The Future of Blockchain
Nov. 28, 2023
The year was 2009. The world was still recuperating from the aftermath of the financial crisis that jeopardised the global economy the year prior. Out of the blue, a decentralised digital currency called Bitcoin burst onto the scene, marking the most prominent real-world application of blockchain technology, and subsequently taking the world by storm. A new era was born.
Fast forward a decade and a half, is there still momentum in the blockchain storm or have the winds gradually died down, giving way to other pioneering developments? The ever-changing and rapidly disrupted technology landscape poses umpteen questions and unforeseen challenges to C-level leadership, demanding a new-age exploration into the field of blockchain.
Blockchain is More Than Crypto
Chances are that even if people are not well-versed with the intricacies of blockchain technology, they would’ve heard, read about, used, or formed an opinion on cryptocurrencies. Whilst cryptocurrency uses blockchain as its underlying technology, many people don’t realise that the two are very different.
So, what is a blockchain? Blockchain is a technology that facilitates the transparent, tamper-free sharing of information along a business network, built around a database mechanism that stores data in blocks connected to a chain. From tracking loans to protecting healthcare records, safeguarding voting to re-engineering the way supply chains work, there are plenty of use cases for blockchains.
Five Aspects of Blockchain to Consider
As organisations and technology leaders, it can be hard to keep pace with the latest developments and the hype that surrounds emerging technology. Often, there is more misinformation and less evidence-based facts on technologies that are typically mysterious and sophisticated in nature. The case with blockchain is no different. Years after its inception, we are yet to fully understand and unlock its potential in achieving greater decentralisation and transparency.
Blockchain has implications on nearly every business line, hence it is imperative that we holistically understand its ins and outs. CTOs and CIOs should consider the following when making decisions on adopting blockchain technology into their business:
- The Right Use-Case at the Right Time: The impact and feasibility of implementing a blockchain use-case depends on the systems, tools, and operational processes in place in your organisation. Assessing the existing problems and business growth inhibitors is the first step after which one can analyse if adopting a blockchain solution can be an effective to address them. By creating proof of concepts and using an iterative approach, organisations can start small, and scale quick thereafter, knowing when to preserve and when to pivot in their blockchain implementation efforts.
- Scalability and Return Efficiency: Scalability and latency tend to be concerns that hinder the full-fledged functioning of permissible blockchain systems, used in most industries. Key bottlenecks affecting the performance of a blockchain include throughput, finality, and confirmation time. To resolve and optimise these parameters, it is critical that organisations think out-of-the-box and find cutting-edge solutions. Once near-instant transaction speeds are achieved, it will culminate in better performance and far more scalable blockchains that generate the intended returns.
- The Cost of Trust: Blockchain, in principle, puts trust and transparency at the core, as it removes the middleman – for example, a central regulating authority, thereby bringing a paradigm shift in power from banks and governments to the users directly. The underlying technology functions in such a way that records cannot be tampered with by third parties, and therefore acts as a strong safeguard compared to paperwork, traditional databases, and other mechanisms to store data and digital assets. Organisations could leverage this technology to keep sensitive information protected, curtailing risks of data manipulation and corruption. Given the onus is on users to be ethical and accountable, senior management must lead by example in setting the right guidelines and drive cultural buy-in.
- Complexities and Implementation Hurdles: Embedding blockchain into your business operations is far from simple. Lack of interoperability to assess and share information across networks is often the biggest stumbling block. Ensuring that the existing ecosystem can accommodate setting up a blockchain, as well as having talent that has adequate know-how and the skillset to operate it are of paramount importance. Using Blockchain-as-a-service (BaaS) and setting up standardised cross-chain communication protocols can be instrumental in this regard.
- Mainstream Usage: Blockchain will achieve its success only when it becomes the engine behind a “killer app” - something that can be universally used and becomes part and parcel of everyday life. Looking at historical precedents like the Windows PC or the internet, once the usage barrier of a new technology is lowered and it reaches an extensive audience, that is the juncture at which it becomes mainstream. Most businesses currently do not use blockchains extensively, but things could change with the advent of a blockchain app, that can be used by all. With new players emerging and challenging the existing status quo, the onus is on businesses to ensure that their enterprises remain ahead of the curve and bolster their future-readiness.
Finding Opportunity Amidst Uncertainty
Blockchain has been a captivating topic over the years. Prominent industries that will enhance usage of this technology include the likes of banking, logistics, marketing, automotive, and medicine. It could well prove to be a viable solution to the pressing problems of trust, safety, and ethics that cripple network-based applications used in everyday lives.
However, excitement must be balanced with caution. Blockchain is a key cog in building safe, secure, and durable decentralised systems that fulfil growing public demand for personalised access to their assets. Ironing out the loopholes and enhancing trust across the ecosystem is pivotal in amplifying the use of blockchains. All in all, it requires collective ownership and sustained efforts to leverage the power of blockchain in enhancing operational agility, improving data management, unlocking new revenue streams, and accelerating value creation for businesses.
Whether blockchain lives up to the billing it once promised is something only time will tell. Until then, the jury is well and truly out.