By Justin Biel, trends editor at Grow Wire
⏰ 5-minute read
This is the third post in a series on blockchain for business.
Read part I, “Blockchain for Business, Explained.”
Read part II, “The Companies Using Blockchain Now, and What Yours Can Do to Stay Ahead.”
What do business leaders need to understand when considering blockchain as a solution to problems?
To find out, Grow Wire asked significant players in the blockchain space from four major organizations:
Hyperledger: Hosted by the Linux Foundation, this San Francisco-based leader in open-source distributed ledger technology (DLT) works to advance cross-industry blockchain technologies.
R3: This enterprise blockchain firm based out of New York City that works with partners to develop apps, known as "CorDapps," for clients on Corda.
KPMG: The multinational accounting and consulting firm employs a dedicated blockchain team, which advises clients on the development and implementation of cross-industry blockchain projects.
LimeChain: This blockchain consulting and development firm works with enterprise clients and blockchain entrepreneurs on private and public blockchains and smart contracts, or those that can self-execute.
The experts’ answers illustrate increased interest and adoption of blockchain technology, alongside a cautious approach that involves strenuous testing and, over time, the necessity to increase collaboration and trust in blockchain's underlying technology.
To continue down the path of adoption and generate successful implementations, decision-makers at companies must understand which business functions blockchain supports and have ways to test and validate those assumptions.
What can blockchain do for my business?
“Blockchain assists everywhere where you have many participants (be it devices, humans, organizations) … exchanging data in a distrustful environment, meaning you are building a trusted network,” said Marta Piekarska-Geater, director of ecosystem at Hyperledger.
Aside from trust, blockchain consensus also yields cost-savings and efficiency, said Charley Cooper, managing director of R3.
Charley Cooper, managing director of R3
"(Blockchain) helps organize data in a common framework, reducing the need for expensive reconciliations or manual verification processes," said Cooper. "By eliminating the middlemen, blockchain enables businesses to quickly and easily trace products and transactions all the way back to their roots."
It’s important to note that blockchain is a "cloud-first" technology, which assists "enterprises across their front, middle and back-office processes,” said Arun Ghosh, U.S. blockchain leader at KPMG.
Ghosh also noted that blockchain technology could help companies "eliminate inefficiency in supply chains, address the challenges of global trade and tariffs, improve product tracking and safety, help reduce fraud and better track and protect customer data."
As a general rule, blockchain and DLT offers businesses access to a distributed, verifiable ledger system with built-in contracts, which can remove inefficiencies and speed up processing for a variety of business functions.
📚 Here’s a technical explanation of how blockchain technology supports business functions.
Can blockchain solve my business problem?
Nick Todorov, co-founder and CEO of LimeChain, encourages business leaders to match "key requirements on a given business process to the core value that blockchain/DLT technology (offers)."
Nick Todorov, co-founder of LimeChain
Todorov mentioned four primary core values associated with DLT:
1. Tamper-proof – A blockchain is tamper-proof due to consensus protocols and traceability.
2. Trust – Blockchains provide trust between parties that all the info on the ledger is accurate.
3. Automation – A blockchain system can be automated or developed with pre-defined logic, or rules.
4. Decentralized – A blockchain network is decentralized, meaning there is no single point of failure in the system.
Before exploring a blockchain project, Todorov suggested business leaders have at least "two of these four boxes required."
📚 Another useful framework for assessing blockchain for business problems is this white paper developed by the World Economic Forum.
The paper includes an overview of the different types of blockchain – permissionless, public and shared – alongside a decision-tree meant to assist with "rapid initial analysis of whether blockchain is an appropriate solution," per the report.
How can I test a blockchain solution?
Once you've identified an opportunity for a blockchain solution, industry experts suggest running pilot projects to test assumptions.
"A way to test and build blockchain is through a series of small, controlled explosions (or small projects) with a limited blast radius and a specific timeline -- preferably 12 weeks -- to prove that blockchain is useful and cost-effective," said Ghosh.
Todorov suggested an even more minimalist approach to testing, saying companies should think about the "minimal efforts and investments" needed to see if "blockchain could bring value in the scenario."
How much collaboration does it take to carry out blockchain solutions?
The short answer: lots.
Modern businesses require large numbers of partners and individuals in their ecosystems. According to R3's Cooper, blockchains require the same "collaborative mentality."
"Blockchain's benefits are best realized within a network effect and a shared focus of industry-wide collaboration," said Cooper.
But according to Ghosh, the number of company "roles and personas" blockchain touches is higher than other technologies. Due to this massive level of integration, organizations need to approach blockchain collaboration carefully.
"(Blockchain) should not be used as a ‘rip and replace’ technique, since it requires significant process redesign, culture change and collaboration," Ghosh stated.
Piekarska-Geater emphasized this point, explaining that peer-to-peer networks are the most critical element to a successful blockchain project.
Marta Piekarska-Geater, director of ecosystem at Hyperledger
"Distributed ledger technologies consists of the underlying data structure: blockchain, possibly some smart contracts and the peer-to-peer network that allows everyone to achieve consensus," she said. "The latter is probably the key to implementing a successful DLT-based solution."
How do I approach the surge of optimism around blockchain?
"Blockchain should not be viewed or used as a solution looking for a problem, as it is not always the right solution," stated Ghosh.
The blockchain experts interviewed all agreed that blockchain and DLT is not a one-size-fits-all solution. Instead, the consensus is that business people must approach blockchain like any new technology they’ve considered for implementation.
"Undertaking a thorough planning period to figure out where exactly blockchain can fit within your existing operations is key to ensuring sustainable growth and getting the best out of the technology," said Cooper.
Blockchain is still in its infancy, and the transition to enterprise-grade, industry-wide blockchain solutions cannot happen overnight.
"Keeping that in mind, adopting the new approach today will result in a competitive advantage for the business tomorrow,” Todorov said.
🌱 More blockchain coverage is on the way! Subscribe to our newsletter to ensure you don’t miss the next post, a rundown of major blockchain companies you should know about.