How useful is blockchain, and what benefits can it deliver?
26 February 2020
When you hear ‘blockchain’, you may well think ‘Bitcoin’. But cryptocurrencies such as Bitcoin are just one application you can build on blockchain’s decentralised ledger technology.
Blockchain is very much a back-end technology. It’s not a ‘sexy’ tech like drones or virtual reality. When you deploy blockchain solutions, most people will probably never notice it – they’ll only see what it lets them do.
But organisations using blockchain applications, across a whole host of sectors, can reap many benefits, including:
- Greater transparency
- Proof of transactions without the need for a central authority
- Permissions-based privacy and security
- Auditable, tamper-proof record-keeping
Where is blockchain most promising?
Blockchain applications are already helping companies verify the credentials of job-seekers, in association with awarding bodies such as universities. For example, a university can issue degrees on a blockchain platform, enabling graduates to easily share those verified credentials with potential employers.
Insurance is one of many industries also discovering the benefits of blockchain. Creating new policies and settling claims are complex, time-consuming processes, typically involving many different parties. Anything that can simplify and speed up such processes will benefit both insurers and customers of services from travel insurance to more specialist offerings.
Take marine insurance, which is a highly complex area of the industry, in which different companies insure different parts of a shipping operation, such as hull, cargo, liability and loss of freight revenue. Using a blockchain platform to place a policy lets multiple parties share and act on information all in one single application.
Everyone with permission to use the chain can see approvals and changes in real time. There’s no need to go back and forth with individual parties, and then return to the rest for approval.
Another sector which showcases the benefits blockchain can bring to a wide range of industries is the international diamond trade. Blockchain in the diamond trade provides a trustworthy, transparent and immutable record of every step in the supply chain - from mine to purchase.
In the case of diamonds, this lets jewellers show their products are conflict-free. But having confidence in your supply chain, and trust in the provenance of items being bought and sold is important across a wide range of sectors, from manufacturing to grocery and healthcare.
There are many other blockchain uses as well, from online gaming trades to energy sales and pricing.
Is blockchain an option for you?
When considering whether blockchain might work for your organisation, it’s best not to start by thinking about blockchain solutions – or about any other specific technologies.
Instead, look at the problems you need to solve. Think about the processes those problems are related to. Think about the issues these processes involve. The problem space is where the solution will be found, so don’t rush through it.
When you start considering solutions, start with the simplest first. You may find the answer doesn’t lie with technology at all, but with people or processes.
If technology is the answer, is blockchain the right one? If you answer yes to at least four of the questions below, it may well be:
Does your problem involve:
- Multiple parties who need the same view of shared data?
- Multiple parties who need to act by changing and updating data?
- Multiple participants who need to trust and verify one another’s actions?
- Intermediaries that add complexity and cost?
- Time-sensitive interactions?
- Interacting transactions where participants depend on one another’s actions?
If blockchain is the answer to your problem then it won’t be a showy solution that gets your customers or users talking. But if it can solve your problem, isn’t that what really matters?