You've most likely heard what blockchain can do, or will do, to your industry. The massively disruptive technology will turn the world as we know it upside down, and if you're not on board, you're getting left behind.
However, there is a difference between touting blockchain as the most revolutionary technology, possibly in our lifetime, and then understanding why that may be.
For that reason, instead of telling you the outcome of your company, your market, or your industry, we will provide you with the knowledge you'll need to decipher whether implementing blockchain technology will work for your business. This isn't to say that we agree or disagree with the points that we will provide (to go in depth for each point would make this post unreadable), we are simply presenting both sides so you will be able to perform further research if you choose to do so.
Disclaimers aside, let's get started.
Really though, what is _"enterprise blockchain"_
So when people refer to "enterprise blockchain", what do they really mean? Let's focus on just a few, key elements that are foundational for any business, but can severely effect project scaling on an enterprise technology level.
- Resiliency: This is different than just being reliable, for your software to be resilient it needs to be able to recover from failure, while remaining functional from a user's perspective.
- Security: Consider dealing with hundreds, thousands, or even hundreds of thousands of data points that correlate to people's personal information. Or perhaps you utilize extremely important formulas or specific processes that need to be secured. Your businesses information needs to be protected against data breaches.
- Performance: If hundreds of people, perhaps around the world, are trying to access your company's system, you need it to run efficiently. Think of a payment processor, how much sense does it make if it takes 30 minutes for a transaction at a coffee shop to process (kind of an issue with some some cryptos today).
- Functionality: Why would you bother to change systems if the new one did not offer ways to further improve your internal processes or customer experience? Today's society expects increased functionality, on a simple to use system, at lightning fast speeds - not always the easiest product to deliver.
- Scalability: As personnel, processes, or infrastructure changes, systems need to adapt as well. Your solution should solve existing problems, while also being able to address future issues.
After considering some of the most integral aspects of enterprise software, it would be safe to assume that people expect blockchain technology, sometimes with the use of a cryptocurrency, to improve upon the elements listed above. We've listed some of the reasons why people believe that blockchain and cryptocurrencies can achieve efficiencies for the points above, as well as reasons why that may not always be the case.
- Pro: Due to blockchain technology's peer-to-peer, decentralized system design, a single point of failure will not cause the entire system to shut down. There are multiple copies of the system that are distributed, potentially worldwide. They are not backups, saved at a particular time and missing data from a certain point on, they are real time, full instances of data.
- Con: You do not have to build a decentralized system on the blockchain, you can create private blockchains that still have centralized ownership. These usually only use trusted, pre-determined nodes for verification, and because there are less nodes, the system is less robust.
- Pro: The more distributed your network is, with more nodes that verify information being written to the blockchain, the more secure your information is. Why? Because it's harder to infiltrate and gain power over the network. Hacking into certain systems can be an expensive and difficult task.
- Con: It can be an easy task if your system is not built well. Errors or loopholes in code can make a system susceptible to hackers, and there is no insurance in the blockchain ecosystem.
- Pro: Blockchains provide an open system where real time transactions are visible to everyone in the network, meaning everyone has the most up to date information. In situations where important decisions are made based off real time, worldwide data, like at an airport, this kind of live data stream would be revolutionary.
- Con: Every entry has to be verified by full nodes, which can be a slow process. Verifications happen every ten minutes on the Bitcoin network, and while other networks can achieve consensus and write to the blockchain faster, this can be at the expense of security. To understand the reasoning behind increased latency and decreased security, refer to the CAP Theorem.
- Pro: Blockchain's immutable ledger can remove rendundent processes, and since the technology verifies information using consensus, information written to the blockchain is already audited. Smart contracts also allow for actions to autonomously execute, removing the need for human interaction and potential error.
- Con: Again, smart contracts needs to be coded correctly or they can easily be hacked, or execute incorrect steps. You also want to make sure that data that is being written to the blockchain will not need to be changed later on, immutable = unchangeable. Most importantly, not everything needs to be on the blockchain, trying to implement blockchain into every aspect of a business to improve functionality can be a costly mistake.
- Pro: Scalability has been a well known issue for blockchains since day one, which also means that people have been working to solve it for just as long. Solutions exist today that allow for enterprise grade blockchain technology, the trade-off being that they are usually not decentralized since existing Fortune 100 companies are building their own blockchain products. However, major blockchains already have solutions in production to solve problems with scalability.
- Con: You've probably heard of the excessive amount of power used by the Bitcoin network (said to be unsustainable), the wait time for verifications, and the cost for running the nodes necessary to verify transactions. It's worth noting there are projects built to solve these issues, but a truly decentralized, peer-to-peer network will have to overcome these problems.
Answer: An enterprise blockchain solution serves to improve upon existing software and processes used at large scale companies by implementing new technology.
One of the hundreds of maps you'll find laying out the legality of bitcoin.
On a world map, the image above lays out the legality of cryptocurrencies in certain countries, because this is easier to track than usage of blockchain tech. As mentioned previously, a blockchain doesn't necessarily need a crypto to operate, although the two are usually pretty intertwined. Enterprise solutions usually do not make use of a cryptocurrency, but major companies may want to create products that use crypto. If you want to run a public blockchain and use the Proof-of-Work consensus algorithm, you'll need to incentivize miners to operate your blockchain, this is usually done through cryptocurrency rewards. So if crypto is banned, it could affect your ability to run a blockchain.
Worldwide, there are several countries that are traditionally known to be more friendly towards blockchain and cryptocurrency projects. Some examples, in no particular order, include: Japan, South Africa, South Korea, Denmark, UAE (Especially Dubai), Malta, Sweden, United Kingdom, Canada, Switzerland, Singapore, and Germany.
If we wanted to look at where blockchain tech is being implemented in terms of industries and designations, we're seeing massive movements in:
- Banking: Decentralizing the money supply through the use of a digital currency, ultimately removing intermediaries and allowing for peer-to-peer, low fee transactions. Essentially a self-sovereign system where a third party does not control your wealth.
- Real Estate: Buying and selling real estate using smart contracts and cryptocurrencies is already happening.
- Advertising: Removing intermediaries that have muddied the waters in terms of ROI and polluted the digital advertising space with bots and scams. Claims such as free range, sustainable, or fair trade could also be verified using supply chain management.
- Law: Introduction of smart contracts to process simple contractual agreements.
- Supply Chain: Tracking and verification of assets throughout the manufacturing and distribution process to ensure quality in a verified, and sometimes public, database.
- Education: Blockchain verification of degrees or certifications to discourage fraudulent claims.
- Exchanges: The creation of entirely new, cryptocurrency exchanges that allow for peer-to-peer transactions from crypto to crypto, or even crypto to fiat.
- Voting: Identity verified voting systems that can reduce corruption and ensure that civilians have a fair and honest ability to vote in elections.
- Music & Entertainment: Maintenance of ownership and distribution rights as well the ability to collect royalties in a transparent and autonomous way.
- Loyalty Programs: User friendly programs with tokenized rewards that allow for the redemption of crypto that can be; spent at any stores that accept it, redeemed for prizes or offers from businesses, or to simply cash out into fiat.
Answer: Enterprise blockchain solutions are being implemented worldwide and in a variety of industries.
So at this point, you're either thinking, "why in the hell would I want to do this?" or "interesting, what will blockchain technology do for me?"
Either way, here are some reasons why blockchain can be an efficient solution for businesses:
- Save Money: Remove redundant processes and improve efficiencies while eliminating human error from data entry. If you were to write out the entire process taken by your employees in order to complete a task, odds are you will run into a few unnecessary repetitions and bottlenecks. Data entry and auditing are just a couple examples of prime tasks for blockchain disruption.
- Enhance Transparency: Improve your company's brand by creating an open and transparent record of transactions. Even in private blockchains, the integrity of financial data is much higher, and today's consumers trust organizations, government, and media less than ever before - being transparent is a way to stand out for positive reasons.
- Verify Resources: Make sure that your manufacturing or supply processes use the highest quality inputs that meet user's expectations. Again, consumers are concerned with what's going into their products and how eco-friendly they are.
- Increase Security: Implement systems that, when built correctly, become less susceptible to hacks, manipulation, and fraud. Data security has been in the news for months now since huge tech companies are having their weaknesses and data breaches exposed to the public.
- Decrease Fraud: Either inside or outside of your company, employees or third party entities will have a harder time faking documents or creating counterfeit assets. Not only can this save you money, but it will also ensure that fraudulent products aren't ruining your brand's reputation. For example, a tag can be placed into a garment that, when scanned, details the garments production journey.
- Go Paperless: Digitalize your internal processes to step away from error ridden, inefficient paper reporting to trustless data gathered by sensors and verified by consensus.
- Maintain Ownership: Register the ownership of assets in an immutable and time stamped ledger. Think copyrights, securities, and real estate titles.
- Decentralize: Create truly decentralized and open source projects that involve the community.
Answer: Blockchain technology can fundamentally change a business' processes to create more efficient and higher quality outputs, however, it can also be used in smaller, specific instances through integration into existing systems and improving particular aspects of an organization.
If you're still with us, now may be the time when you're asking yourself "has this ship sailed? Did I miss my chance?" Ask anyone when you should implement blockchain tech and they'll say "6 months ago" or "now". Realistically, jumping on this bandwagon without doing your research will cost you. Can blockchain save you money in the long run? Absolutely! Is it inexpensive to implement? That depends, but usually no. Considering the following before you dive head first into blockchain.
- What are the problems you're trying to solve and how do you plan to solve them?: List and rank your top priorities in order, with a system switch, you may not be able to achieve all your goals at once. Put your needs in order of importance and focus your plan with key metrics that represent success.
- Do you have the manpower to do the work, or the knowledge to hire: You need experienced developers who can execute on your project goals. This is tricky because I love when you see people who have been in the blockchain space for 12 years...buddy, it was invented in 2008. So do your research there, know what you want to implement, what skills you need to do so, and a general idea of what you want. As developers, we don't expect you to know the ins and outs of systems, but it doesn't help us or you if you're trying to use tech just because it's a buzzword.
- Are there legal and regulatory boundaries: There are going to be, this is a new space and laws are the last thing to be updated when there are changes in the world. Take GDPR for example, never heard of it? Check out our post about it. Talk to a lawyer so you can judge whether or not you are prepared to deal with potential issues that may arise in implementation. See if you can find a lawyer who has done more than just Googled "what is a blockchain", again, this will come at a decent expense.
- What is your breakeven point: Obvious, but worth noting. Implementing blockchain tech may save you money, but if you spend more money implementing it than it can ever recover for you... not good.
Realistically, this industry is quite young, if you were to start implementing blockchain technology you would be amongst early adopters. It's always easier for major corporations who have the money and personnel available to implement these kinds of changes, but don't let that deter you from researching the developments and learning how it will affect your organization.
Okay, so you have a couple options here:
Find an Out of the Box Solution
As we mentioned earlier, there are already massive corporations like IBM, Microsoft, and JP Morgan that have built enterprise blockchain solutions and are working with companies to implement them. They have built their own technology (sometimes altering existing code) and have teams of developers, specialists, and solutions architects on staff to cater their product to your needs. You can also use their products without their guidance to create your own solution. These solutions are designed to span across the industries listed above, plus more, for example:
- Working in Finance? Look at Quorum.
- Focus on cloud computing? You may be interested in Azure.
- Want to integrate distributed ledgers and blockchain technology across a variety of industries? Check out some of Hyperledger's many projects.
Hire Staff to Develop your Own Solution
We touched on this in our answer to "when", you can create your own blockchain department that will be able to develop solutions that work for you, but you need to have some knowledge to know what to hire. Maybe you outsource the hiring, but to be honest, a lot of the developers who truly understand this space realize how scarce their skills are, and charge for it. There's nothing wrong with doing it yourself, just err on the side of caution when hiring.
Use a Third Party to Develop your Solution
You could outsource just the hiring of your team, or you could outsource the entire team. Many companies now tout their development and marketing services for companies looking to integrate blockchain into their everyday operations. Out of the three, this may be the most reasonable solution if you a) don't have the capital to use expensive, out of box solutions, and b) don't have the knowledge to hire your own team. Verifying the capabilities of a company that has existing client work can give you an idea of what they can do for you and their experience in the space. In the end, you could potentially save money while executing a process simpler than onboarding new hires.
Answer: There are many sources that provide enterprise solutions, you could do the implementation yourself by creating a team or using an out of the box system, or you could hire a company that will take care of the development for you.
This is a whole article in itself, thankfully we've already created a nifty report on implementing blockchain tech.
Hopefully we've provided some basic concepts and information that can help you with your exploration into this space. Our main takeaway would be this:
If you want to implement blockchain technology into your business, the first step is to prioritize the issues you want to tackle, and then research how blockchain and cryptocurrencies may be able to solve them for you.
From there, development and implementation of a system will be dependent on your ability to hire proper talent and train your team on new processes or perhaps a new system. As our report outlines, the implementation of large technology projects are not always successful and can be an extremely time consuming and expensive process.
Your best bet...go into it prepared.
Coinaccord is a Canadian Blockchain Venture Studio that strives to create entirely new and decentralized models on a global scale. As a company run by humans, we want to know if we’ve made a mistake. Do we need to make a correction or do you have a different point of view on the topic? Let us know in our Medium comments.