by   |    |  Estimated reading time: 4 minutes  |  in Business Technology, Finance, Strategy   |  tagged , , , , , , , , ,

Blockchain was born to provide legitimacy to its Bitcoin master after the financial cataclysm of 2008. At its heart is a rebellious disdain for central authoritative control, offering instead a decentralized network of self-compliance and regulation. But the servant has become the master, offering business benefits not envisaged during its conception. In fact, it’s nothing short of a game changer for those who can master it.

What is Blockchain?

BitcoinBlockchain is a secure distributed electronic ledger, connecting multiple parties in a network of trust and integrity, facilitating the transfer of assets and the information pertaining to those assets. It was initially created as the means by which Bitcoin could be legitimized as genuine electronic currency after the seismic events in the financial world that lead to the global financial crisis in 2008.

It does this by securely recording digital transactions in a sequential chain using cryptographic digital keys, which are verified by the network as authentic. Duplication, editing or removal of transactions is prevented by the chain, which is held on everyone’s computer on the network. The longer the Blockchain and the wider the network the more complex the digital key, and hence the more secure the Blockchain.

A new trading platform

Any type of trade requires exchanging assets between two or more parties, and unless the trade follows the bartering system, there is always at least one central third party that is brokering the deal, providing trust into the trade and seeking their own compensation for the role that they undertake ($1.7Tn in 2014 according to the economist).

Blockchain alters this trading platform by bringing parties together in a trusted network without a third party and by recording each transaction sequentially and securely. This is illustrated succinctly in this two-minute MIT video, Blockchain – A short introduction.

Business benefits

Utilizing this new trading platform can bring many business benefits, but most are centered on delivering one or more of six competencies:

Benefit #1: Efficiency

As transactions are completed directly between the relevant parties with no intermediary and with digitized information, settling the transaction can be quick. Added to this is the ability to operate ‘smart contracts’ which automatically trigger commercial actions based on satisfying the criteria laid out in the contract. This can dramatically streamline processes and in doing so, remove time and cost from transacting. The article, “How Utilities Are Using Blockchain to Modernize the Grid,” by Oliver Wyman Consulting outlines how this is being utilized currently in the energy industry.

Benefit #2: Auditability

As each transaction is recorded sequentially and indefinitely, it provides an indelible audit trail for the life of an asset even between parties. This is especially important if source data is essential in verifying an assets authenticity. Currently, this benefit is being realized by the company Everledger to track diamonds as summarized in this article in Wired magazine, “How the blockchain is helping stop the spread of conflict diamonds.”

Benefit #3: Traceability

Tracking goods forwards in a supply chain can be advantageous when seeking to trace where components are currently residing. Information relating to the component can then relayed to or from the new owner for possible action. This benefit is succinctly described in this Harvard Business Review article, “Global Supply Chains Are About to Get Better, Thanks to Blockchain.”

Benefit #4: Transparency

Lack of commercial transparency can sometimes lead to delays in commerce and a breakdown in relations. By providing details of transactions against the commercial construct, further trust can be enlisted within the process and so provide a more stable relationship based on transparency rather than negotiation.

Benefit #5: Security

As each transaction is verified within the network using independently verified complex cryptography, the authenticity of the information can be assured. Assured information is one of the fundamental keys to unlocking the benefits of the Internet of Things (IoT), which is a closed loop cyber autonomous process linking assets to actions. A version of this is currently being used in the defense Industry for verification of instructions and protection of IP, as illustrated in this article by Ascent, “Securing 3D-Printing: Could Blockchain be the Answer?”

Benefit #6: Feedback

With full traceability throughout the lifecycle of an asset, the asset designers and manufacturers can accommodate through-life asset management into their products to make them more effective. This can allow for information returning from shipping, installation, maintenance and decommissioning.

Here to serve

While Blockchain was designed to serve its digital master, by using the examples of the benefits outlined above, it can be used to serve your needs. Can you envisage a use for Blockchain in your business? I would enjoy having that discussion.

I welcome comments on this or any other topic concerning finance, HCM, CSR and business strategy.

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388 Responses

  1. Avatar

    Chris Martin

    Nice post about blockchain advantages. Blockchain is immutable, transparent and more secure than centralized solutions which makes Blockchain technology is very useful for insurance, finance and banking industry.

    Reply
    • Steve Treagust

      Steve Treagust

      Thanks for the comment. I agree that Smart contracts are certainly an advance I would be looking into for process optimisation. There are many options available for choosing which blockchain and coin suits the company and the process the best. The coinmarket capitalisation page https://coinmarketcap.com/ is a good place to see just how many options are available, and their relative size within the $200Bn market.

      Reply
  4. Avatar

    amar

    block chain emerged as one of the best technology . It has good business benefits as described .Transparency and trust proves to be key benefits of it.

    Reply
  8. Avatar

    Jim

    Great post Steve!
    I am looking out for use cases outside of BFSI Industry which are prevalent and are already matured as I talk to the Sponsors of our Key Accounts who are willing to see if it is worth investing or co-innovating with us.
    Thanks
    Jim

    Reply
  9. Avatar

    Fredrick Carter

    Blockchain can be called one of the most disruptive tech in the last few decades. Faster speed transactions with no interference from third parties and cheaper transaction rates are already making the legacy financial services institutions and banks to appear redundant. It is also foraying into real-estate space, supply-chain auditing and government record keeping databases.

    Reply
  11. Avatar

    Marie Weaver

    Transparent of Blockchain Network technology is quite secured as the distributed network is built such that it checks in with itself every ten minutes. yes, we can use blockchains transform the healthcare system and it also all movements of assets and value between organizations or individuals are managed through a blockchain.

    Reply
  12. Avatar

    Heena Malik

    Privileged to read this informative blog on Blockchain.Commendable efforts to put on research the Blockchain.Please enlighten us with regular updates on Blockchain.

    Reply
  13. Avatar

    Akeo

    Blockchain is a data structure to create and share distributed ledger of transactions among a network of computers. Its a great and very informative post, Thank you for adding up to my knowledge and sharing the post.

    Reply
  14. Avatar

    priyanka jain

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  15. Avatar

    Torah Bright

    Thank you for the useful information. Now I am no doubt sure that blockchain has some effect on insurance, finance and banking industry.

    Reply
  16. Avatar

    PETER ROGERS

    This is really interesting, but I feel you missed out on immutability, which I feel is not the same as security.

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  27. Avatar

    meenal deshpande

    This new technology can certainly offer us a lot in terms of what the article talks about, however by focussing on it we don’t confront the real issue that faces us.

    Reply
  29. Avatar

    bloggar

    With the emergence of blockchain concept, advancement appears not close to over, and new and innovative strategies and techniques emerge. We seek to orchestrate the adoption of a completely decentralized ecosystem through distributed ledger technology. It most certainly is a very electrifying time to be doing work in the blockchain place and since lots of people take on this disruptive solution, it will expectantly permit us to create an infinitely more reliable, appropriate and open world.

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  31. Avatar

    Robert Bint

    Hi,
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    Firstly,Users are in control of all their information and transactions
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  109. Avatar

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  111. Avatar

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  195. Avatar

    Rohan

    Transparency and robust security is the biggest business benefits of Blockchain. as a distributed ledger it can also be accessed from anywhere and anytime. Also,
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    Reply
  199. Avatar

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  212. Avatar

    Kate

    Nowadays, blockchain technology can be practically applied to any industry including Agriculture, banking, healthcare, education, e-commerce, transport and logistics, media and entertainment, automotive- the list goes on.

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  218. Avatar

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  244. Avatar

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    Really the trend of blockchain technology increases day by day, and it is very important for business or companies to use this technology in your business, thanks for sharing such an informative article.

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  262. Avatar

    Nadiia

    There are obviously a plenty of benefits of using blockchain, you’ve highlighted only a part of them. Nowadays it is being used practially in all industries and its growth and expansion are predictable

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