The 3 traps when it comes to blockchain and business – and how to avoid them

blockchains

(Stanislaw Zarychta, Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Rajesh Dhuddu, Global Practice Leader for Blockchain, Tech Mahindra


Blockchain was first introduced in 2009 with the launch of its first application, Bitcoin. In its simplest form, blockchain is a decentralized digital system of record in which untrusted parties can share a digital history and reach consensus without an intermediary. It is comprised of a time-stamped series of immutable records of data that is managed by a cluster of computers that are not owned by any single entity. Each of these blocks of data is secured and bound to one another using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp and transaction data. By design, a blockchain is resistant to modification of the data.

 

During myriad conversations with global chief experience officers (CXOs), I realized that many of them are not fully confident in their understanding of blockchain. Here are a few of the most common misbeliefs and traps that decision-makers need to disregard when considering blockchain for their respective businesses:

1) “Blockchain is all about cryptocurrencies, particularly Bitcoin or Ether. We cannot internalize cryptocurrencies in our businesses”

This common belief is incorrect. Blockchain has several versions – public and private – the most known examples are Bitcoin and Ethereum networks where everyone (nodes) has equal rights to transaction creation and validation, data access and producing new blocks.

Cryptocurrencies rely on the “public permissionless” version. There are other versions like “public permissioned” where anyone who meets certain predefined criteria can download the protocol and validate the transactions, and parties joining the blockchain network will need prior permission.

“Private permissioned” may be most relevant for enterprise applications with respect to privacy. Every node or participant in a blockchain network is pre-selected and validated. These are usually implemented in a consortium model and used for situations that require collaboration between businesses. There are no cryptocurrencies; mining is irrelevant here.

For example, an enterprise could set up its own blockchain network to accomplish network effects and obtain business collaboration between its suppliers, partners and customers for procurement and delivery of goods. Suppliers and partners belonging to another enterprise could not join this private chain.

India

What is the World Economic Forum’s India Economic Summit 2019?

Under the theme, Innovating for India: Strengthening South Asia, Impacting the World, the World Economic Forum’s India Economic Summit 2019 will convene key leaders from government, the private sector, academia and civil society on 3-4 October to accelerate the adoption of Fourth Industrial Revolution technologies and boost the region’s dynamism.

Hosted in collaboration with the Confederation of Indian Industry (CII), the aim of the Summit is to enhance global growth by promoting collaboration among South Asian countries and the ASEAN economic bloc.

The meeting will address strategic issues of regional significance under four thematic pillars:

• The New Geopolitical Reality – Geopolitical shifts and the complexity of our global system

• The New Social System – Inequality, inclusive growth, health and nutrition

• The New Ecological System – Environment, pollution and climate change

• The New Technological System – The Fourth Industrial Revolution, science, innovation and entrepreneurship

Discover a few ways the Forum is creating impact across India.

Read our guide to how to follow #ies19 across our digital channels. We encourage followers to post, share, and retweet by tagging our accounts and by using our official hashtag.

Become a Member or Partner to participate in the Forum’s year-round annual and regional events. Contact us now.

2) “Blockchain is emerging tech, it’s cool. Let us implement it for tech’s sake”

Some companies approach blockchain purely because of their fascination with technology. This is a recipe for failure. Blockchain implementations should be led by business outcomes. The tech led fixation has been fed by the software and platform industries releasing ever more advanced versions with emphasis placed on the technical features. Blockchain implementations, both public and private, however, are and will be successful when they are implemented to:

1. Provide a new experience to end customers;

2. Meet unfulfilled or under-served needs;

3. Accomplish complete or partial disintermediation;

4. Reduce mistrust by digitizing trust and preserving the provenance of an activity or material.

These four attributes can address millions of problems that today exist in any form of interaction – B2B, B2C, P2P, machine-to-peer or machine-to-machine

There is a tendency to dismiss private blockchain as a flat file or database that is nothing but old technology. Public blockchain also uses established components like C++ (for Bitcoin, invented in 1985), asymmetric encryption (invented in 1976), Proof of Work (invented in 1993) and SHA 256 (invented in 2001). When these different technologies came together they ended up solving the double-counting problem in money applications, which computer scientists had struggled to solve since the early 1980s, through the invention of Bitcoin in 2008.

Indeed, at this stage, private blockchain should be used to solve tough business problems mainly when other technologies fail or are sub-optimal. Otherwise, blockchain initiatives will fail and discourage people from using or exploring them.

3) “To use blockchain, an industry-wide consortium is required. Someone else needs to start the chain and we will join it.”

There is a widespread misconception that for blockchain to be useful, everyone in an industry needs to be a part of it. Enterprises think that since it’s a consortium someone else needs to take a lead, start the chain and establish a code of practice for its effective function, and that once these are accomplished, they can join the consortium. This is incorrect.

Based on our experience of implementing blockchain for several industries globally, enterprises can benefit significantly through private blockchain by starting their own chain. The approach here is DIY rather than DIFM (“Do it for me”) and could be considered a private chain or micro-chain. These are very effective in addressing gaps in trust, which can increase when there is an interplay between companies, suppliers, partners and customers to accomplish common objectives and goals. The value of such a chain to a company increases even further when the interaction involves a combination of legacy and non-legacy systems leading to different information islands or silos that dont talk to each other. Hence companies spend a lot of time and effort on data or information reconciliation that can be saved through implementing blockchain. As such, these own chains can deliver tremendous collaborative benefits and achieve positive network effects.

We have deployed these chains in various enterprises to solve business problems such as:

– Reducing purchase order failures even after they are run on Electronic Data Interchange (EDI);

– Improving the expected time of arrival for customer orders that involve collaboration between various enterprise teams, order-fulfilment partners, warehousing partners and others;

– Tracking the movement of high-precision tools and the sharing of such tools between the original equipment manufacturer and its innumerable suppliers;

– Managing forward and reverse logistics of non-serialized inventory involving several stakeholders;

– Safeguarding personally identifiable information and its exchange in a system that involves several players and preventing incorrect monetization of such information.

In essence, the opportunity for enterprises to build and use their own chains to drive transformation, whether pertaining to processes or digital operations, is now.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Trump’s Syrian hit the softest option vis-a-vis Russia

Crimean crisis: not enough to slow down European indices

The Chinese solar panels suddenly became too cheap for Europe

Main results of Foreign Affairs EU Council, 16/07/2018

The EU seals CETA but plans to re-baptise TTIP after missing the 2016 deadline

EU integration: MEPs want to end permanent opt-outs from EU law

UN rights chief ‘appalled’ by US border detention conditions, says holding migrant children may violate international law

Consultant in Forensic Technology – 1969

EU summit: No energy against tax evasion and fraud

How our food system is eating away at nature, and our future

Peace operations benefit from improved cooperation between the UN and troop-providing countries, says peacekeeping chief

Memoirs from a unique trip to China: “my new old dragon” (Part II)

UN and African Union in ‘common battle’ for development and climate change financing

The Bavarians threaten Berlin and Brussels with immigration crisis

EU Commission announces Safe Harbour 2.0 and a wider Data protection reform

Praising Roma’s contributions in Europe, UN expert urges end to rising intolerance and hate speech

Brexit: MEPs concerned over reported UK registration plans for EU27 citizens

This Chinese megacity is building a giant waste-to-energy plant

Here’s how we reboot digital trade for the 21st century

Syria: Civilians caught in crossfire, UN refugee chief urges Jordan to open its border

Children who exercise have more brain power, finds study

A Europe that protects: Continued efforts needed on security priorities

UN rights chief calls for release of hundreds abducted and abused in South Sudan

‘Let the children live’: UN prepares to ramp up food aid to Yemen as famine risk grows

FEATURE: Niger’s girls find sanctuary in fistula treatment centres

IMF’s Lagarde: Ukraine must fight corruption

European Commission recommends common EU approach to the security of 5G networks

Help prevent children ‘from becoming victims in the first place’, implores Guterres at campaign launch

COP21 Business update: Companies urge now for carbon pricing as coal is still a big issue

The Japanese have a word to help them be less wasteful – ‘mottainai’

6 facts to know about EU alternative investment funds

Why do US presidential elections last so long? And 4 other things you need to know

It will take a lot more than free menstrual pads to end period poverty

Who should be responsible for protecting our personal data?

WHO study reveals ‘game-changer’ drug with potential to save thousands of women’s lives in childbirth

UN chief condemns student abductions in north-west Cameroon

The Commission unsuccessfully pretends to want curbing of tax evasion

To win combat against HIV worldwide, ‘knowledge is power’, says UNAIDS report

A new European banking space is born this year

Caspian Sea deal an invaluable step towards easing regional tensions, says UN Chief

EU budget deal struck with Parliament negotiators

Three ideas for leaders to be more successful in the 21st century

‘All efforts must be made’ to ensure peaceful elections for Guinea-Bissau, Security Council hears

Young people all over the world come together to demand paid good quality internships

Banks suffocate the real economy by denying loans

For how long will terror and economic stagnation be clouding the European skies?

UN chief praises Japanese climate resilience, as Typhoon Hagibis cleanup begins

Why Eurozone needs a bit more inflation

Don’t understand the US-China trade war? This metaphor could help

India-UN fund gets 22 development projects off the ground in first year

China’s New Normal and Its Relevance to the EU

Here are 3 alternative visions for the future of work

Millions at risk if Syria’s war moves to last redoubt of Idlib, warns senior aid official

Commission to decide on bank resolution issues

The European Sting writes down the history LIVE from G20 Leaders’ Summit in Turkey

Breaking barriers between youth in the new tech era: is there an easy way through?

Why strive for Industry 4.0

UN health experts warn ‘dramatic resurgence’ of measles continues to threaten the European region

Russia to cut gas supplies again: can the EU get back to growth without a solid energy market?

Keep Africa’s guns ‘from firing in the first place’, UN political chief urges

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s