Does your business need blockchain ?
According to some sources, the total investment in blockchain till June of 2018 had already exceeded that of the whole of 2017. The expenditure on blockchain technology implementation in the US alone would surpass $12 billion by 2022. All major blockchain investments have progressed beyond the experimental phase, and this clearly indicates that the more established companies have raised significant capital to meaningfully improve their resources & leverage blockchain. Blockchain has already become a buzzword this year, and so all organizations are wondering whether or not they should adopt blockchain.
There is a lot of information available out there which explains that Blockchain implementation is like a “distributed ledger”. To explain in simple terms, a distributed ledger comprises of a set of transactions that have been approved by mutual consent and are made visible to all stakeholders.
Since the transactions have to be approved by all stakeholders, chances of a fraudulent transaction are eliminated(since everyone is watching).
It is believed that blockchain would help industries if :
- There are multiple transactions which need to go through a 3rd party intermediaries
- Information security takes the highest precedence
- There are transactions which are recurring; but can also be automated if needed.
The base benefits of implementing blockchain are:
- Optimized security
- Complete transparency(leading to greater accountability)
- Enhanced efficiency
Scope of Blockchain
It must be pointed out that blockchain implementation was inspired by monetary transactions and is known to be the backbone of bitcoin trading. Therefore a considerable effort has gone into the development of tools and frameworks that handle financial transactions only.
But there is scope in other business arenas as well. A conceptual model can be considered in the following example of the retail sector.
Let us assume that a retail store sources organically grown cashews from a farmer and wants to be involved at all stages of the product journey from the supplier to the store shelf. In such a scenario, the production-to-store cycle would comprise of the following steps-
- Producer packs the product and initiates shipment request
- The shipper picks the product and ships it out.
- The shipment is received by the warehouse and checked in
- The shipment is moved from the warehouse to the retail store
- The retail store confirms receiving the product and places it in the store shelf
All the aforementioned steps can be tracked using barcode readers, electronic seals and other sensors used at various stages in the supply chain sector. Such a product can have the following characteristics:
- A common system maps all the steps and does not allow a completion of any step till it is validated by all stakeholders(manually or automatically).
- Please also note that all steps have to follow the order from 1 to 5.
- Now assume that 100 such shipments are to be approved batch-wise; for the sake of efficiency
- At all stages, the transactions would be visible to various stakeholders.
By definition, a set of such transactions can form a block and such a product looks like blockchain implementation. We know that this business need exists since there are experimental requirements from numerous business sectors.
If one thinks of -say- oil and natural gas distribution; then all stages of distribution can be monitored and controlled; thanks to the roaring evolution of IoT technologies. A similar evolution of technology has been witnessed in numerous other business sectors. As a result, scope is created for blockchain implementation in those sectors also.
Blockchain in Software technology
From a technical perspective, there are numerous methodologies available to help trace transactions, secure them and make them available for scrutiny. But tracing, security and availability are mostly distinct functions. This is where blockchain deftly and emphatically manifests the need for providing transparency, trace-ability and security together in digital transactions. This has heralded the opportunity to create variants of the same framework and implement it across all multi transaction processes in different business verticals and industries.
How can similar frameworks be implemented across different business processes?
Would that not be like-say- using principles of aircraft manufacturing in manufacturing a car?
But when it comes to application of frameworks in unrelated systems, lets not forget guerilla marketing; derived from guerrilla warfare!
Another example could be use of Sonar to create prosthetic for the visually impaired.
There are numerous such examples.
Blockchain implementation is an evolving field and therefore its implementation is no longer restricted to financial transactions. An entire blockchain solution can be created to suit a business’s needs once the steps (to be traced, approved, secured) are identified.
How it works in IT?
How the solution works can be explained in a basic conceptual model as follows:
Assume that there is a variable X which has a value and a sub-value. The main value can be modified only after the sub value has been modified(for assumption sake).
X has a value of 1 assigned to it initially with a sub value of A
Then someone wants to change the subvalue to QY
After the consent of all stakeholders(which can also be created in the form of a rule engine to change values); the sub value is changed to QY
Therefore now, X = 3(QY)
Again, based on the rule engine(with manual intervention provision wherever applicable), the main value is changed to 4.
Now historically speaking, X has had the following values allocated to it from 3(A), 3(QY), 4(QY). There can be any number of nested values assigned to a variable. The interdependency, depth of data and rules are all pliable. What is important is that we can discern traceability, transparency and security in the aforementioned example.
The challenge that software industry faces currently is how to create a singular product that is able to consolidate all blockchain requirements for a business need. The product requirements for each business would vary. This calls for the creation of a custom blockchain product .
The interesting aspect of it all is that blockchain can be utilized as a framework across most sectors where technology can be implemented. Such sectors range from energy industry to supply chain. However the need for the implementation of blockchain must be clearly defined(what requires tracing, how are the blocks created, how would consent from stakeholders be provided etc.) for implementation success.
Why you may need Blockchain
If an organization uses third party tools for transactions, or if there are many users who have access to their DB- with potentiality to make a lot of changes, then that organization can start thinking of implementing blockchain. The primary benefit would arise from a tamper proof solution for all such scenarios. Once the people perceive the merit of the solution, the adoption would be quicker and smooth. Since this will become a norm in the years to come, the early adopters will find it very easy to move on to the next level as blockchain itself evolves.
Supply chain could make use of the ‘smart contracts’ feature in blockchain. Smart contracts can be defined as contracts developed in software code which automatically execute based on a rule system of “milestones”. If the qualifying criteria is met, the code executes the transaction. This reduces the chances of fraud & malpractices, if not eliminate them entirely.Any intermediaries so far responsible for any transaction- thereby adding to the cost overheads- are eliminated in the process and the business can have complete control. A well defined conceptual model around business use cases can easily help create a robust blockchain system.
Why you may not need Blockchain?
Today’s blockchain is not for everyone. Adopting it means starting to code from scratch, changing the way you think of your business, and putting your weight behind a technology that is still immature. If speed of transactions is required and the database security becomes paramount, then only an organization should consider blockchain.
Blockchain implementation requires a certain amount of brainstorming to understand the business need. With that need identified, a custom solution can be created for any business- tailormade to monitor any transaction