Why Businesses Need to Move on Blockchain
Concordium is a Business Reporter client.
Businesses need to act now to ensure that they are ready to take advantage of the potential of blockchain in the future economy.
For years, blockchain has been touted as a technology that can revolutionize the world. By now, most people in the corporate world have heard of blockchain, but many would still struggle to accurately describe what it is, or the potential benefits it could bring to their business.
But this is a topic that every business leader needs to understand sooner rather than later—if they don’t want to again find themselves in the same position that they likely were when Covid-19 hit: woefully underprepared and forced to overhaul their processes almost overnight to ensure their survival.
Business benefits of blockchain There are several ways in which organizations can make use of blockchain. One of the most obvious is by taking advantage of the transparency and traceability it offers due to the distributed ledger technology on which it is based. Blockchain enables transactions and data to be recorded in multiple locations, and for all authorized people to see the same information in real time.From a supply chain perspective, this offers huge benefits, including seeing precisely where components are and where they have come from, which is becoming increasingly important as the need for full transparency in sustainability grows. Transparency and traceability throughout the supply chain enable companies to demonstrate their sustainable and ethical credentials and metrics for net zero claims.
The decentralized nature of blockchain also makes it inherently tamper-proof, as all members in the network have a copy of the same data. This means it can act as a single source of truth around which businesses can operate, overcoming the issue of multiple sources of recorded information within complex supplier networks.
For instance, blockchain can give businesses—knowing that items have been dispatched—the confidence to release payments to suppliers, and it can increase the use of smart contracts, allowing businesses and their partners to automate aspects of an agreement when certain conditions have been met, without the need for manual intervention.
“This can change a lot of business processes, streamline overheads and ensure fulfillment,” explains Lone Fønss Schrøder, CEO of blockchain firm Concordium. “Smart contracts enforce the terms of a contract via code, ensuring that commitments are fulfilled transparently, traceably and irreversibly. It’s now possible to do this without the need for specific coding capabilities, which will expand the use of such contracts to more businesses.”
The immutability of blockchain data can also help in other areas where trust is vital, such as autonomous vehicles, decentralized finance applications and voluntary carbon markets, and in demonstrating rights ownership of art and music. Taken together, blockchain can create a sense of trust and accountability between multiple entities, leading to simplified and more effective business relationships.
Blockchain blockers Despite the obvious benefits, many businesses have not yet taken advantage of blockchain. Perhaps the biggest deterrent is the lack of clarity in the regulatory and compliance implications of deployment, as well as questions of ownership and interoperability with other technologies.Many blockchains allow users to operate under pseudonyms, meaning some platforms and cryptocurrencies have come under scrutiny for money laundering and terrorist financing. Regulators are increasingly concerned about blockchain’s potential use for tax evasion, meaning there is a need for applications and services to be built on blockchain infrastructure that fully complies with both existing and pending regulations.
Businesses may also find it hard to identify blockchain’s best potential use case, or be unsure which platform will provide the best match in areas such as security, privacy, scalability, integration and customer experience. Some may have practical concerns relating to performance, data governance, enterprise architecture, change management or business process design. It can also be difficult to make the first move in creating a consortium, or to decide whether to join an existing one.
Some organizations have also been through expensive and complex technology projects recently—such as a migration to cloud applications—and may lack the corporate desire to go through such a process again, particularly if there are concerns that it may not be a long-term solution. Trepidation regarding the amount of communication, interaction and change management involved can be a mental barrier for many.
Facing the future The next generation of blockchain is already upon us, with a greater focus on security, scalability and load balancing to create a more robust and business-focused platform. It also incorporates an ID level at the protocol layer and guarantees privacy through zero-knowledge proof (ZKP) cryptography, going above and beyond current regulatory requirements.Implementing blockchain is not something that can be done overnight, so it’s important that businesses start to think about it now. “We all know, especially in the corporate world, how long it takes to implement new technologies into our roadmaps,” says Schrøder. “There’s a long learning curve, and this will transition the industry over the next five years. Businesses need to be front and center of that.”
Concordium’s open-source, decentralized blockchain technology is the first with layer-one ID built into the protocol to ease regulatory compliance. This offers unrivaled security, privacy, transparency and peace of mind to forward-thinking businesses and application developers.
To find out more about how Concordium blockchain could help your business, visit Concordium.
This article originally appeared in Business Reporter. Image credit: iStock id1316264191
