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.

the sting Milestone

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

How Hawaii plans to be the first US state to run entirely on clean energy

Wednesday’s Daily Brief: Syrian detainees, Zimbabwe hunger crisis, Kabul attack, Mexico disappearances, new tech to feed the world

The world’s coastal cities are going under. Here’s how some are fighting back

Brexit effect: Public opinion survey shows that EU is more appreciated than ever

Missions of Our Time Shared by China and EU

EU to gain the most from the agreement with Iran

Fresh airstrikes kill dozens in conflict-ravaged Syria

Aviation Safety: Commission adopts new EU Air Safety List

Long-term EU budget: Parliament wants safety net for beneficiaries

The impossible end of the war in Syria

Asia and Pacific on course to miss all Sustainable Development Goals, says UN region chief

Costa Coffee products (Copyright: Costa Coffee; Source: Costa Coffee website, Press area)

The start of the “Caffeine rush”: Coca-Cola acquires Costa Coffee days after Nestlé-Starbucks deal

These are the world’s most tree-covered countries

‘Undersea gardeners’ are restoring Jamaica’s lost coral reefs

Coronavirus emergency: here’s what we know so far

Is the English language too powerful?

UN agency plan tackles ‘hidden cost’ of gold, paves way for safer, mercury-free mining

FROM THE FIELD: Changing world, changing families

Japan should reform retirement policies to meet challenge of ageing workforce

COVID-19 has accelerated the digital transformation of higher education

End ‘shame, isolation and segregation’ of fistula sufferers, urges UN reproductive health chief

Countering illegal hate speech online – EU Code of Conduct ensures swift response

Nauru President warns of possible climate change ‘economic Armageddon’

Forget about growth without a level playing field for all SMEs

Commission presents review of EU economic governance and launches debate on its future

The financial war touches Frankfurt and Berlin

As a rising global power, what is India’s vision for the world?

4 things President Trump could learn from Jimmy Carter

This is how the world can get routine vaccinations back on track

UN investigates systematic sexual violence across South Sudan

How COVID-19 might help us win the fight against climate change

Coronavirus: EU global response to fight the pandemic

Deal agreed to protect consumers against misleading and unfair practices

Is flexible working here to stay? We asked 6 companies how to make it work

Asking for more restriction on intra EU immigration: Unproductive and politically dangerous

UN human rights office urges Egypt to immediately release detained protestors

UN global education envoy urges new funding for ‘lost generation’ of children forced out of classrooms by conflict

EU leading in global agri-food trade

These are the world’s 10 most competitive economies in 2019

‘Starvation’ now a reality for displaced Syrians stranded in camp near Jordanian border

Parliament commemorates the liberation of Auschwitz 75 years ago

MEPs vote to limit negative impact of no-deal Brexit on citizens

Reasons to hope and reasons to keep perspective on a vaccine

Here’s why the tech sector could be the next target for Chinese investment in Africa

To entrepreneurship and beyond!

The business case for investing in sustainable plastics

Here are three ways Africa’s youth are defeating corruption

Prisons are failing. It’s time to find an alternative

Mobile technology saving lives: Changing healthcare systems with simple technological solutions

What do toilets have to do with climate change?

UN Middle East Coordinator strongly condemns ‘arrests and violence’ by Hamas security forces during Gaza protests

Starbucks and FIAT again under Commission’s microscope: is Europe ready to kick multinationals out of the house?

How to change the world at Davos

Earth already has a perfect recycling system. So why not use it?

5 things you might not know about forests – but should

Why the world needs the youth revolution more than ever

FROM THE FIELD: Photos highlight agony of West African civil wars

Higher education becoming again a privilege of the wealthy?

Deal on protecting workers from exposure to harmful substances

EntEx Organises 5 Summer Schools for Young Entrepreneurs across Europe in June/July 2014

More Stings?

Advertising

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