COVID-19 has acted as a catalyst, pushing businesses worldwide to adopt innovative digital solutions in order to combat the effects of the pandemic. As we acclimate to hybrid ways of working, it is imperative for organisations to understand the potential for emerging technologies such as blockchain, to add value to digital transformation initiatives.
Even without the pandemic as a factor, the explosion in global trade that we witnessed in recent years is evidence of a pivot in consumer preferences for digital platforms for all aspects of life including leisure and work. As such, traditional transaction models will no longer be adequate.
Data security therefore, is an increasingly important factor in driving digital growth. Technologies like blockchain, or Distributed Ledger Technology (DLT) solutions, provide one of the most robust services to ensure data security, transaction authenticity and traceability while sharing data across global trade channels. Research reveals that global spending on blockchain-based solutions will reach $11.7 billion by 2022. But before investing in DLT, organisations must first understand how exactly it will accelerate digital transformation.
To gauge how DLT functions in these settings, businesses must understand that blockchains come in two forms: public and private. Take cryptocurrencies as an example. Blockchain applications in cryptocurrencies rely on “public permissionless” networks, where all parties have equal rights to transaction creation and validation, as well as the ability to produce new blocks. “Private permission” networks, on the other hand, are most relevant to enterprise applications, mostly due to the confidentiality it offers - a crucial factor for corporate data sharing. As blockchain provides permanent records of data, this offers traceability across all stages of a business process. This creates total transparency for processes like material sourcing within the manufacturing industry.
To understand blockchain's capabilities, it is useful to note that its value is rooted in its ability to share data instantly in a secure manner. Blockchain is a digital ledger of transactions with unique characteristics that are virtually impossible to replicate for fraudulent purposes. It records information and is independently verified by peer-to-peer computer networks, without the need for third parties. In simple terms, it is a time-stamped series of immutable records of data that is managed by a cluster of computers not owned by any single entity. Each node in a blockchain network is validated and bound to one another using cryptography, making it resistant to modifications and in turn, incredibly secure.
Many associate blockchain with its first and most famous application - Bitcoin. While it is most commonly used in cryptocurrency, there are many other commercial uses for blockchain, including optimising real-time IoT operating systems, monitoring supply chain and logistics, and even personal identity security.
Historically, individual traders have led the charge when it comes to blockchain through crypto trading. While it has continued to gain momentum, blockchain in industrial applications has also witnessed growth, particularly in the banking, financial services and insurance (BFSI) sector. In fact, 77% of global financial businesses adopted blockchain-enabled services as part of their system and processes as of 2020.
