How Enterprises Can Integrate Blockchain into Business
In 2016, blockchain technology came close to hitting its peak on Gartner’s annual Hype Cycle, signaling an imminent shift from an emerging, theoretical technology to widespread adoption. Like cloud, big data, and the Internet of Things (IoT) before it, blockchain is the tech industry’s latest Next Big Thing. Analysts and industry experts say it holds immense potential for organizations, but many business leaders don’t yet see a practical application for their operations. While a lot of people know blockchain is the technology behind Bitcoin, Ethereum, and other cryptocurrencies, what about enterprise applications in other industries?
What exactly is blockchain?
The code that makes up blockchain is incredibly complex , and only a few thousand people understand it. On a high level, it’s a data structure supported by peer-to-peer (P2P) protocols that form a distributed, decentralized transaction ledger. Every member on the community network uses the same “consensus mechanism” to verify every transaction made through the network, creating
a unique, permanent audit trail. Thanks to the distributed nature of the blockchain, there’s no single point of failure, and no way to make modifications to the transaction record.
You may start to hear a new acronym—DLT, or Distributed Ledger Technology . Many experts think 2017 is the year blockchain technology will gain traction in the enterprise, and new mainstream understandings about the technology will lead to high-value applications and process simplifications as general adoption trends progress to line of business solutions.
It’s important to understand that blockchain isn’t a technology layered on top of existing infrastructures in order to tweak the way business is done. It requires a different way of thinking and an entirely new approach to business. There are no middlemen involved in a blockchain transaction to facilitate and verify the exchange; it’s all done instantly on the distributed network, with the record of transaction logged permanently in the database. It’s a machine-to-machine process that has no human touch points once the transaction is entered.
Enterprise use cases
Blockchain is the next iteration of the connected enterprise. It’s the next logical step in a data sharing ecosystem in which every process is now—or will soon be—digital. The amount of data we have to process is overwhelming. As IoT takes hold, connected smart machines and devices will exchange information and execute automated tasks.
Blockchain is already used in a handful of applications including cryptocurrency . This year, as more people set their minds to understanding the technology and finding creative applications, we will see a sharp increase in new use cases in industries as diverse as agriculture, finance, healthcare, energy, and manufacturing.
Supply chain The immutability of DLT makes blockchain suited to banking and finance, which is why the first mature applications, such as Bitcoin and Ethereum, are in this space. The responsibility for verifying and securing the transactions shifts from a central authority to the distributed network, and the ledger is public, which increases transparency. But you don’t have to deal in cryptocurrency in order to find a fintech application for blockchain. The real promise for enterprises lies within the supply chain. Because transactions happen in real time, sales order processing, inventory management, and accounting work more closely together and at significantly increased speeds.
Picture this: a women’s apparel retail store does a booming business in a particular line of handbags. The store’s inventory management system sends a purchase alert when it’s time to order, and through the blockchain, the application sees available inventory and triggers a sales order.
