It is true that blockchain is not a solution for everything. The saying “if it ain’t broken then don’t fix it” has a lot of truth. There are decisions to make about the cost benefit of transitioning existing centralised systems (that work) to a blockchain solution. However will this future proof the system or organisation?
In this article I have outlined the four main ways that blockchain can create and deliver value. I think there is something here for everyone, regardless if you are an existing organisation with systems, or a start up with a blank canvas. It all comes down to one question … are you creating or providing compelling value?
We know that blockchain’s structure and capabilities support end-to-end automation and easy data sharing across companies and more recently across chains, and can significantly reduce manual processes. Additionally transaction histories can significantly improve regulatory and audit compliance, decreasing the associated costs and improving response times. Blockchain technology enables “smart” contracts, with machine readable logic that requires no human interaction.
Let’s take a peek at these four sources of value that blockchain use cases can deliver, and which businesses can mix and match in different ways:
- New Business Models. Blockchain-supported innovation can help businesses create new revenue streams. In the energy sector, for instance, blockchain platforms can help individuals and entities trade excess energy stores autonomously and in near real time over the grid. Blockchain innovation can also allow product companies to move up the technology stack and expand their portfolios with higher-value service offerings, such as track and trace (provenance) or services based on data captured by blockchain.
- Operational Efficiency. Blockchain enables process automation and the removal of unnecessary intermediaries to help organisations improve productivity and performance. It also supports audit and regulatory compliance, generating significant time and cost savings. The use of smart contracts, for instance, can automate routine business functions, such as invoice generation and reconciliation, customs clearance, and property title transfer. In the banking sector, , for example, financial institutions could generate $billions in savings by applying blockchain to streamline and automate many back-office activities.
- Risk Mitigation. Companies can use blockchain-related applications to improve tracing and authentication across the supply chain. Better provenance and transparency throughout the supply and distribution chain, for example, could reduce counterfeiting and associated health and safety issues from fraudulent parts, thus mitigating financial and reputational damage.
- Social Impact. Blockchain platforms can be used to support a wide variety of initiatives, including voting and election management and ethical sourcing. The Democratic Republic of Congo, for instance, is using blockchain capabilities to build a new e-government platform that will help the country manage its natural resources and social welfare programs. Estonia is pioneering the use of blockchain for securing citizen information and is planning to adopt the technology to support other public welfare initiatives, such as those relating to personal ID and health records.
The disruptive implications of blockchain are clearly far reaching…
Reference: Article by Boston Consulting Group – Capturing the Value of blockchain