Why You, As A CIO, Can’t Afford To Ignore Blockchain
Just like disruptive technology innovations that came before it, such as the PC, the internet, social networking, and cloud computing, blockchain is poised to revolutionize the business world and provide opportunities for growth and competitive edge.
Blockchain is typically associated with cryptocurrencies like Bitcoin and Ether, but that would be like saying that the internet is only associated with email. More recently there’s been increased interest from enterprise and government in utilizing blockchain for increased security and transactional integrity. Peer-to-peer transfer of value, distributed processing, and immutable recordkeeping give blockchain the ability to enhance or replace existing transaction infrastructures in a wide range of industry verticals - with applications as payments, supply chain governance, identity, security, manufacturing, record keeping and much more making it a must watch technology for CIOs in practically any industry.
Because of this, CIOs are becoming increasingly aware of the benefits of using blockchain technology in an enterprise model for greater security, efficiency, and authenticity.
What is Blockchain and How Does It Work?
A blockchain is a structure of data that records a transaction. These transactions are digitally signed to ensure authenticity and security, so all the transactions within the ledger can be considered to be virtually immutable, helping to prevent or even eliminate fraud. This applies to not only financial transactions, but also anything valuable and secure, such as birth and death certificates, marriage licenses, insurance claims, deeds and titles of ownership, educational degrees, financial accounts, medical information, votes, smart transactions, or anything else that can be expressed in code.
These transaction entries are distributed across the network and provide information about the state of the transactions at any given moment, accessible by all verified participants. Regardless of the trustworthiness of an organization or an individual participant, this platform guarantees integrity through mass collaboration and code. Transactions are safer, more secure, and more reliable than ever before.
When a new transaction or an edit to an existing transaction is recorded on the blockchain, the implementation executes algorithms to verify the history of the block that is proposed. If this history and signature are found to be valid, this block of transactions is accepted into the ledger. If the majority doesn’t approve the transaction or edit, it won’t be added.
This allows blockchain to run as a distributed ledger without a centralized authority stating that transactions are valid or invalid.
What CIOs need to pay attention to, however, is the ability to scale blockchain across the enterprise with a vast network of digital trust and protection. Every stakeholder in a blockchain-supported, supply-chain network has a copy of the authenticated ledger. This ensures transparency since all parties are fully aware that the recorded transactions in the ledger are trustworthy and authentic. Currently, no other similar technology offers that promise or potential to scale across so many use cases.
How Can Blockchains Be Structured?
Blockchains are adaptable and can be configured in a variety of ways using different mechanisms to verify transactions and define known participants in the chain.
Bitcoin, for example, uses a massive, anonymous public ledger that allows anyone to participate. Private uses of blockchain allow a smaller group of individuals to participate, which helps businesses control who participates in the transactional activity. Human resources could use this technology to get verified information about potential contractors with specialized skill sets. The constantly-changing financial well-being of a company can be tracked reliably by stakeholders, or for internal use. Customer behavior can be tracked and captured online for sales and marketing teams. Sellers no longer need to establish trust with a potential company, since the blockchain guarantees it.
Depending on the unique industry and scope, blockchain can be tailored to the exact demands of any given business to ensure efficiency and transparency for a wide variety of use cases.
Benefits of Blockchain Technology
Blockchain technology appeals to CIOs in business and government for a variety of reasons, including:
- Lack of central authority: There’s no requirement for a central authority, which allows joint ventures and affiliate relationships to have equal footing without a provision for an arbitrator or manager. Having computers verify transactions and settle them removes the need for any settlement agents as well, which provides disintermediation in a business arrangement and reduces overall costs, while also improving the efficiency of transactions.
- Lower risk of fraud: The digital signatures and verifications make it difficult for an individual to introduce fraud or problems that are time-consuming and costly to resolve. The integrity of the pending transactions within a blockchain, along with the examination of the blockchain architecture, prevents threats and fraudulent use of the technology.
- Asset tracking: Blockchain technology can accurately track the movement of assets through the supply chain, including vendors, transportation lines, and the final destinations.
Blockchain and CIOs
IT challenges are business challenges. Digital security, for example, involves more than just IT. With so many data breaches occurring that put millions at risk and damaged the reputations of several organizations, digital security now needs an approach that begins with employee training and ends with the IT department.
Implementing blockchain is no different. This technology is about more than just IT, but also encompasses security standards, continuity, accuracy, and one version of the truth. Likewise, the benefits extend far beyond the digital convenience and affect the bottom line.
Transactions on blockchain can be processed more quickly and with high integrity, leading to cost-effectiveness, accurate reporting, informed decision-making, and improved compliance. The transactions are much faster and ensure an accessible audit trail, all with a distributed design that offers a high-availability platform.
This technology can help businesses reduce their costs and risks, while also decreasing the amount of time needed to settle transactions. Customers will be more content, since the enhanced services are more convenient, which translates to greater revenue.
So where does the CIO come in? In order to understand and implement this new infrastructure, a CIO should have some firsthand experience.
- Start experimenting with digital currency to have a greater understanding of the blockchain and its potential.
- Understand the idea of a distributed ledger and review its implications for business.
- Find the processes that are most costly or error-prone, since these are the areas that will benefit the most from blockchain implementation.
- Explore use cases, and the potential business case for blockchain in your organization
- Keep up with the news about the blockchain developments and revolution.
- Employ a team of blockchain IT talent to ease the transition. Right now demand exceeds supply, so expect to pay more for an employee with a blockchain related skillset
- Come up with an architecture plan and migration strategy to fuel the future.
- Launch a pilot or proof of concept to teach your team about the upcoming changes.
- Experiment with the technology to speed up adoption and find the best practices for your company’s needs.
Get Expert Help With Implementation
As with the many opportunities for blockchain in enterprise, blockchain vendors have the flexibility needed to tailor solutions for your individual business needs. It’s important to still have trained IT talent in-house to handle the day-to-day, but easing the transition with a blockchain expert can aid in a smooth transition.
IBM Blockchain, for example, features an enterprise-ready platform for retail, supply chain, healthcare, finance, government, and other industries to enhance trust and transparency.
Oracle Blockchain Cloud Service is a comprehensive PaaS that boasts the most scalable and agile platform for evolving blockchain implementation.
Authenticiti offers enterprise-grade infrastructure with rapid deployment, scalability, and data privacy on a public cloud or a virtual private cloud. A simple, user-friendly interface and full support of high-volume, on-chain data are also featured.
Depending on your individual enterprise needs, the appropriate vendor can eliminate the experimentation and ensure that you have a private, usable chain within days, so there’s little disruption to your day-to-day operations.
Blockchain has already made a big splash in the finance and investment space, given the early use cases for cryptocurrency, tokenization and ICOs. It’s now its infancy for business use, but is quickly maturing. Before long, more and more businesses will be transitioning into the blockchain model to adapt to the changing landscape. Like the internet, blockchain could take years of experimentation to find the ideal model for a particular business or industry vertical, so it’s essential to start early and stay ahead of the curve.
The Business of Blockchain Event Series offers education on enterprise blockchain implementation, including case studies, customizable hands on workshops, and a variety of themed tracks to ensure your educational goals are met.
Hundreds of industry experts from across the world are interviewed to find you the best in the business of blockchain. From creators of new blockchain based technologies and decentralized applications, to industry leading consultants, experts and investors funding ICOs, this event series has gathered the cream of the crop, in order to deliver an unmatched educational experience.
To learn more, check out:
- Blockchain ID for Enterprise - Virtual Conference (July 24)
- Blockchain Health - Washington DC (August 14-16, 2018)
- Blockchain East - New York (October 8-10, 2018)
- Blockchain West - San Francisco (March 2018 TBA)