trust in business while also speeding up transactions and simplifying the settlement of complex financial instruments.
With companies like AID:Tech issuing ID cards to refugees to distribute benefits using blockchain technology, it becomes clear that businesses within the financial services industry need to begin investigating blockchain and understand the potential use cases, otherwise there is a likelihood that new players will enter the market and remove the need for the likes of banks and other institutions. Digitalisation is something that needs to be explored to avoid being left behind and ensure that a company is ahead of the curve.
While financial services seems like an obvious arena for blockchain to demonstrate its benefits and potential, there are numerous industries where we can expect to see this technology being used to enhance processes and customer service. We have previously discussed the technology being used in the real estate and advertising industries to transform service delivery. Smart contracts are being explored by HM Land Registry to automate the process of moving funds and updating the register to speed up the transfer of property. Meanwhile, in advertising the technology is being used alongside facial recognition to create personalised advertisements that provide data immediately with accurate reporting.
Businesses looking to invest in blockchain need to take the time to fully understand how the technology works and what it is capable of to fully leverage its potential power. It is likely that in the years to come, the technology will be utilised in ways that we have not yet realised. There are numerous business processes where it could be implemented to make change, bring efficiency and develop customer relationships.
How to invest in blockchain technology and prepare for the future
We have previously identified that less than 30% of businesses were confident they were on top of the developments that blockchain can bring. Companies need to start thinking about how this technology could be used internally as well as across their market to ensure that they capitalise on the opportunities that it could offer.
As we highlight in our report 'Tides of disruption: How to navigate business transformation', it is not just blockchain that is set to disrupt business as we know it. The likes of 5G, artificial intelligence, hybridity and autonomy are set to alter how we operate and the business models that we use, bringing forward a seismic shift across the board.