Blockchain in business – Will 2018 be The Year of the Block?

blockchainA couple of weeks ago we asked readers of this blog a big question – ‘Are you ready for the Smart Manufacturing revolution?’ – and we concluded that the answer could be found in the attitude of individual businesses to the adoption of new technology.

Various technologies underpin this next revolution in manufacturing but, alongside the sensor and control tech that powers automation, the emerging idea of blockchain occupies a prominent position in current debate around the subject.

Now, you’ve probably heard of blockchain already, it’s one of those technology terms that seems to make its way into just about every article, interview or speaking slot with an industry expert right now – the kind of term which would incite huge ridicule and dismay amongst all the other industry experts were an industry expert not to reference it when asked (and possibly leading to their permanent exile from the industry expert community) – but what actually is it?

Harvard Business Review makes one of the better attempts at a succinct description of the technology when it defined blockchain as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.”

This verification and permanence comes from the cryptographic linking of “blocks” of data using what are referred to as hashes and previous hash pointers. It can be a bit mind-boggling at first but if you have 20 minutes free then we reckon this video from former MIT lecturer, and now Chief Evangelist at Circle, Anders Brownworth, is one of the best explanations out there and well worth a watch.

bitcoinAs a business solutions provider we’ve kept tabs on blockchain ever since the dawn of the technology mainly due to our interest in, and the major impact it promised to have on, finance and financial systems. This has been amply demonstrated since by the explosion of the Bitcoin cryptocurrency.

However, beyond immutable records of financial transactions, we hadn’t much considered its application within the manufacturing supply chain and business operations in general until much more recently. As 2018 looms though it looks like next year could see us focusing on the subject in much more detail as the confusion around blockchain and its potential capabilities begins to lift.

Firstly, there’s the relatively obvious expansion to transactional functions outside of purely financial ones (products or sensitive information for example). With blockchains able to facilitate far quicker confirmation and verification of both ownership and authenticity, as well as reconcile processes, their application could help simplify and speed up supply chains by automatically implementing the terms and service levels of multi-party agreements.

Another huge benefit of blockchain technologies is their ability to remove intermediaries, such as banks and clearing  houses, from the supply chain by replacing them as the creator of trust and provider of verification. Deloitte Consulting highlighted this in their recent piece, Blockchain: Democratized Trust, when they posited that:

“Blockchain’s ability to replace intermediaries is precisely why this technology matters. It can reduce overhead costs when parties trade assets directly with each other. Its ability to guarantee authenticity across institutional boundaries will likely help parties think about the authenticity of records, content, and transactions in new ways.”

In addition to these major benefits, our partners at SAP have also pointed to the promise blockchain holds for hastening the digitisation process when it comes to physical goods. The ability to tag and track goods by providing them with highly secure digital identities means far more trust can be placed in stock management and asset recording systems.

All pretty impressive and exciting for businesses looking to streamline operations in the future then, so much so that in the same article SAP described blockchain as the digital Cinderella coming of age – referring to the fact that it’s true worth and capabilities are only just getting out in the open.

As these huge benefits become more and more obvious to businesses and technology solution providers though, the drive to provide and take advantage of them will surely only speed up. For this reason its fair to say that it will be worth staying tuned to the development of blockchain-based solutions in 2018 as well as starting to think about how the technology could affect your business in the next 12 months and beyond. We’ll be doing just that and no doubt we’ll be talking about the subject a lot more over the course of the next year.

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