By Eric Wise
When it comes to hype, blockchain has moved into a level of disillusionment over the past 12 to 18 months. The technology is far from dead and still has great potential, but the most glaring issue seems to be that many business leaders cannot grasp the disruptive potential of the technology. However, with a little understanding, they can leverage it in a practical manner inside their organizations.
Why not use a database?
My peers in technology often ask this question, and 99% of the time, the assumptions underlying the inquiry are correct. If you plan to use blockchain as a database replacement, you’re barking up the wrong tree. Blockchain technology brings features that traditional databases don’t have, such as decentralized consensus, tokenization, and confidentiality, to name a few. If your business case doesn’t need these features, then sticking with traditional databases is going to make sense today and in the future.
So how is blockchain being used?
There are three situations outside of cryptocurrency that seem to be picking up steam.
1) Digital asset markets (a derivative of cryptocurrency). Blockchain technology is quite good at creating digital assets and representations of physical assets in the digital world. Distributed ledgers, consensus mechanisms, and the immutability and traceability of records, as well as the ability to avoid double spend, make blockchain platforms ideal for the creation and management of digital markets.
There are a variety of start-ups playing in this space already, whether it is trading and holding precious metals, managing energy assets, or even exchanging advertising contracts. Blockchain technologies that manage media assets such as movies, digital cards, and games seem inevitable.
2) Companies that are looking to exploit the potential efficiency gains in existing business processes. The immutability and traceability of records that blockchain brings are attractive in supply chain, and financial services such as reinsurance and derivative processing have interesting applications in blockchain. The best-known example of these is Walmart, which is using blockchain technology in its food supply chain to better track foodborne disease outbreaks.
3) Blockchain as a record keeper. Blockchain’s immutability features make it ideal for ensuring records cannot be tampered with and that they can be audited on demand. We often see examples of this in the government sector and other registration bodies; for instance, business identification such as the DUNS number. One of the best government examples is the government of Estonia, which is leveraging blockchain in its e-estonia initiative.
Is blockchain practical for the enterprise in 2019? We are in the midst of a blockchain winter right now, so the current general sentiment is negative, but the experiments that are being run by companies are compelling. Areas of digital asset markets, efficiency gains, and record keeping are seeing bright spots and exciting activity.
If your business today relies on, is planning in the future, to be in one of those spaces, blockchain is something you will want to keep a close eye on, and maybe start running some experiments if these areas are critical to your business. If not, then you’re probably safe reevaluating in another year or two.