Forget Bitcoin for Now: Here's the Real Reason You Should Embrace Blockchain
Grow Your Business, Not Your Inbox
The basis for all business is supply and demand, but recent events have shown that supply can be more fragile than we might expect. For example, KFC's chicken shortages in the U.K. forced two-thirds of its 900 restaurants to close while the company worked to repair its delivery, via DHL. (And this was then followed by a gravy shortage.)
Ultimately, it turned out that those U.K. events were because of human error, not any lack of chicken. And that revelation only reinforced how critical excellent record-keeping and accountability are for maintaining supply chain integrity. But help is on the way: Fortunately, the supply world will soon be revolutionized by the innovative solution of blockchain.
Blockchain: the next wave in supply chain management
The most promising approach to robust supply-chain data is likely blockchain technology, a relatively new approach to digital record-keeping most famously associated with cryptocurrencies such as Bitcoin but applicable to many domains.
Sharing is the secret to blockchain's robustness against tampering: Because everyone has a record of the information, there is no way any one person can alter data in the chain. The technology's distributed nature also means there is no central authority, so no one group controls that data.
These attractive features, of database security and distributed storage, are what's motivating the incorporation of blockchain into business operations. They're also the reasons blockchain will come to have the ring of trustworthiness in consumers' perceptions. That trust is critical to competing in today's marketplace.
Companies that lead in adopting blockchain will enjoy building that trust early in the process of its global adoption. So, are you in? Following are a few simple steps to move your company toward incorporating blockchain into your own operations:
1. Don't adopt blockchain because it's the cool new thing but because it ensures trust.
New technologies tend to stir up excitement, but that can also create a bandwagon effect in which companies wind up wasting resources on new tech just because they can.
I'm seeing this pattern with blockchain, and it reminds me -- and others -- of the dotcom era. That thinking goes something like this: "We're going to store data about transactions in the blockchain. Why? Because that's what's cool."
But that's never a good business reason. Instead, commit to adopting blockchain only if you need to ensure trust in your transactions through a verifiable and incorruptible system. Trust is ultimately about proof. Ask yourself, what exactly do you need to prove, and to whom do you need to prove it?
For example, if you have a massively long list of transactions that relate to your supply chain, is verifying every entry on that list important to your business? Or are you actually trying to prove just a fraction of that? To know exactly where you'll need provable data, do some thinking about supply chain issues and what blockchain can do for them.
Fortunately, there is no shortage of great resources to develop your understanding of blockchain. In my own education, I've found YouTube to be an excellent tutor. Several other resources I recommend include an overview of how blockchain will change the economy, a lesson about how it works and recent conference presentations on the technology.
2. Know blockchain's current limitations: real-time transactions and scaling.
It's fair to say that because of a glaring lack of speed, blockchain is not ready for real-time transactions. The transaction rates are unable to compete at the level seen by credit card companies or any domain with a very high rate of transactions -- essentially anything with an exchange.
Vitalik Buterin, founder of Ethereum, a popular cryptocurrency and alternative to bitcoin, has discussed in an online video how the peak capacity for Bitcoin is five transactions per second, with Ethereum nudging past it at six per second. But he then compares that to the much greater transaction capacity of Visa's network, which is capable of handling a blazing 56,000 transactions per second, as a spokesman told the MyBroadband blog.
Speed may come to blockchain in time, but for now, intense real-time applications have been ruled out. That limitation excludes many use cases, which allows you to focus a little more closely on what actually can work. The present limitations in the blockchain technology also pose inherent problems. Buterin also blogged about this issue, noting that with the milestone of Ethereum transactions having reached a million a day early in 2018, blockchain networks have been generally reaching the limits of their (current) capacity.
3. Make sure you can tolerate working out some kinks with blockchain.
Blockchain as a concept was born less than a decade ago, so it is still in the research and development stages. For that reason, if you're going to adopt it, be sure you can stomach some bumps in the road as the technology improves -- as well as the slew of variations and new offerings competing for your business. Things can get dizzying quickly.
For example, there isn't just one standard blockchain. Instead, there exist many types of what are now known as "distributed ledger technologies," or DLTs. Although diversity in digital tools is a positive aspect for business, it also creates mental overhead in your choosing the right approach for your needs. Some DLTs are more suitable for certain kinds of programs, so it's important to do the research necessary to understand which is best for you.
Finally, because blockchain is relatively new, press coverage and general buzz about it may swing wildly and is often driven by investor concerns or exaggeration -- regardless of what's happening with the technological progress.
In fact, a recent TechCrunch article even characterized it as having entered the "valley of despair" that is common to all change. The point, though, is that you should be careful to not get caught up in the buzz -- good or bad -- regarding blockchain, and instead stick closely to the technological facts. If your supply chain needs can benefit from tracking transactions with a new level of trust, then all that media chatter doesn't matter.
The blockchain future is arriving. Will you be ready?
Expect to see more of your competitors offering and advertising a blockchain solution in the coming year. By being prepared, you can be part of a revolution in supply chain management, building trust in your brand and making product-tracing massively more efficient.
Whether you create an in-house solution or outsource to today's cutting-edge consultants, this novel approach to accountability can make all the difference in your client satisfaction and brand recognition during 2018 and beyond.