Blockchain tech is breaking into all business spheres, making nearly half of C-level executives consider pivoting their companies. But which business processes can benefit from this technology? And where is blockchain’s disruptive potential overhyped?
Blockchain tech certainly has the potential to improve your ROI, but only if it serves as a solution to existing business problems. This article will help you identify some of the blind spots you might have while considering blockchain for your business. We will share our insight, gained from many real-life projects where our customers requested help with adopting blockchain. But first things first; let’s start with a brief introduction to the technology.
According to Don and Alex Tapscott, blockchain is “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” In other words, the blockchain system is a decentralised, secure and verifiable way of operating databases. It’s a distributed ledger, in which all the network participants can store and share any piece of information.
Blockchain has an immense potential to augment financial industries, retail management and manufacturing, healthcare and government. We might no longer need bankers, auditors and brokers — blockchain takes over their responsibilities and triggers secure and free interactions between individuals or organisations.
We share this enthusiasm for blockchain’s disruptive potential, as it is also compatible with other spheres, from telecommunications and food supply chains to shipping and transportation; however, we see no reason for the automatic adoption of this technological innovation without understanding if your particular case is likely to benefit from it. Even if your business operates in any of the mentioned industries, blockchain may not be the best fit.
Utilising our client experience, we have prepared 4 essential questions for you to answer to see if blockchain can potentially work for your business.
Even though you might have seen many successful cases with business models like yours, there is no guarantee that blockchain tech will work for you in the same way. Even if you have a clear understanding of what blockchain offers, you need to make sure that the technology maps to your unique business processes and needs.
Gideon Greenspan, the founder and CEO of Coin Sciences, business cases where it might be reasonable to choose blockchain:
- The use of shared databases
- Databases with multiple writers
- Databases with multiple non-trusting writers
- An interaction between the transactions created by these writers
- Transactions that can be created collaboratively by multiple writers
- Authoritative final transaction log
If you lack at least one of these requirements, there may be no need for implementing blockchain.
Currently, blockchain provides stakeholders with a high level of security as the data kept within the system is safe from theft or violation. Such a solution turns the traditional methods of administering transactions or contracts on its head, whether in economics, politics or a legal system. It is this power that makes blockchain so desirable to business owners who choose this technology to transform their organisations.
However, if the nature of your business demands that you retain full control over your network, then blockchain will be of no benefit to you. Blockchain tech supposes the establishment of a coordinated community for all the parties involved, allowing them to run ‘nodes’ which hold a copy of the database, creating a peer-to-peer network.
A blockchain ecosystem with just one member is useless as it is only effective when your connections have signed on to it. If you intend to adopt blockchain, you need to be prepared for other writers to generate transactions that will modify the database.
Blockchain tech is not a cure-all when it comes to problems regarding the security of your transactions; there are limits to what it can achieve. Firstly, it can be a challenge to integrate blockchain into your established organisational processes and operations. As blockchain requires a large network of users and a grid of nodes, you need to be prepared to migrate your infrastructure to next-generation platforms and allocate a budget for new software and tools. Years may pass before you put new business processes in place.
Blockchain transactions are slower than centralised database transactions, as blockchain needs to check three additional parameters:
- Signature verification to provide security in a peer-to-peer fashion. Such verification is complex and time-consuming.
- Consensus mechanisms to ensure that nodes in the network reach unity.
- The general computation in all nodes, as transactions, must be processed independently by every node in the blockchain network. For comparison, centralised database transactions are processed just once or twice.
With all that checking, you can expect a much larger energy consumption. Blockchain miners process around 400 thousand trillion actions per second, drastically increasing the amount of PC power required.
In addition to everything we have already mentioned, it’s vital that you are blockchain literate; comprehensive blockchain knowledge and skills are critical for a successful adoption. Whether you retrain your current staff or hire external experts, your business will need employees that know blockchain inside and out; while it has the power to revolutionise your transactions, it is as diverse and complex as it is exciting.
Our experts can help you analyse the needs of your business and compare them against the solutions that blockchain can afford. We can advise you on the changes blockchain will make to your existing business infrastructure, as well as estimate the cost of deploying a blockchain solution.
Don’t jump on the blockchain bandwagon without a well-thought strategy in place. Need a hand in determining whether blockchain technology is the right fit for you and your business? Let us know how we can help.