This article is not about the top five or ten Blockchain trends in 2017. If you’re looking for content like that, just follow me on twitter. Instead, my aim here is to give you some food for thought on how you can make practical use of Blockchain when undergoing a digital transformation.
The seemingly endless amount of information on Blockchain out there does not make it easy to understand what to do or decide where to start. To make matters worse, most articles on the internet on this subject do not contain useful information that you can put into practice. Some aspects worth mentioning that have already been covered include:*
- Smart contracts and the respective process automation opportunities
- Permissioned and peer-to-peer Blockchain networks
- Privacy for transactions and the protection of customer data
However, as we have already learned, the scalability of Blockchain in some cases might be insufficient. Think of Bitcoin and Ethereum and how these Blockchain-based platforms are implemented. Just consider the limited volume of Bitcoins (nobody knows what will happen when the last Bitcoin is generated). And there are additional problems connected with the computing power and energy consumption required to run these platforms. One challenge that is common for all new implementations is to know how to deal with these obstacles and to break through these barriers.
Another question relates to the type of case in which you can really take advantage of Blockchain’s benefits. A country in Africa that has not yet created a land register can use Blockchain to quickly find an appropriate and future-orientated solution to create such a register; you could call this ‘low hanging fruit’. By contrast, in Switzerland there is already a reliable and trusted land register; hence, nobody would immediately consider renewing the existing land register based on Blockchain, even though the need for process optimization will sooner or later inevitably result in an automated and perhaps decentralized register (which could, in the end, be based on Blockchain or a similar technological base).
When thinking of how Blockchain could benefit your business, I recommend taking into consideration questions such as:*
- Is there a tendency to automate processes in your industry? Or are there new challengers who are seeking to reinvent parts of your business (keep ‘digital transformation’ in mind)? In almost all cases the answer to these questions is ‘yes’. Blockchain has some valuable mechanisms to make process automation possible through smart contracts, even though these kinds of operational efficiencies were previously considered impractical.
- Is there any need for transaction privacy and/or the protection of customer data? Are your customers skeptical about giving up their private data? This is almost always the case in the insurance and finance sectors, for example, but it is also true of other industries. Additionally, consider new regulations regarding customer data (such as GDPR or others like MIFID and MIFID II), whose restrictions often go beyond those within the aforementioned industries.
- Do you have to (re)gain customers’ confidence? Since the subprime crisis, the reputation of central organizations has suffered considerably. People are afraid of being exploited and potentially losing money and property as a result. This trend opens a window of opportunity for decentralized and transparent processes and networks that can be based on Blockchain.
I could ask a number of additional questions, but let’s leave it at that for the moment.
Anyway, back to Switzerland. Although the Swiss Bundesrat does not anticipate many cases where transactions will be based on Blockchain, I would like to mention two key uses of Blockchain:*
- Legaltech representatives and companies are currently evaluating the potential of Blockchain, for example, in automatizing the design of legal contracts.
- Monetas provides a system which allows safe, fast and very low-cost transfers of any assets and enables users to store assets securely on distributed ledgers (and Blockchain respectively).
Hopefully, this article will inspire you to think of some of the challenges your industry faces and how Blockchain might help you address them. We can discuss lots of other aspects in person. Please do not hesitate to get in touch or subscribe to my newsletter.
* These parts are examples only. Let’s arrange to discuss by phone or in person the aspects that matter most to you.