Previously we touched on what blockchain is and how it works through its most well-known use case – bitcoin. By now you’re probably thinking about the technology’s use cases, how it can be applied and to which industries. And this is what our final blog post on blockchain aims to address.
Just to recap…
‘Blockchain is a purely distributed peer-to-peer system of ledgers that utilizes a software unit that consists of an algorithm which negotiates the informational content of ordered and connected blocks of data together with cryptographic and security technologies to achieve and maintain its integrity.’ Daniel Drescher, Blockchain Basics, a non-technical introduction in 25 steps, 2017.
Sound familiar? That’s because the definition of blockchain is generally well known. But, beyond this, little is known about how this technology can be applied, and more specifically which business areas will benefit the most and be impacted when evaluating the need for implementing blockchain technology.
Properties of blockchain include immutability, consistency, transparency, and security. You can liken it to a massive box for storing digital items. The range of data stored and thus the range of its application, to say the least, is big. One of the areas that blockchain has gained the most traction and success in has been payments through cryptocurrencies. The technology enables digital currencies, such as bitcoin, to be easily managed and transferred; plus it creates digital instruments of payments that are decentralized, making them independent of any central bank or government.
Beyond its most well-known use case of cryptocurrency, there are other areas and industries blockchain have gained traction in and are well suited for.
- Notary and legal services for storing digitalized documents such as contracts or proofs of ownership – think mortgage documents or medical records – where data is regularly exchanged between more than one organization.
- Blockchain may also find its application in the public sector to facilitate voting or tax collection. The process of calculating and collecting taxes may be facilitated using blockchain technology.
- As a whole the implementation of blockchain will be a good option in all areas where data storage and its automation play an essential role. Any record storage and management will be improved with a distributed peer-to-peer system.
Although many industries can benefit from this pioneering technology, there are a lot of questions to be answered before a conscious decision can be made about implementing blockchain technology.
What is the added value of using a distributed peer-to-peer system over a centralized one? What is the application idea and what is its business case? Is the choice of a distributed system justified when basic requirements are fulfilled? Have you considered the system architecture and the connection between the components?
These are just some examples of questions you need to consider before thinking about implementing blockchain in your organization. As demonstrated, the technology provides a chance to make process flows easier and hence reduce the cost of running business, but before jumping on the bandwagon make sure you take a step back and consider not only the benefits, but also the impact it may have throughout all areas of your business.