Blockchain technology has become the technology solution of “trust” and a key driver for digital transformation. But before businesses can develop a blockchain adoption strategy for their organisation, it’s important to understand what makes this shared digital ledger so unique, how it can be used outside of crypto use cases to support specific business needs and the capabilities it can offer to some of the fastest-growing sectors in the industry.
Increasing Efficiency by Cutting Out the Middle Man
Disruption is all about increasing efficiency by cutting out the middle man and directly connecting two individual people or companies who want to do business. Blockchain was originally developed to support cryptocurrency, which removes banks from the middle of a transfer of funds between two parties. Today, blockchain is eliminating a third party in an astounding assortment of industries by establishing an unprecedented level of trust.
Greater Trust Means Greater Efficiency
Imagine what the business world would be like if everyone completely trusted everyone else to deliver exactly what they said they would. There would be no need for cumbersome validation processes. With blockchain, there is no chance of human error or false identity. When a bank, a manufacturer or a supplier knows that they can absolutely trust the identity of the person they are transferring funds to, the data they are getting from a sensor is valid or the amount of electricity a consumer is using and being charged for is correct, it eliminates a giant, unwieldy, human-led part of the transaction process and allows everyone to get business done faster and more efficiently.
With blockchain, all participants in the ecosystem are vetted. The blockchain ledger cannot be changed, except by consensus, and it is immune to tampering. For example, if two parties agree upon a smart contract to ship 100 items, blockchain technology ensures that 100 items are shipped, there is automatic confirmation that 100 items are received and payment to both the vendor and the shipper is transferred instantly. Processes that could take days or weeks to reconcile, involving a large number of human participants, are resolved in moments.
Blockchain as a Stepping Stone for Digital Transformation
Because all participants are vetted and their identity is confirmed, blockchain is ideal for high-security environments like banks. One government bank in Europe wanted to implement blockchain as part of their digital transformation, so Lenovo has been working with the government to establish a digital identification system that will be used by governmental agencies and commercial banks throughout the country and has already implemented the architecture of a new blockchain platform.
Advancing the IoT Revolution
Blockchain has ramifications for other aspects of business, especially when incorporating the Internet of Things (IoT). One of the issues with IoT is the increasing security risk of the billions of devices that will inevitably be deployed and operational within the next year. It is much harder to secure devices on the edge, especially with so many of them. A decentralised security system like blockchain is what is needed to make sure those devices aren’t hacked. With blockchain, the IoT revolution can continue, safely.
At Lenovo, we are working with a drone company that is combining a blockchain solution with artificial intelligence (AI) in an IoT context. The drones scan sensors on things like wind turbines and transmit that data back to a central office to be analysed. Blockchain technology guarantees that data is accurate, time-stamped and secure. The end user’s insurance company no longer needs to insert itself into the process to validate the data, and a human doesn’t have to go near dangerous equipment such as wind turbines to inspect it.
Business Transparency Enhances Consumer Trust
While blockchain uses trust to enhance security and safety, some companies also see a business opportunity to create a better customer experience. Providing transparency into business processes makes customers feel like they can trust that business, especially when combined with giving the customer more control. Blockchain makes both of these things possible. For instance, a company in Germany is developing blockchain-powered refrigerators that will allow consumers to not only monitor their refrigerator’s electricity usage, but also choose where that electricity comes from (wind farms, solar, etc.).
Transforming the Supply Chain
The supply chain is yet another area where blockchain is cutting out middle men, speeding up the process and giving more control to the consumer. A company in Seattle, Washington is using smart contracts to let consumers track their coffee from the bean in the field to their cup. This not only ensures that consumers are getting what they paid for, it even allows them to choose which farmers to buy from. Coffee bean farmers will be able to watch the same process, seeing where and for what price their coffee is actually being traded, eliminating fraud and confusion. At Lenovo, we’re using blockchain to transform our enormously complex supply chain and make it more efficient.
We’ve only just scratched the surface of blockchain’s potential for business. The key to transformation is knowledge of how this technology works and is evolving. As customers consider embarking on a blockchain journey or adopting new solutions to bolster existing capabilities, they should always be thinking about how solutions can be customised to fit the future needs of their business for an ever-increasing competitive edge.