Using blockchain for business: is it worth it?
Have you heard this comment before? There is no shortage of authorities stepping forward to argue both for and against using blockchain for business. In case you haven’t heard (perhaps you’ve been traveling in the Arctic or on a submarine in the Aleutian trench for the last few years), blockchain is the technology that powers Bitcoin (and all other cryptocurrencies currently on the market). It was proposed along with Bitcoin in a magical, mystical white paper published in October of 2008 by Satoshi Nakamoto. While there have been many questions around the nature, motives, and identity of the author, the paper itself launched an entirely new currency and a new way of sharing value between people. This paper proposed solutions for both cryptocurrency and double-spending that have become ubiquitous with this new and controversial medium.
Let’s leave Bitcoin (and all other cryptocurrencies) out of this discussion. The question is, “Does blockchain matter to your business?” The fact is, the answer to this question is determined by a multitude of factors. It’s not as simple as yes or no. In its basic form, blockchain enables transactions of trust to occur between two or more parties that do not trust each other. This is not a pejorative statement. It’s meant in the sense that each party is a distinct and separate entity that must (for its own self-interest and that of its constituents) perform a transaction in a format that can be recorded and validated by any related parties to the satisfaction of all.
If you are performing transactions within your business where all parties are known and trusted…you don’t need blockchain! There are many other existing and developing technologies that are faster, stronger, better.
If you are performing transactions between untrusted parties but the only party that needs to verify the legitimacy of transactions is your business…you don’t need blockchain! Again, you can find many solutions to solve this need that are likely to better serve your needs.
But…if you truly need a trusted transaction between untrusted entities with the requirement for all parties to verify, using blockchain for business should be on your list to consider. Why? Blockchain provides several key features that could benefit you in performing and verifying these transactions:
There is no need for a trusted third party or intermediary to validate transactions; a consensus mechanism is used to validate transactions.
2.Transparency and trust:
This is relevant in scenarios such as the disbursement of funds or benefits where personal discretion should be restricted. Since blockchains are shared, this allows the system to be transparent in establishing trust among all parties.
Once data is written to the blockchain, it is extremely difficult to change (statistically/practically impossible is a better way to think of it). It is not truly immutable but, since changing data is realistically impossible, this is seen as a significant benefit for the ledger of transactions.
These are just a few of the key factors that would drive consideration of using blockchain for business. Other factors include high security, high availability, cost savings, and rapid verification performance to name just a few.
An example of untrusted entities in a transaction would be component suppliers to automobile manufacturers. Each component supplier may work with other suppliers assembling whole systems before delivery to the manufacturer for assembly line installation. Each supplier would be an untrusted entity to each other as well as an untrusted entity to the manufacturer.
So, does blockchain matter to your business? If your operational requirements would benefit from these key features, the answer is “maybe.” CIO/CTOs and business leaders must determine if the investment in, adoption of, integration, and deployment of solutions based upon blockchain are worth the effort. In cases where this is a clear benefit that offsets costs and risk of implementation, the answer would be “almost certainly.”
This is the first of a series of posts on the blockchain by Brad Bennett, Vice President, Digital at Infolob Solutions. He can be reached at [email protected]
Infolob Solutions has expertise in the design and development of blockchain solutions designed to help your business analyze the opportunities where blockchain brings the greatest value. We can help you assess your requirements, determine if blockchain is right for you, and even help build and integrate blockchain-enabled transactions for your enterprise.