Few emerging technologies have created as much hype as blockchain, which has the potential to revolutionize the world of digital transactions. According to Deloitte’s 2019 Global Blockchain Survey, “53 percent of respondents say that blockchain technology has become a critical priority for their organizations in 2019 – a 10-point increase over last year”. As the use of blockchain continues to expand, it is important for businesses to understand the cost and barriers of implementation versus the value that the technology can provide.
One of the most attractive components of Blockchain, “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way” (2), is the fundamental transparency that is created through its use. Full scale utilization of blockchain would allow all contracts and supporting transactions to be embedded onto a shared database in digital code. The digital code would be protected from deletion, modification, and tampering, ensuring that business transactions are conducted in a compliant, transparent manner. The implementation of blockchain technology can significantly lessen transactional errors and fraudulent transactions across all industries.
In addition to the benefits of transparency, blockchain can be utilized for traceability purposes. This technology can be used to trace the movement of goods and resources through all supply chain nodes, from origin to end customer. Blockchain can be used for public transactions as well as for private ledgers that are comprised of internal transactions. Both internal and external transactions can be validated, stored, and shared between parties, facilitating the instant flow of information between business partners. In supply chain management, where multi-tier visibility, product integrity, and transparent knowledge sharing are of critical importance, blockchain technology can be of immense value. The use of blockchain technology can drive a significant decrease in the unintentional procurement of counterfeit goods, as blockchain can be used to verify an item’s core characteristics, such the origin and authenticity of diamonds, or whether or not a grocery item is truly organic.
Blockchain is here now – industry leading organizations such as Walmart, International Business Machines (IBM), the United Parcel Service (UPS) and FedEx are actively experimenting with blockchain technology in an effort to improve supply chain efficiency. This technology is scalable, and in a future state, the source data that is stored within blockchains will be used to support artificial intelligence and the development algorithms for machine learning.
While the mass use of blockchain amongst business and government organizations is still several years away, we have already witnessed the power of blockchain through Bitcoin, the first application of blockchain, which as of September 3, 2019 had a total market capitalization of over $189 billion. As with any potential business investment, it is important to conduct a thorough business case analysis in order to understand the cost and barriers of implementing blockchain into your current network versus the value that the technology can provide to your organization. It is also important to understand the current state of technological development, and to time your investment well, as the implementation of blockchain technology demands significant effort. The future state impact of blockchain is enormous, and this technology has the potential to restructure the fundamentals of the world’s economic and social systems. It is therefore important to build an awareness and understanding of the technology, and to properly prepare your organization for the new world of digital transactions.