Is Blockchain going to shape our future?
Our expert's opinion
"Nowadays, everyone heard about all the possibilities of cryptocurrencies and especially about Bitcoin. The buzz is real, but actually the mechanism behind it is even more promising.
Blockchain is a distributed network that creates more efficiency and security, because there is no third partner in between. Although it can be used in a lot of business cases, there are still some important issues that need to be covered before there can be a real second digital revolution.
First of all, there is a lack of infrastructure at this moment. In the case of Bitcoin, there are only four ATM's in Belgium. Scaling is a second problem, because it can take up to ten minutes before a transaction is validated. Even more problematic is the lack of standardisation, the abuse of the anonymous network and the absence of regulation.
It is a relative new technology, but I believe Blockchain is going to shape our future a lot faster than we all would expect."
- Yoram Ceelen, Associate Consultant
What Can You Do with Blockchain? Here Are 4 Ideas to Consider
By now you’ve probably heard at least one description of what blockchain is, and that description probably had something to do with money. Blockchain has received a lot of attention for its “distributed ledger” technology, which is the basis for buying or selling cryptocurrencies and other assets through private markets.
But blockchain technology has broader applications than crptocurrencies. In the future, blockchain technology could be a part of many everyday business-to-business transactions, including those powered by enterprise applications.
There are many use cases discussed and it can be hard to make sense of them all, but I prefer to look at the ways the technology can be used to bring value to businesses. Take a look at these four scenarios of how blockchain could work within enterprise applications to provide more flexible, secure, and streamlined business processes—or even enable new business models.
1. Enable distributed, autonomous marketplace
Blockchain allows asset owners to track and trade things of value—such as outstanding invoices—in a secure, transparent, private, and self-reconciling “chain” of transactions. This capability adds speed and flexibility to cash and asset management. For example, using verified invoices from enterprise resource planning (ERP) applications, companies could raise needed cash quickly or accelerate cash flow by selling invoices on an autonomous invoice-factoring marketplace.
Autonomous marketplaces for other assets likely will multiply. Essentially, a blockchain-based transaction does away with the need for third-party oversight because the software itself is a controlled and open framework that is visible to all transaction participants. Thus, organizations can view their assets multi-dimensionally in terms of value; instead of just face value, they have opportunity value.
2. Reduce friction in business transactions
Managing spending is a challenge in most organizations. Take a look at these statistics from Ardent Partners CPO Rising 2016:
- Less than half (45%) of spend is contract compliant
- Only 39% of addressable spend is actually sourced
- Only 63% of spend is linked to a purchase order
Alternatively, enterprises could create a self-governed blockchain network for suppliers and partners. This could enable automated smart contracts, instant payments, and Internet of Things (IoT)-activated shipments. Without human interaction, errors and missing information are reduced across transactions, and transactions happen faster because buyers and sellers are directly connected.
3. Manage and secure decentralized private records with encryption
One of the fundamental features of blockchain is that each individual data record or element is encrypted. Traditionally, industries rely on third parties to guard databases of their shared information using firewalls and restricted access. As frequent high-profile data breaches demonstrate, this practice isn’t ideal.
But if each data element is secured and encrypted with a blockchain member’s key, a cybercriminal would need to have access to each key of each member to access all of the blockchain data. This is not to say that blockchain makes all data 100% secure, but it certainly can help to prevent the exposure of large numbers of private records in a single act.
A logical application for this example is employee or student records, where employers and educational institutions and even industry certification bodies can add new qualifications, grades or work positions as they are obtained. Imagine giving an employee a key for access to all of his or her employee records as part of a secure blockchain that human resources (HR) also participates in. Individuals would be able to share their college transcripts or employment with employers or other educational institutions securely and not rely on faxing copies of certificates that are unreliable and easy to forge.
4. Tracking the provenance of products and materials
Blockchain can help to guarantee product quality and safety by making it easier to track and locate in-use products and materials. For example, let’s say an auto manufacturer forms a quality-focused blockchain that includes parts suppliers, sub-assembly makers, a quality-control provider, and the public regulatory body (e.g National Highway Traffic Safety Administration). Recalls of defective parts would then progress much faster, and thus be more effective. This is significant, considering that tens of thousands of lives are lost annually because of defective auto parts.
Blockchain is Likely in Your Future
These are only four of many ways we see our customers potentially using blockchain. We recently announced Oracle Blockchain Cloud Service at Oracle OpenWorld, and we’re encouraging our customers to think strategically about the technology. Take some time to learn about blockchain, and then consider pilot projects that can add value in your business. In some cases, using blockchain will require building new business processes or reconstructing existing ones using Oracle Cloud applications. But it is a flexible technology that could benefit any industry.
It may be a few years before blockchain is present in a large percentage of our customers’ technology stacks, but we are building paths for easier ramp-ups of blockchain initiatives when customers are ready. This goes not just for our applications but also for our expertise. The same function-specific specialization Oracle maintains for implementations of financial, human resources, and supply chain applications will also be part of blockchain projects.