Blockchain technologies in businesses

Abstract

Over the past two and half decades digital technological innovations have tremendously impacted the world of business. Blockchain technology and its imminent adoption is another giant step in revolutionising the way businesses are carried out. The blockchain is a distributed account ledger which maintains an immutable trail of transactions on a decentralized platform. What started as a new data structure for a peer to peer currency network is now being analysed and talked about as a game changer technology across various domains. Blockchain can be used to record and maintain an immutable log of business transactions between two or more parties without the requirement of a third party intermediary. Transactions are transparent, democratic and are approved through a consensus mechanism. Security and trust are the backbones of a Blockchain as transactions once approved cannot be changed without the consent of the majority of its participants. Innovative applications of Blockchain in the past years like the use of Blockchain to validate a piece of art, to check the quality of food produce and to incentivize usage of renewable source of energy give us a glimpse of the potential of this technology. Blockchain protocols available currently are capable of executing smart contracts and running decentralizes autonomous organizations. This capability of a Blockchain has the potential to disrupt the governance of organizations. Decision making is trusted to an algorithm with no opportunity for a human to meddle with the process. Whether this concept will find acceptance in a business organization is still to be seen. Blockchain has the potential to bring in efficiency, cost reduction and security in industries with a high dependence on the audit trail. Industries with a high inventory in transit and high-value goods like diamonds will be revolutionised by the use of Blockchain. Blockchain will also see a large scale adoption in industries where trust is currently being established through third party intermediaries. By removing the need for third party intermediaries, Blockchain reduces the cost of operations and smoothens regulatory procedures. The interest for the technology seems to be well spread with bluechip companies and start-ups taking equal interest in understanding the technology and finding suitable use-cases. However, like every new technology Blockchain has its own challenges to overcome. In its current avatar, the technology is not scalable. Transaction speed is also an issue as each transaction gets added to the Blockchain only after it goes through the consensus mechanism. There are regulatory concerns around the legality of the use of Blockchain in certain domains. The negative PR which the technology has received specifically due to its use in illicit trade also acts as a deterrent. Finally, deploying Blockchain to manage your process is not an increment move and hence will require a massive change in the way man and machine have been configured in the industrial world. Are businesses ready to pay this switching cost to adopt a new technology is something which only time will tell.