More and more organizations plan “to do something” with blockchain technology, but often struggle to identify use cases. Before you can see its potential applications, you must understand both blockchain technology and your organization’s transactions in depth. This three-part series explores ways to find blockchain use cases, beginning with the problems it can solve.
Blockchain is a foundational technology. Although it has the potential to fundamentally change our economic and social systems, there’s still a considerable gap between the technology and its solutions. As with most scientific discoveries, you won’t immediately see the relevance of blockchain until it evolves into practical applications, which could take many more years. For example, in healthcare, medical breakthroughs aren’t immediately available for patients because these discoveries must first go through the barriers of regulations, legislation, business-model adoption, and acceptance by users. Likewise, with blockchain.
You do not need to understand blockchain completely to bridge the gap between the fundamental technology and its application. What you do need to know is that blockchain is a “distributed ledger” in which transactions between two parties are recorded without a central authority. Those records cannot be changed and are verifiable by everyone. The other basic thing you need to know is that blockchain technology can execute transactions automatically when certain conditions are met. These conditions are written into “smart contracts” which can execute functions programmatically.
So, from a technical perspective, blockchain solves the double spending problem by preventing someone from selling the same asset twice. From the business perspective, it ensures trust between parties and transparency. The transparency avenue is worth investigating when searching for potential use cases. For example, the Facebook hearing of April 2018 created a heightened awareness of how companies use and sell user data. One possible blockchain use case could be to offer services with anonymized open data, to build trust with clients.
Finding Use Cases
Every business has trust issues. Otherwise, you could write blank checks to your suppliers without verifying their deliveries and let your customers leave without seeing what they took from your store. Blockchain technology can help you solve trust and transparency issues in a cheaper, more effective and reliable way.
For example, all the different interactions you have as an organization are actually transactions of information. If the information contains value, the transactions are at risk. Blockchain can reduce that risk by making the valuable data generated in a supply chain process tamper-proof.
Not Only Financial Transactions
Because of all the hype around Bitcoin and cryptocurrencies, blockchain technology has become almost synonymous with financial transactions. Indeed, organizations can use it to
pay employees and suppliers using smart contracts that contain a set of rules. But there are many other applications for blockchain technology beyond financial transactions.
Businesses can use it to manage employee access to their systems; governments can use it for voting and training; institutions can use it for certifications. It could also disrupt successful, platform-based applications like Booking.com, Airbnb, Foursquare, and Uber. For example, it could completely change Airbnb’s business model if a homeowner and renter could use smart contracts to establish trust, manage ratings, payments, disputes and so on. Notaries and platforms won't be made obsolete, but the roles will fundamentally change.
In the next two articles we cover your business transactions in depth and discuss the different ways you can use blockchain to establish trust.
Read also part II: How blockchain technology makes platforms obsolete
Want to learn more about our vision about blockchain technology and what we could add to your business? Feel free to get in touch!