Blockchain presents many opportunities for enterprises to expand their operations and bring in new business. Blockchain for the enterprise is beyond cryptocurrency and can foster technology-led business innovations. It’s most definitely not restricted to protecting financial transactions and use cases that go beyond the use of blockchain in traditional financial services. Companies will also find that it allows for making unalterable contracts and preventing identity theft while helping to keep sensitive information safe and secure.
Deploying blockchain streamlines such tasks as looking up data and confirming that information has not been edited by a malicious third party.
As ConsenSys pointed out, “Leading financial institutions, governments, and conglomerates are already seeing the benefits of blockchain-based solutions for use cases as wide-ranging as digital asset creation and post-trade settlement.”
Blockchain’s programmability lets enterprises create secure business networks that easily scale. What’s on offer includes the ability to program transactions for automatic execution, keep data tamper-proof, and enabling network permissions when trust is a high priority.
Important Characteristics of Blockchain for Enterprises
Your effort to leverage bitcoin in your company can begin with you and your team identifying some key characteristics that apply to core business functions, which include decentralization, immutability, and digital asset lifecycle management. They apply to a range of business types.
Enterprises involved in finance will particularly be interested in using blockchain technology because the record is immutable, an innovation that protects assets by providing a clear record of their ownership. ConsenSys notes that “The clearing and settlement process today is built upon fragmented financial infrastructure that is not only inefficient but results in significant liquidity constraints and credit risks.”
In clearing and settlement cycles that currently can take up to 10 days, both parties are exposed to the risk of not obtaining their purchase price or the securities at the expected time. ConsenSys reports that using a blockchain platform, Codefi consolidates ledgers and settles assets not in days but seconds. All entries remain immutable in the blockchain.
Another capability blockchain brings is decentralization. “Decentralized finance (DeFi) unlocks untold amounts of economic opportunity for global citizens, enabling a more profitable, equitable, and secure global economy,” per ConsenSys. Such a system enables complete transparency, showing all transactions for verification. A major implication for your business would be the ability to comply more readily with Know-Your-Customer regulation and anti-money-laundering laws.
Managing the lifecycle of digital assets is a characteristic of blockchain that CIOs in real estate or financial institutions will want to consider. “Blockchain facilitates secure data sharing, streamlines rental collections and payments to property owners, and also provides premium due diligence across the portfolio.”
Examples of Situations Where Your Enterprise Can Leverage Blockchain
Three types of situations help to illustrate how your enterprise can start to leverage blockchain today, in terms of contracts, logistics, and payments.
* Contracts: With blockchain, you can build contracts that can’t be breached. Once the terms of so-called smart contracts are entered into the blockchain, they remain there forever, so each participant will know what’s expected for deliverables, including the timing and what kind of payment will be used. Your enterprise can’t change the contract alone and neither can the other party unless you mutually agree to make changes, which will be reflected in a new blockchain record.
* Payments: The intermediaries used to handle transactions taking place between different countries are cumbersome and cost money that enterprises can keep in their coffers when adopting blockchain. A retailer in one location can sell to buyers located anywhere that shipping is available, relying on bitcoin rather than having to deal with local currencies. A major benefit besides convenience here is you no longer need to budget for currency exchange fees.
* Logistics: Shipping and logistics are more manageable using blockchain technology and may find a home in your enterprise accordingly. Every step in the logistics chain is recorded in the blockchain record. Everyone can see the details, from the person who ordered an item to the warehouse team monitoring workflow. Pricing information and the date stamps that track the movement of shipped items are instantly available to all involved parties, eliminating the potential for fraud that plagues transaction schemes built without blockchain protections.
For enterprises that have a keen interest in demonstrating how they protect customers’ or clients’ sensitive data, the use of blockchain can help reassure those who are worried about identity theft and other crimes because of improperly secured information.
Benefits of Working With a Blockchain
In a company concerned about maintaining data integrity and keeping corporate information on a need-to-know basis, your associates may find it strange that you are considering working with data in a blockchain since they’re not accustomed to the notion of opening their books for anyone to read.
But you can point out that a public-facing blockchain cannot be changed, so it can prove useful for entities to work together when they don’t have any other mechanism to instill trust. For example, they aren’t going to use an escrow service to hold funds until a transaction has settled, but instead work it out in a blockchain ledger.
As reported in Acta Inform Med, “using a public blockchain can remove the need for trusted central authorities in record transactions and dispute arbitrations. This is because trust is built into the model through immutable records on a distributed ledger.”
Since no one can alter information that’s been recorded in a blockchain, you have a permanent record of the disposition of assets. Your lack of trust in another entity in a business network and their failure to find trust in you will not be an obstacle to deal-making, because both parties can agree on the blockchain’s immutable qualities.
An enterprise benefits thanks to less time needed to look up specific information on a transaction, such as to work out a dispute or just to verify a transaction took place at all. You can also look forward to saving costs, with no more need to work with third parties and the overhead that carries. There is also a reduction in overall risk since blockchain prevents criminals from colluding, tampering with data, or trying to commit other fraudulent acts.
While there are many benefits to using blockchain in the enterprise, it’s prudent to keep in mind that its use requires a lot of electrical power. Even if you are not mining bitcoin for your own cryptocurrency needs, your organization will want to keep power usage in mind in terms of your carbon footprint.
Whether you focus on mining and using bitcoin in transactions could influence any efforts you make to present yourself as an environmentally friendly corporation. You might consider it more of a public relations issue than a strictly technical issue.
For context, BBC News recently reported that computers mining bitcoin consume about 121.36 terawatt-hours per year, which is more than Argentina uses for all its power needs. By comparison, China uses about 5,500 TWh annually.
Blockchain Use Cases in the Enterprise
IBM has a major interest in blockchain and has been partnering with various companies to use the technology in their processes. The use cases it presents are beneficial for spurring the imagination of you and your associates for potential deployment in the enterprise.
For example, True Tickets has collaborated with Chateaux Software Development Inc., which is a partner with IBM Blockchain, creating a new ticketing system based on blockchain.
Counterfeited tickets are the bane of fans buying tickets as well as for the artists and venues that are cheated out of admission sales. Another issue in sporting events and concerts has been a lack of transparency about security and pricing. IBM’s ticketing solution uses blockchain to authenticate all sellers and buyers, which verifies they are legitimate transactions. The artists and athletes as well as the ticket buyers rely on the unchangeable blockchain ledger to verify ticket pricing and sales levels.
In the construction industry, IBM teamed up with Marsh LLC. Marsh routinely creates proof-of-insurance documentation for customers hiring contractors, in the millions.
The company used blockchain to streamline the process of verifying insurance status, with records that cannot be altered. This gives construction companies the peace of mind that comes from knowing they are properly covered in case of worker injury. A blockchain ledger allows companies to trust one another, which itself boosts efficiency since there’s no research time to do verification manually.
Trust in the supply chain is also bolstered with blockchain. When it comes to the issue of stopping the flow of “blood diamonds” and other conflict minerals, IBM began working with iPoint-systems GmbH to create a blockchain network for verifying minerals’ provenance.
Conflict minerals are the raw materials extracted from locations in the world where conflict is happening, and where war and conflict pose a threat to the workers who haul the minerals out of the earth. The sale of the raw resources helps fund wars, so customers want to avoid buying them and lending any support to the conflict. The blockchain for iPoint helps to verify if a mine is being harvested sustainably as well as complying with European and U.S. regulations banning conflict minerals.
More Than Mere Cryptocurrency
Blockchain presents many opportunities for enterprises to expand their operations and bring in new business. It’s most definitely not restricted to protecting financial transactions.
Working in a global economy where trust is hard-fought, it makes sense to turn to a new technology that provides for better control over data. That holds for processes ranging from financial transactions to verification of the identity of someone before granting access to protected information. With so many potential use cases for blockchain, you’re bound to come up with some innovative solutions to leverage it in your enterprise.