How Should Your Business Use Blockchain Technology?
Tags: Hyperledger, Ethereum, Smart Contracts, Blockchain, Bitcoin

Progress in blockchain research and adoption makes whoever is paying attention quite nostalgic of the internet dot-com boom of the late 1990s. However, beyond the hype (a necessary first evil for mass adoption of any new technology), we need to have a serious discussion on what blockchain actually is, how different it is from current (traditional) systems, what industry use cases are available for practical reference, and most importantly, how an organization can use it to transform its business processes.

There are five (5) game-changing technologies that organizations worldwide are leveraging for their own digital transformation efforts:

Artificial Intelligence (AI), Big Data, Cloud Computing, Internet-of-Things (IoT), and Blockchain.

Various industry experts agree that of these 5 technologies, blockchain is the most disruptive. Of course, there are skeptics who consider the blockchain as nothing more than a “glorified linked list”, from a software engineer’s perspective, and thus do not see any practical use of the technology beyond cryptocurrencies. However, we have already seen evidence to the contrary.

We are yet to find any industry which has not been touched by this revolutionary technology. These days, the conversation on blockchain is not about whether or not your business needs it, but instead on how you should strategize for its adoption, and to develop applications relevant for your business use case. Before we get into all that…

Distributed ledger technology (DLT) is the ‘ish’

Organizations’ need for blockchain has been on an exponential rise primarily because traditional ledgers and traditional contracts have problems.

The problem with our current ledgers is that everyone in the business network has their own version. What’s the problem with that? Well, consider a situation where company A has recorded a transaction on their ledger, but company B has recorded it differently, or even has no record of it! Put differently, what if Kobby records the fact that he’s bought Ewurama’s laptop, but Ewurama does not: whose ledger is correct, and who owns the laptop?

Moreover, disputes in contracts often arise due to ambiguity and/or lack of mutually agreed terms and conditions. While disputes may be great for lawyers, they are not so much fun for the participants involved in those disputes.

Blockchain aims to solve the problems of traditional ledgers and contracts by sharing them in an unambiguous form between the participants of the business network.

Not just a “glorified linked list” after all! Or is it?

What is blockchain anyway?

The world was really introduced to blockchain technology when, in 2008, a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was released by a certain someone or entity under the pseudonym of Satoshi Nakamoto. Needless to say, research in distributed ledger technology goes way back!

Simply defined, blockchain is a shared, distributed ledger with smart contracts. Put differently, it is a secure, shared recordkeeping system in which each user of the data holds a copy of the records, which can only be updated if all parties involved in a transaction agree to update.

Technically, blockchain is a peer-to-peer, distributed ledger that is cryptographically secure, append-only, immutable (extremely hard to change), and updateable only via consensus or agreement among peers.

Let’s unpack those loaded terms in the two definitions…

Smart contracts refer to computer code that is shared between participants of the business network, and these implement the business rules associated with each transaction. As the code is shared, it can be executed by all relevant participants and they can agree on the output.

From the technical definition, peer-to-peer (P2P) implies that there is no central controller in the network, and all participants (nodes) talk to each other directly.

A node can be defined as an individual player in a distributed system.

A distributed system is one in which two or more nodes work with each other in a coordinated fashion to achieve a common outcome. Thus, a distributed ledger is one that is spread across the network among all peers in the network, and each peer holds a copy of the complete ledger.

Furthermore, blockchain is append-only, which means that data can only be added to the blockchain in time-sequential order. That is, blockchain is practically immutable because once data is added, it is almost impossible to change that data.

The most critical attribute of a blockchain — which is what gives it the power of decentralization — is that it is updateable only via consensus.

With some key technical jargons out of the way, let’s see some industry use cases for blockchain.

What’s in the lawyer’s block?

Technological restructuring in the legal industry often proceed at a very slow pace. Blockchain applications are being used to alleviate labor-intensive manual processes while providing increased accessibility, transparency, cost savings, speed, efficiency, and data integrity to the legal industry.

The most prominent use cases of blockchain applications in the legal industry include:

Electronic signatures

Intellectual property

Property rights

Chain of custody

Tokenization

Automated regulatory compliance

Machine to machine payments

Blockchain-based arbitration systems

Fintech, DeFi, and all that…

You’ve probably heard the term Fintech or DeFi thrown around. Fintech is a portmanteau of the terms “finance” and “technology” and refers to any business that uses technology to enhance or automate financial services and processes. DeFi is literally, “decentralized finance”. Blockchain is at the fulcrum of these industry buzzwords. From P2P lending, international money transfer, crowdfunding, issuing of digital private shares, blind auctions, and foreign exchange processing, to reduction in insurance fraud, execution of digital wills, micropayment channels, and stock markets prediction, blockchain is disrupting banking and finance in epic proportions.

Blockchain use cases in healthcare

Making electronic health records more accessible

Improving medical record keeping

Establishing proper chain of custody in drug shipments

Improving medical record access

Underpinning data security in healthcare

Improving patient-doctor interactions

Enhancing the security and control of healthcare transactions

Tracking medical credentials

Tracking and stopping counterfeit drugs

Tracking clinical trials and pharmaceuticals

“So what?”

“This is great and all, but how do I actually use blockchain to improve my business?”

If you closely examine the blockchain use cases for the three industries we’ve looked at, i.e., legal, finance, and healthcare, you may notice a pattern:

Core Blockchain Development: A group of companies may form a consortium to create their own blockchain, determining the architecture and security protocol by themselves. Or, Blockchain Software Development: Companies may leverage existing enterprise blockchains and/or distributed ledger technologies such as R3’s Corda, Hyperledger Fabric, Ripple, Quorum, and Ethereum, by building decentralized applications (DApps for short) on top of these platforms.

Whatever route an organization decides on, a competent Blockchain Developer or Blockchain Engineer must be consulted, because in the final analysis, it is the developer/engineer who will design the system. There is absolutely no room for errors in this domain! Furthermore, the developer/engineer must work closely with domain experts to decide on the business processes and security protocols.

So, that was the blockchain… in a nutshell!

In a future article, we will explore various blockchain applications that are already disrupting EVERYTHING. No kidding! The applications range from secure sharing of medical data, to anti-money laundering tracking systems, and they are platform agnostic.

It is time for you to take advantage of this technology to improve your business processes, such as, automating costly, manual, and repetitive tasks, securing sensitive organizational and customer data, monitoring supply chain and logistics, and removing middlemen and bottlenecks. The applications of blockchain are endless! Welcome to Web 3.0!