10 Oct 2017
Bitcoin may be hogging all the crypto limelight right now, with a skyrocketing value and frenzy of interest from global traders and emerging startups. But cryptocurrency is only one side of the blockchain coin and comes with it is risks.
Blockchain for the enterprise is not bitcoin. Beyond the cryptocurrency, private permissioned blockchain for enterprise is joining the mainstream.
Like the growth in acceptance of the internet in the mid-1990s, blockchain for enterprise has emerged from a deeply technical world out into the open – much to the delight of investors and entrepreneurs.
" Private permissioned blockchain for enterprise is joining the mainstream."
Now, investment is booming as innovative businesses try to grasp the technology’s transformative potential. In the last year venture capital firms and others have poured over $US1 billion into blockchain-related startups, and another billion is expected to be invested in similar efforts this year.
Out the gate
Optimistically, Australian blockchain startups have been fast out of the gate, with three taking out the grand prize at the world’s largest blockchain summit in June.
No one wants to miss out on what could be the most-disruptive technology to hit the business landscape in a decade.
Part of the allure of blockchain is the enormous potential of distributed ledgers—as blockchain for enterprise is commonly known—to improve the security, transparency and efficiency of transactions. This applies not just in currencies but over a wide range of marketplaces, including the long, complex supply chains and transactions which for many businesses stretch across the globe.
Today, an auto parts dealer in Sydney might wait weeks for a global manufacturer to remit payment as that payment winds its way from the manufacturer’s accounting department to its local bank to the bank’s central office and then into a correspondent bank.
The process involves multiple ledgers, different routing numbers and lots and lots of hands until the payment finally works its way into the auto dealer’s accounts receivable. Distributed ledgers allow such transactions to be completed within minutes with complete transparency on all sides.
As importantly, the most-advanced industry applications harness the power of ‘hyper-ledgers’ not reliant on anonymous trading and virtual currencies. Instead they provide a permissioned network with known identities which allow companies, suppliers and partners to keep common records in an all-but-unhackable environment.
But not all blockchain technologies are created equal and the opportunities will differ across countries. In developing economies, blockchain’s unchangeable record could bring much-needed trust to transactions.
In an economy like Australia’s, advancements will instead hinge upon enabling new business models, innovation and reducing the cost and risk of transactions.
Progress will also depend on the preparedness of the workforce – amplifying the importance of digital literacy and ensuring IT professionals understand the other sectors in which blockchains can operate including accounting, fraud control, law and banking and finance.
Organisations may also invest heavily to find, as with the dot-com boom, for every promising avenue, there can be dead ends too. Without a concrete understanding of the desired outcomes and the different elements and parties who must come together to make them happen, institutions may fail to get the returns they were hoping for.
Getting it right
To get the most from one’s blockchain investment, organisations need to get a few things right at the outset.
Company leadership plays a strong role in setting the tone—giving teams permission to experiment and allowing them to fail fast so they may succeed faster.
Distributed ledgers have the potential to radically reshape the transaction environment, speeding results in complex, multi-party environments with unmatched security and transparency.
By approaching their blockchain investments in a calibrated fashion organisations can shorten their learning curve and sharply increase the probability of success.
Mark Ebeling is CTO Blockchain and Financial Services, IBM
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
10 Oct 2017
06 May 2016