What do you think of when you hear blockchain? The term cryptocurrency leaps to mind for many people, but that definition fails to represent the breadth and depth of blockchain today. Over the past several years, practical blockchain use cases have emerged as organizations worldwide recognized blockchain as a tool to help solve real-world problems such as food waste, supply chain inefficiencies and fraud.
Blockchain provides a public ledger that is secure, distributed, traceable, and unalterable. There are many use cases across a wide variety of industries that would benefit from this type of ledger. Retailers, manufacturers and logistics companies we talk to are excited about the opportunities for process improvement that blockchain provides.
Practical applications are in use today
Walmart and IBM lead the development of Food Trust, a digital system for tracking and tracing food between retailers and suppliers. Today many global companies such as Carrefours, Nestle and Dole are partners in the trust. Blockchain helps these companies create a tracing solution to quickly identify the source of any food problems while preventing large volumes of good food from being destroyed. Blockchain also combines with other technologies like mobile to provide consumers with essential information. For example, scanning a QR code on a package can access data from the blockchain that verifies if the produce is organic and where it was grown.
During THINK, The Home Depot described how blockchain allowed the company to identify where inventory is in the supply chain and if it’s time to pay its suppliers for goods and services. In luxury goods retail, brands such as LVMH and DeBeers use blockchain to help stop counterfeiting and trace supply chains from raw material to the retail shop.
The shipping and trading still heavily rely on manual and paper-based processes, which are very costly, slow and error prone. Blockchain allows a company to view the origin and route of components and products as they move throughout the supply chain. Maersk, CSX and Global Container Terminals Inc are just a few of the logistics companies participating in blockchain called the TradeLens platform. Supply chain partners (e.g., cargo owners, ocean and inland carriers, freight forwarders and logistics providers, ports etc.) use the blockchain to securely provide permission-based access for sharing millions of shipment events and documents, such as cargo details, trade documents, customs filings, and sensor readings.
Insurance companies can use blockchain to record contracts and claims, making it easier for insurers to eliminate invalid and duplicate claims. An example of blockchain in action in insurance is openIDL, a group of insurance companies and the American Association of Insurance Services that came together to automate insurance regulatory reporting and streamline compliance requirements.
Given that blockchain provides a way to securely and efficiently create a tamper-proof log of sensitive activity, Lopez Research expects to see more use of blockchain in areas such as digital identity, voting, patient health data.
Companies can overcome challenges with proper planning
Yet, blockchain isn’t a product that you pick up at the grocery store. Blockchain is a tool that enables a broader digital transformation, which means the most significant challenge with blockchain isn’t the technology. A successful blockchain implementation requires a set of companies to agree on a business process change.
These companies form a network and must decide on a common set of standards and the scope of the problem that they are trying to solve. Additionally, the group must nail down security and governance guidelines for the blockchain. For example, who has access to the ledger, and how is access controlled? However, none of these challenges are insurmountable, and the rewards of adding blockchain outweigh the challenges.
Simply tire-kicking blockchain leads to poor results. Companies with successful blockchain deployments focused on addressing a specific problem and defining what success metrics should be measured. Vendor selection also matters. Companies should look for vendors with industry expertise and experience with building enterprise systems. There’s a high likelihood that your company will work with a systems integrator to help define both the process and technical aspects of the blockchain.
Leaders have demonstrated the value — it’s time to act
Blockchain has evolved from a speculative currency model to a foundational technology that delivers real business value. Blockchain, when architected correctly, improves regulatory compliance, reduce paperwork and shrink costs.
Blockchains minimize friction and simplify the process of trade. Examples like those from The Home Depot, Maersk and Walmart highlight why blockchain continues to gain traction and acceptance in more industries.
I look forward to the future ahead.
Founder, Lopez Research
(The article is published by IBM blog)