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Businesses need to act now to ensure they are ready to take advantage of the potential of blockchain in the future economy
For years, blockchain has been touted as the technology that can revolutionise the world. By now, most people in the corporate world have probably heard of blockchain, but many would struggle to accurately describe what it is, or the potential benefits it could bring to their business.
But this is a topic every business leader needs to understand sooner rather than later, if they are not to find themselves in the same position they likely were when Covid-19 hit: woefully underprepared and forced to overhaul their processes almost overnight to ensure their survival.
Business benefits of blockchain
There are several ways in which organisations could potentially make use of blockchain. One of the most obvious is through the transparency and traceability it offers, courtesy of the distributed ledger technology on which it is based. This enables transactions and data to be recorded in multiple locations, and for all authorised people to see the same information in real time.
From a supply chain perspective, this offers huge benefits, including seeing exactly where components are and where they have come from – something that will be increasingly important as the need for full transparency in sustainability grows. For example, transparency and traceability throughout the supply chain enable companies to demonstrate their sustainable and ethical credentials for net zero claims.
The decentralised nature of blockchain also makes it inherently tamper-proof, as all members in the network have a copy of the same data. This means it can act as a single source of proof around which businesses can operate, overcoming the issue of multiple sources of recording information and complex supplier networks.
This can give businesses the confidence to release payment to suppliers, for instance, in the knowledge that items have been despatched, and for the greater use of smart contracts, allowing businesses and their partners to automate aspects of an agreement when certain conditions have been met without the need for manual intervention.
“This can change a lot of business processes, streamline overheads and ensure fulfilment,” explains Lone Fønss Schrøder, CEO of blockchain firm Concordium. “Smart contracts enforce the terms of a contract via code, ensuring commitments are fulfilled transparently, traceably and irreversibly. It’s now possible to do this without the need for specific coding capabilities which will expand the use of such contracts to more businesses.”
The immutability of blockchain data can also help in other areas where trust is vital, such as the use of autonomous vehicles, decentralised finance applications, demonstrating rights ownership in art or music or voluntary carbon markets. Taken together, all this can create a sense of trust and accountability between different entities, leading to simplified and more effective business relationships.
Yet despite the obvious benefits, many businesses have so far failed to take advantage of blockchain. There are a number of reasons for this. Perhaps the biggest deterrent is the lack of clarity to the regulatory and compliance implications of deployment, as well as questions of ownership and interoperability with other technologies.
Many blockchains allow users to operate under pseudonyms, meaning some platforms and cryptocurrencies have come under scrutiny for money laundering and terrorist financing. Regulators are increasingly concerned about its potential use for tax evasion, meaning there is a need for applications and services to be built on blockchain infrastructure that readily complies with both existing and potential regulations.
Businesses may also find it hard to identify blockchain’s best potential use case or be unsure as to which platform will provide the best match in areas such as security, privacy, scalability, integration and customer experience. Some will have practical concerns too, relating to performance, data governance, enterprise architecture, change management or business process design. It can also be difficult to make the first move in creating a consortium, or deciding whether to join an existing one.
Some organisations have also been through expensive and complex technology projects recently – such as overseeing a migration to cloud applications – and lack the corporate desire to go through such a process again, particularly if there are concerns that this may not be a long-term solution. The fear of the amount of communication, interaction and change management involved can be a mental barrier for many.
Facing the future
The next generation of blockchain, though, is already upon us, with a greater focus on enhancing security, scalability and load-balancing to create a more robust and business-focused platform. It also incorporates an ID level at the protocol layer and guarantees privacy through Zero Knowledge Proof cryptography, going above and beyond current regulatory requirements.
Embracing blockchain is not something that can be done overnight, so it’s important businesses start to think about it now. “We all know, especially in the corporate world, how long it takes to implement new technologies into our roadmaps,” says Schrøder. “There’s a long learning curve, and this will transition the industry over the next five years. Businesses need to be front and centre of that.”
Concordium’s open-source, decentralised blockchain technology is the first with layer-one ID built into the protocol to ease regulatory compliance. This offers unrivalled security, privacy, transparency and peace of mind to forward-thinking businesses and application developers.
To find out more about how Concordium blockchain could help your business, visit Concordium
Originally published on Business Reporter