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This article previously appeared in Business in Vancouver Magazine.
Blockchain will impact your business.
A mere 25 years ago, the world was abuzz about the internet – an information highway that could impact virtually every aspect of society. And it has. The World Wide Web continues to provide us access to incredible amounts of information and a means for people and businesses to connect almost instantly.
Yet as we begin 2018, the second era of the internet is beckoning. This era, powered by blockchain technology, will bring us from an “internet of information” to an “internet of value.” A detailed review of how blockchain works is beyond the scope of this article, but it can be thought of as a distributed ledger – a massive global spreadsheet that runs on millions of computers simultaneously. Hence the broader term used to describe blockchain: distributed ledger technology (DLT).
Blockchain can record transactions between two parties in near real time and in a verifiable way that doesn’t require traditional intermediaries to authenticate or settle transactions. Additionally, it provides a platform for transparency and trust between strangers because of its immutable transaction record.
Many know of blockchain technology because it is at the heart of Bitcoin and other cryptocurrencies, which have received accelerating media coverage over the past year. However, it is blockchain’s broader implications for business that are truly staggering. Pick any industry and blockchain has the potential to disrupt it.
Industries ranging from artistic content to biotechnology are exploring blockchain’s ability to store unregistered material in the timestamped and secured ledger for later formal registration and protection. Because a blockchain transaction is immutable, once a business has added something potentially proprietary to a public blockchain, that information can never be lost or changed. Thus, the blockchain could provide evidence of original ownership, particularly when a creator wants to bring an infringement action.
A blockchain-powered supply chain has the potential to introduce complete transparency and inform better business and customer decisions. This is because blockchain captures certain information about a product and from different perspectives. For manufacturing industries, blockchain data could provide attestable origins for all materials and inputs. Similarly, for food industries, it could record attestable information that is important for producers and consumers.
For example, an agricultural blockchain could hold data verifying the exact farm that a product was sourced from and whether that product was organic.
“Smart contracts” are one of the most transformative early applications of blockchain technology. Simply defined, smart contracts house code within a blockchain to automatically facilitate, execute, enforce and transact payments for a contractual arrangement between parties once the terms of their agreement have been met.
For example, a smart contract can automate payment when a shipment arrives or issue share certificates that automatically send their owners dividends if profits reach a certain level. For businesses that create intellectual property, smart contracts could mean self-executing licences upon the use of work. This can allow people and businesses to better monetize their IP. It is also worth mentioning that smart contracts need to be tested extensively if monetary transactions are involved, as cryptocurrency transactions are not easily reversed.
Perhaps most fascinating is that the addition of representations of business processes into smart contracts could provide the opportunity to have not just attestable data shared between multiple parties, but also attestable processes. Nothing’s out of reach. Even the massive business phenomenon of the sharing economy could be impacted by blockchain.
Consider Airbnb as an example. Blockchain could be used to connect people wanting to rent a property with people who have a property that is available for renting. Both parties can transact based on verifiable, transparent and trustworthy information in a direct peer-to-peer manner. If this occurs, Airbnb’s disruptive business model could also be disrupted.
Executives would be wise to start reviewing the potential impact of blockchain on their business. It starts with educating business and technology leaders on the opportunities and challenges presented by blockchain and DLTs and incorporating this into strategic plans. It’s important to ensure that appropriate policies, governance models and guidelines are put in place to respond to and embrace this rapidly developing technology.
Contact Ryan Hoag, B.C. Regional Technology Lead, at 604-685-8408 or [email protected]
Contact Brian Beveridge, Technology Solutions, at 204-775-4531 or [email protected]
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