Investment in blockchain in the first 5 months of 2018 had already exceeded that of the whole of 2017. Moreover, a KPMG report seems to indicate that the biggest blockchain investments are moving beyond the experimental phase, telling us that the more established companies have raised significant capital to meaningfully improve their resources & leverage blockchain. The point is, there are a lot of blockchain initiatives coming out, many of which have moved past the hype phase, to actual implementation. People have started talking about it a lot more this year, leading to the inevitable question in every company – Should we adopt blockchain?
With all the hype around blockchain, backed by the stats, it’s easy to be tempted into adoption. But not everyone is sure. This scenario has been likened to the adoption of mobile. While initially thought of as a wave more suitable to consumer-facing businesses, literally all kinds of businesses ended up adopting mobile. Similarly, not many people know how, or even if, they need to do adopt blockchain. But according to us, they surely will in 3 years.
It’s important to consider several points before making a decision on adoption. Broadly, blockchain is believed to help industries if:
- There is a need for a large database
- There are multiple transactions that all need to go through a 3rd party intermediary
- Security of information is paramount
- There are recurring transactions that could be automated
The first industry that comes to mind, obviously, is financial services, which ticks all of these points. Naturally, it is the industry that has seen the highest adoption. When you search for blockchain resources or forums online, you’ll notice many results carrying the words ‘crypto’ or ‘coin’ in them (even in their URLs). This is fair, given the popularity of bitcoin & the rise of other cryptocurrencies. In fact, one could say that bitcoin put blockchain on the map through that whitepaper all those years ago. Finance is an industry that’s perfect for blockchain – just look at the wave of cryptocurrencies, ICOs & cross-border payment companies cropping up in this space. A lot of major banks & other financial establishments have already adopted blockchain in some form (like testing out smart contracts) to make the movement of money easier.
Healthcare is another industry which could benefit. Lifetime records of patient history could be stored and retrieved securely anywhere & anytime, without any discontinuity in treatment. This will ensure quick & better diagnosis, resulting in lesser cost. A decentralized database of patients’ medical history can also prove a gold mine for medical research. There’s also talk of allowing patients to get paid for releasing their medical records for research.
Supply chain & logistics could make use of the ‘smart contracts’ feature in blockchain. Smart contracts are essentially coded, self-executing contracts that automatically make transactions once a pre-defined goal has been met. This reduces the chances of fraud & malpractices, if not eliminate them entirely. It will also serve to remove the middlemen, who currently act as intermediaries to facilitate the movement of goods, which in turn reduces the markup costs one needs to pay them.
Why you wouldn’t need Blockchain
As illustrated in the 3 examples above, blockchain in its current form is most effective when targeted towards a specific use case. It is up to you to determine your use case, and if blockchain would adequately move the needle in terms of ROI.
Again, today’s blockchain is not for everyone. Adopting it means starting to code from scratch, changing the way you think of your business, and putting your weight behind a technology that is still immature. So for the time being, if you’re happy with your database, there is no need to change it. If speed of transactions is important, don’t go to blockchain in its current state.
Why you would need Blockchain
On the other hand, if you are utilizing a third party for transactions, or you have multiple people making changes to your database, or you have untrustworthy elements that need to carry out transactions or modify your database, blockchain will become a necessity. Blockchain provides a transparent, tamper-proof solution for all these cases, and will start to see widespread adoption over the next two years, once people get the hang of it. Not choosing to be a part of this could mean choosing to get left behind. Remember – blockchain is the new mobile, so everything needs to built here from scratch. There’s room for a new Google, Amazon, Facebook on blockchain, so the potential seems limitless.
But you can start with your existing business first.The amount of investment & effort you’d have to put into this would be worth it once you reap the benefits of a secure database free from fraudulent elements.
At ContractIQ, we’ve been studying this space intently over the past few months in an effort to make your decisions easier. We’ve expanded our directory to include blockchain service providers. You can check out the listing here. We’ve been experts at consultative services over the last 6 years, and we strive to help the new segment of blockchain adopters the way we did with mobile all those years ago. If you have any questions at all, don’t hesitate to contact us.
Vishruth Muralidhar
Vishruth heads ContractIQ, and is currently evangelizing blockchain as a channel for companies to improve efficiency, build trust and generally get better results. In his downtime, he follows the many sports teams he supports or plays video games.
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