Is Blockchain Right for Your Business?
8 minute read
It’s a classic coming-of-age story: breakthrough technology excites technical community who experiment and evolve it; true believers champion the technology to a wider audience; it becomes a buzzword; the big guys swoop in to make it accessible to the masses.
Are we talking about artificial intelligence, conversational interfaces like Alexa, computer vision? We could be, but in this case, we’re talking about blockchain.
“You’ve Come a Long Way, Baby”
You’ve probably skimmed all the Blockchain 101 blog posts out there. You know blockchain is one form of distributed ledger technology. It creates incorruptible audit trails. Many users independently verify that a piece of data is in a certain place at a certain time, and that becomes one block in an immutable chain – the data’s life story.
You also know blockchain is the technology that powers the cryptocurrency Bitcoin, celebrated for its decentralized nature; no central authority required. But that particular selling point may become less important as blockchain makes the jump to enterprise.
“Blockchain is a viable business solution whenever three factors are present,” explains our Director of Strategic Partnerships, Mike Rolfes. “First, you have a business problem in need of a solution. Maybe you have a high volume of transmitted goods or data, and you’re using manual processes or paper-based tracking systems. Second, you have an identifiable business network, a group of companies or customers who need to communicate to get the job done. And third, all of the above must happen under an umbrella of trust and security.”
In today’s global, hyperconnected economy, those coexisting conditions are certainly prevalent. That’s why IBM, Microsoft, Oracle and Amazon are all investing heavily and battling for your Blockchain-as-a-Service (BaaS) business. They are leveraging their economies of scale to lower your barriers to entry with cloud-based, out-of-the-box blockchain solutions.
As Fortune observed in its look at the commercialization of blockchain: “That a 106-year-old company like IBM is going all in on blockchain shows just how far the digital ledger has come since its early days underpinning bitcoin drug deals on the dark web.”
Determining Your Blockchain ROI
Mike offers a good working definition of blockchain’s abilities: “It’s a secure way to track people, items and actions in a distributed way.” That last part is important. It means the person holding the paperwork, or the people on your company network, are not the only ones who can see where the widget is at any point in time. All parties involved can check in on progress.
In blockchain PR circles, the story of WalMart and its mangoes is now legendary. In the linked video, you can watch WalMart’s vice president of food safety explain how their blockchain pilot collaboration with IBM reduced the time it took to trace a package of mangoes’ farm-to-store journey from days down to seconds. It’s impressive and absolutely a worthwhile investment for WalMart, given the devastating impact of a food scare/bacteria outbreak.
Does a blockchain implementation make sense for your business? That’s a big question comprised of several smaller questions. The answer is different for every company. Do you have to frequently move a large quantity of sensitive goods or info? How many other parties are involved in the process? What are you currently spending in both time and money to accomplish these tasks? Are you paying subscription fees to a third party to verify data? You can see blockchain’s potential to be an industry disruptor in financial services, real estate, manufacturing and health care, just to name a few. Could it be one for you?
Once you’ve run the numbers and determined whether blockchain might make sense for you, it’s time to turn to a second set of questions: How will you implement a blockchain solution? Most techies agree, blockchain’s biggest potential stumbling block is scalability. Because it was initially conceived as a way for users who don’t know and/or trust each other to agree on an asset’s history, every server on a blockchain must verify each new entry. All the encrypted “blocks” are linked together into a chain by serializing data. These hallmarks of blockchain require plenty of processing power and storage space and can make updating slower than traditional databases. Blockchain champions are working on scalability solutions that range from fundamentally changing how users are accredited to decreasing the number of nodes needed to verify transactions (sharding). For now, it’s important that your BaaS vendor understands your security and speed requirements and you understand their plans for mitigating slowdowns as both their customer base and hosted blockchains expand.
Then there’s the question of which type of blockchain is right for you: (1) public/community-based, as the technology was originally presented; (2) founder-directed, where one entity (e.g. WalMart) sets the direction for all users; or (3) a consortium, a group of founders operating on the same standard. The last two are “permissioned blockchains,” each participant in a known community is vetted and verified. These private blockchains are generally preferred for commercial deployments, but interoperability can be a moving target as adoption and use evolve.
Blockchain Experimentation: Start Small
IBM advises blockchain newcomers to start with a small, clearly defined project. Probably best to keep it just within your company; save the consortia and shared governance for down the road.
“I have to admit: I love how IBM’s recommendations fit Mind Over Machines’ standard operating procedure to a T,” Mike grins. “This is exactly how we like to initiate partnerships: start with a thorough discovery process, iterative planning and design, small, frequent wins, fail quickly (if we have to fail at all), and keep progressing until we solve the business problem.”
But while our MINDs appreciate IBM’s tack here, we don’t want to give you the sense that you must jump on the bandwagon of this latest technology. BaaS for business is just one tool in the toolbox. Whether you choose to use it depends entirely on what you’re trying to accomplish.
We’d be happy to help you decide whether blockchain is the right tool for your business and, if so, which type of blockchain best suits your needs.
“We are at the dawn of a new era for enterprise,” says Mike. “All these revolutionary business intelligence technologies are becoming increasingly accessible and affordable. You can just stitch services together to create a solution perfectly tailored to your business needs.”
Give us a call; we’ve got our sewing machine all warmed up.