The adoption of new technology has become essential for businesses to remain competitive and to continue growing. The advent of computers and the internet brought about software powered departments, which saw processes such as accounting and supply chains get digitalised. More recently the growth of cloud computing has also allowed small businesses to make use of SaaS (Software as a Service) tools to implement technology and gain more competitive edge. Is it time businesses start using blockchain too?
The past couple of years have seen the term ‘Blockchain’ become one of the most popular catchphrase, with new startups flaunting their use of blockchain along with existing businesses in different industries testing the use of blockchain. All great – but the question is, do we really need to introduce blockchain in every operation possible? What if this over-enthusiasm revolving around Blockchain is actually harmful to the technology’s health and (meaningful) adoption?
If you’re still confused on what Blockchain is, a simple explanation of it would a distributed database which isn’t stored on a single centralised database but distributed thousands of times across a network (blockchains are a form of a Distributed Ledger). Any data stored on a blockchain is shared and continuously reconciled across the network. The benefit this offers is that data is not controlled by a single authority, and there is no single point of failure; making the entire chain transparent and safe from corruption by a single party. A blockchain would also allow redundancies to be reduced, and to avoid duplicate records or transactions.
Sounds great, doesn’t it? Potential use-cases for the use of blockchain have been proposed ranging from supply chains to legal documents to archiving. Seen as a truly revolutionary technology, there has been a surge in startups, even non-tech ones, attaching the term ‘Blockchain’ to their name to attract investors. However, how do you reliably decide whether your business needs a blockchain?
Fortunately, a group of researchers have developed a framework that can help you decide the right implementation of Blockchain. The group includes Cathy Mulligan, Co-Director at the Imperial College Centre for Cryptocurrency Research, who also previously worked with Professor Roger Maull, Co-Director of Surrey CoDE on CREDIT (Cryptocurrency Effects in Digital Transformations). The framework laid out by Cathy and her co-authors is based around a set of questions that lead to a decision.
The questions start simple, revolving around the removal of intermediaries, working with digital assets and the ability to create a permanent and authoritative record, before moving on to more specific questions. The complete framework takes you through a set of 11 questions, leading to one of five possible decisions:
- You do not need to use blockchain.
- Blockchain may work, but not efficiently until better solutions are developed.
- Blockchain may work, but further research is needed.
- You may use blockchain as a private/permissioned ledger.
- You may use blockchain as a public ledger.
Any business opting to deploy a blockchain as part of their business would do so if they are dealing with digital goods of value and want to create an authentic record for each transaction, which can be independently verified by anyone else on the blockchain. Staunch enthusiasts of blockchain predict blockchain will take over the world. Blockchain-powered taxes, votes, financial transactions, educational records, property records and even wills are said to be among public use by as soon as a decade’s time.
But taking a step back and not falling prey to the hype allows you to carefully evaluate whether your business needs it or not. The questions proposed act as a practical framework for executives to rapidly analyse and decide if blockchain is for them or not. The framework allows a focus on the business problems associated to a particular case rather than following the (often) ill-advised decision that blockchain will solve all world problems.
This article is based on ‘Blockchain Beyond the Hype’ report published by the World Economic Forum. Read the full report here.