The emergence of blockchain technology in recent years has started to impact the way we handle financial and trade transactions. Blockchain technology is defined as a decentralized database that stores a registry of assets and transactions across a peer-to-peer network, secured through cryptography. This creates an immutable, unforgeable record of all of the transactions across the network. To illustrate the use of blockchain, we recently built an application using IBM Blockchain to demonstrate the value it brings to logistics and supply chain operations.
When it comes to incorporating Blockchain into your applications, there are some things to know before you get started. We caught up with technology thought leaders to learn their perspective and get their advice on what business leaders need to know about this groundbreaking technology. Here’s what they had to say:
When It Comes to Incorporating Blockchain Into an Application, What Do Business Leaders Need to Know?
“A lot of business leaders mistakenly conflate Bitcoin and Blockchain. I can’t tell you whether we’ll be paying with Bitcoin in the future or not. But I am most certain that the blockchain technology that underpins Bitcoin and other crypto-currencies will have a pervasive and profound impact. Any business process that requires intermediaries is a candidate for Blockchain’s distributed ledger, and the most useful exercise that business leaders can do today is think about their value chain, and the players that extract rents without adding meaningful value. You don’t have to understand Blockchain to do this exercise, just look at your business processes, and the cost and frictions from intermediaries.” – Ross McKegney, Director of Platform, Box.
“When thinking about incorporating blockchain, first ask yourself this: Could you create the solution that solves the business problem without it? There are many scenarios that I have seen proposed for blockchain solutions where blockchain is really adding additional complexity to the solution without really adding value. The key question, in my opinion, is this: does the transaction that you’re trying to create a solution for pass through many hands with no central control, but end up with a need for an immutable transaction record of every state that it passed through? If this is the case, then Blockchain may be something you should consider.” – Rod Willmott, Chief Wzard, Wzard Innovation.
“Most importantly, technology is only a tool. This is no different for what is commonly called ‘blockchain technology.’ At the end of the day, there are business or organizational problems which you are trying to solve. You need to think carefully about which way exactly the technology can solve those problems. Often the answer includes changes in business or commercial models, governance structures, and so on. Business and organizational needs should always be at the forefront of any project, for it eventually to be a success.” – Jan-Willem Burgers, Capgemini Financial Services.
“Business leaders need to be fully committed to leveraging technology as a strategic investment. This includes developing cloud-native apps that are capable of taking advantage of Blockchain and other services. Organizations with the ability to incorporate agile outcomes into their digital transformation will be primed to take advantage of new technologies like Blockchain, or even machine learning.” – Abby Kearns, Executive Director, Cloud Foundry.
What Industry Will Be Most Impacted by Blockchain?
“All industries – Blockchain is a new form of currency. It will simplify the flow of trade.” – Charles Caldwell, CEO, GEM Analytics.
“This is difficult to say, of course. Predicting the future is hard, and in this case, it also depends on what you mean by the term ‘blockchain technology.’ I would say, to start, that financial institutions should expect to face significant competitive challenges in the coming years, and that blockchain technology will probably be one of various technologies relevant in this regard. Certainly not the only. General sentiment is that trade finance, payments, and capital markets will be particularly impacted by new technologies. I would say that trade finance in particular seems like it could benefit from blockchain technology. Outside of trade finance, we have seen promising results particularly in cases that involve supply chain challenges. With blockchain technology, you can increase the transparency of the ecosystem, improve trust between the players, and increase efficiency in operations.” – Jan-Willem Burgers, Capgemini Financial Services
“Banking and finance to start. Energy is a close second.” – Evan Kirstel.
“Financial services may be the first industry to be most impacted, but the downstream ramifications for all other industries — real estate, automotive, payment — will be huge.” – Abby Kearns, Executive Director, Cloud Foundry.
Blockchain will impact how we exchange value across numerous industries, lowering uncertainty and making transactions easier, more reliable, and more secure. It’s important for business leaders to understand the possibilities and limitations of blockchain and associated distributed ledger technologies.