What CIOs need to know about blockchain
- Posted on July 12, 2018
- Estimated reading time 3 minutes
This blog post was originally published on MoneyInc.
Is blockchain a technological game-changer? The data seems clear that it is. Is blockchain only useful for cryptocurrencies like Bitcoin or Ethereum? Absolutely not. Are people confused about blockchain? Yes – and perhaps rightfully so. Blockchain is a complex, often misunderstood technology built on the concept of a distributed data model; a ledger stored across multiple points. A recent study of top C-suite and IT decision-makers found that 83 percent of executives believe that blockchain is more fad than revolutionary technology. Yet the same study, conducted by Avanade and Wakefield Research, showed that 91 percent of the same respondents could not articulate a single use case for blockchain Simply speaking, many believe it is overhyped, but even more don’t fully grasp what it could be used for.
But blockchain is more than just the latest tech buzzword. The independence, transparency and permanence afforded by a blockchain application can bridge divides between communities of organizations that transact business with each other, every day. It is the immutability of the data model and the inherent security of each encrypted block that can change the paradigm for how we build trust between enterprises. What’s more important than the technology are the opportunities to reinvent business.
The benefits of blockchain are numerous. By having a secure, persistent and pervasive ‘version of the truth’ we begin to establish a ‘trustless’ business model, where validation of data and reconciliation of transactions are things of the past. We begin to make third-party intermediaries irrelevant and reduce delays in each business process. Reduced delays. Lower costs. More transparency. Greater control.
The immutable nature of blockchain means that those entities charged with tracking and monitoring business activity will have a ready-made, auditable system for operational and regulatory reporting. The decentralized nature of blockchain means assets are tied and controlled by their owners rather than by institutional custodians. And finally, the distributed, replicated nature of the blockchain delivers unprecedented data security at a time when it’s needed more than ever.
In the real world, this simply means that participants of a particular blockchain can dramatically reduce costs, save time, and accelerate their business goals.
Right now, all of the hype and sadly, the notoriety, about blockchain revolves around cryptocurrencies like Bitcoin and Ethereum. That’s about to change. Consider these untapped possibilities:
- In the automotive industry, blockchain could rewrite the rules of vehicle sales, giving everyone from manufacturer to insurance companies to consumers an unprecedented ability to track the provenance and wear and tear of a particular automobile.
- In healthcare, blockchain can help lift the veil on illegal counterfeit pharmaceuticals with a fully transparent, end-to-end view of pharmaceutical manufacturing, distribution, prescription and patient use.
- Coffee lovers could rejoice as retailers using blockchain give consumers full transparency into every aspect of the process, from growers and roasters to retailers and consumers. For the first time, blockchain would allow java junkies to directly tip the specific coffee grower half a world away with full transparency and confidence. (Or even for the wine lovers and producers.)
It’s clear to me that understanding the technology underpinnings of blockchain are less important that the opportunities it creates. I compare where we are at with blockchain to where we were with cloud computing when it first debuted.
Initially, the concept of putting your company data on a sprawling public network seemed revolutionary, if not inconceivable. Yet today, most organizations understand the considerable cost savings, flexibility and other benefits cloud provides.
The blockchain revolution has just begun, and it’s going to play a key role in the future of business.