Blockchain revealed its potential outside the world of cryptocurrencies. By disintermediating trusted parties, Blockchain is considered as one of the most disrupting technologies for the coming years. More than a shared ledger, the technology enables improved transparency, self-executing smart-contracts, machine-to-machine payments, decentralized applications and eventually autonomous organizations.
According to the definition used by Blockchain France, a blockchain is ‘a transparent and secure storage and information transmission technology, acting without a central authority’. The principle of blockchain is based on a database that records all transactions made between users (comparable to a general ledger). The database is secure, as it is distributed among its users without any centralized control. This allows all users to verify if the chain is valid.
In contrast to a classic database that is based on servers, a blockchain is completely decentralized, works without central authority and is perfectly secured. And what’s more, blockchain is completely royalty-free. So, there are only advantages. It made some people think that the entire financial world would be taken over by cryptocurrencies like bitcoin or ethereum.
However, we need to realize that blockchain requires gigantic computing capabilities for its operation. First of all, it is necessary to download software that becomes a node of the chain. Moreover, each transaction must be verified and validated by all the nodes before being available in the block, which dates it and makes it impossible to tamper with.
Impact on all industries
So far, blockchain mainly appeared in the financial world in the shape of cryptocurrencies. But it is clear that the technology could be applied to other industries as well, given its strength in terms of decentralization and security. In fact, blockchain could be used for any activity that involves transactions or the exchange of information. Opportunities can be found in healthcare, the public sector, several industries (such as logistics), not to mention transactions or the exchange of information between individuals.
Unfortunately, blockchain also comes with a major challenge. Since blockchain is a disruptive technology, as its concept is revolutionary and innovative, it is necessary to completely rethink a process before implementing blockchain. It makes no sense to start rolling out blockchain technology without having first implemented a methodology to redesign the process – and align it with the principles of blockchain.
And there’s more. As blockchain works without a central authority, it holds the power to wipe out platforms such as Uber or Airbnb, which are basically service aggregators. In other words, compared to what some people are talking about as the Uberization of the economy, blockchain goes even further and is disruptive technology in the true sense of the word.
According to research firm Gartner, which offers its predictions every year in terms of technological innovation, 20% of companies will have abandoned their mobile application for the According to the Gartner research group, which offers predictions about technological innovation, 20% of companies will trade mobile applications for blockchain by 2019. Research shows that blockchain technology could represent a 7,7 billion dollar market by 2022.
Obviously, the financial world is at the forefront of blockchain implementation. But other industries will follow. The French government already issues bonds based on blockchain. The production and management of energy using solar panels and wind turbines are also the subject of experiments with blockchain. Managing copyrights (for example in music or photography) is a perfect fit for blockchain technology. In the travel industry, some suppliers develop automated travel insurance solutions based on blockchain. A smart contract – based on blockchain – combines travel conditions with airport data, resulting in direct compensation for travelers, for example in the event a flight is delayed.
For companies, all processes related to logistics, HR management or finance can be impacted by blockchain. In the end, it is clear that the convergence of public and private channels will cause the exponential growth of blockchain, creating an ecosystem where businesses and their trading partners collaborate seamlessly and securely. At the same time, the more the physical and digital worlds converge, the more blockchain applications will appear.
Facing the blockchain trend, Gartner remains cautious: “Applying blockchain requires a clear understanding of the business opportunity, the capabilities and the limitations linked to blockchain, a trusted architecture and the necessary implementation skills.” In short, to transform blockchain into a real competitive advantage, a company requires a partner who understands both the technology (IT) and the business (organizational processes).
As with any new, innovative technology, the main business challenge is knowing when to use blockchain and understanding its pros and cons. The distributed and secure nature of blockchain are often put forward as its most important advantages. Other elements, such as the ability to quickly process large volumes of data, can be important bottlenecks. To find out quickly in which cases blockchain technology can deliver value, WEF has published a decision tree. It allows to define the selection criteria for a blockchain project (see illustration).
If the decision tree indicates that blockchain is the best possible solution, it is still necessary to get access to the technology. Major IT suppliers such as Microsoft and IBM didn’t hesitate to position themselves in the rapidly evolving blockchain market. In this context, Aprico keeps an eye on the evolution of the technology. In the most pragmatic way, we help our customers realize the ambitions they have with blockchain.
In case the selection criteria for blockchain are not met, there are of course other technologies that may help achieve the company’s objectives, such as automation or data distribution. These technical topics are part of Aprico’s areas of expertise.
Aprico develops expertise in several domains of technology. Its added value lies in the ability to guide customers towards the most appropriate technical solution.
Aprico Consultants is a consulting firm specializing in the architecture and transformation of information systems. Accelerating our customers’ digital transformation processes allows us to offer the flexibility, performance and competitiveness our customers need to strengthen their market position and improve their customer service.
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