We’ve all heard that blockchain will revolutionize business, but it’s going to take a lot longer than many people claim. Like TCP/IP (on which the internet was built), blockchain is a foundational technology that will require broad coordination. The level of complexity—technological, regulatory, and social—will be unprecedented.
The adoption of TCP/IP suggests blockchain will follow a fairly predictable path. While the journey will take years, it’s not too early for businesses to start planning. An American Banker states, “If blockchain were to replace the current financial system, developers could face the same fiduciary liability as banks do. What that duty would look like is a contentious debate within the industry. Some say it comes down to prioritizing between ‘duty of care’ and ‘duty of loyalty.’ The first is about doing no harm, but the second is about serving a customer’s best interest.”
Comprehensive and Trusted Tracking of All Production Steps.
On a single IT platform, the customer can monitor progress as well as any deviation from the scheduled plan. This interoperable, blockchain-based platform is independent of the selected print shop or service bureau, thus reducing cost and the need for multiple databases.
Protecting IP by Using an Encrypted, Immutable File.
This is particularly relevant for designs involving critical IP or being used in regions where IP security is especially at risk. To facilitate the outsourcing of AM processes, a consortium project called Genesis of Things is developing a platform that will allow parties to share digital design files in a safely encrypted blockchain format that is accessible only for the defined number of printouts. Companies contributing to the project include Cognizant, Commerzbank, and Innogy.
Offering Transparency into Quality.
Blockchain-enabled 3D printers control and document the raw material and process parameters used, and the output of the printing process. These functions validate quality for customers and end-users.
Executing Machine-Controlled Maintenance.
Sensors attached to AM machines can trigger maintenance requests, and related smart contracts on the blockchain control fulfillment of and payment for the work. Enabling MaaS Offerings: blockchain allows AM machine vendors to reliably prove that a machine or product meets contract goals. It also supports the execution and auditing of the financial transaction, promoting trust among all parties. In order to capture these benefits in AM factories, manufacturers must advance use cases beyond the proof-of-concept phase and improve the technology so that factories can conduct additive production economically. Moreover, a critical mass of end-users must recognize the need to outsource AM, either because they lack the necessary internal resources and capabilities or because they require the specialized services that an AM factory offers.
Assessing the Applicability of Blockchain Use Cases
Prior to selecting which blockchain use cases to pursue, manufacturers should conduct a multistep assessment. The assessment of applicability should touch on six factors: Currently, the majority of players in the blockchain for the energy market are trying to enact some form of peer-to-peer energy trading. In 2017, Enedis, working with the French start-up Sunchain and the Departmental Council of Pyrénées-Orientales, launched one of the first P2P energy sharing projects in France. The project, DIGISOL, explored the use of blockchain technology to share solar energy between individuals within the same building (collective auto-consumption). Large-scale deployment of the technology for P2P energy trading however is still inexistent in France. The interest in “blockchains” is growing far beyond the hype. It has become apparent that this technology will shape the future and rewrite the rules for personal and corporate finance, medicine, supply chain transparency, identity verification, construction, and more. Following a panel on blockchain and cryptocurrencies, Patricia Connolly, Executive Director of the Raj and Kamla Gupta Governance Institute at Drexel’s LeBow College of Business, and Richard Godwin, Blockchain Strategy Lead at SEI Investments Company, help bring clarity to blockchain’s mystery.
Blockchain’s potential to disrupt various industries and ultimately, the economy, has many people talking. The technology could conceivably change the way transactions – both financial and logistical – are processed. It’s important to understand the underlying technology in order to consider blockchain’s future applications. The term “blockchain” is everywhere these days. From its architectural benefits to its use in cryptocurrencies like Bitcoin, blockchain is gaining traction, making it imperative for industries, executives, and regulators to gain a fundamental understanding of the technology and its possible applications. What is blockchain, and how can it be utilized?
As a result of the 2008 financial crisis, Bitcoin was anonymously developed with the goal of creating a decentralized form of currency that did not rely on banks and their intermediaries. The cryptocurrency effectively provides a digitally distributed accounting ledger, and there are no central authorities needed to maintain it. Bitcoin’s blockchain serves as the record-keeping function, which enables its users to easily transfer ownership of Bitcoin to other network participants. Blockchain’s ledger function is what has drawn the attention of many businesses across a variety of industries. Each transaction on the ledger is digitally broadcast to all parties in the network, who then verify the validity of the transaction. Not all enterprise blockchain implementations are alike.
Cryptocurrency architecture typically processes transactions in “blocks” that are then added to a “chain,” while other blockchain implementations have adapted the architecture by trading some of the unique cryptocurrency designs for better scalability and functionality in an enterprise setting. However, similar key features exist across all platforms: Redundancy – All participants maintain their own copies of the ledger and are notified when their respective copies are not in consensus with the other participants’. Disintermediation – Automatic updates to the ledger eliminate network breaks, as there is no reliance on centralized changes or system approvals. The technology is inherently “trustless” because blockchain creates a transparent, indelible record of transactions and provides a way for all participants to safely share and access data in a public network setting. Automation – Businesses can leverage smart contracts that interoperate with the ledger to automate business logic related to the shared ledger data. This reduces the need for manual reconciliation across multiple organizations that are parties to the ledger.
The underlying blockchain technology has applications that could result in substantial changes to how businesses and individuals transfer information. Any industry in which transactions require a permanent record and trust from all parties can benefit from and potentially use the technology. More specifically, blockchain can simplify paper-intensive processes that require an accounting ledger. Process-heavy practices, such as real estate title issuances and transfers, contract execution, insurance or trade finance, could similarly extend blockchain technology to digitize and mechanize current processes. Executives even have the opportunity to incorporate blockchain technology into their roles on company boards.
For example, some have identified blockchain as a technology that could be applied to proxy voting in order to reconcile and capture votes, as well as deliver the results in an indisputable format. Though these areas are currently being explored, and real enterprise solutions do not yet exist, many organizations can potentially transform the way they conduct business with blockchain. What can be done to ensure companies and their boards are aware of blockchain? In July 2017, Delaware was the first state to pass measures allowing businesses incorporated in the state to utilize blockchain technology for record-keeping, including maintenance of shareholder and stock issuance lists. Because Delaware is the site of incorporation for more than 60 percent of U.S.-based corporations, a large number of businesses now have the opportunity to implement blockchain technology for record-keeping practices. It is imperative that board members gain an understanding of the underlying technology and the ways in which it could positively or negatively disrupt their organizations.
Connolly believes that company boards cannot wait until blockchain is being adopted; they must gain an understanding of the technology now, while it’s in development. Board members of companies that may be impacted by blockchain technology should get involved in industry groups that provide education and insight into blockchain’s potential impact on certain businesses or practices. Investing in blockchain research and platforms could prove to be beneficial for each organization in determining how the technology can be strategically leveraged. Connolly also encourages boards to utilize their organizations’ chief information officers, if they have one. Inviting CIOs into the boardroom for regular conversations about current and future blockchain opportunities will help board members hear firsthand about the company’s plans for emerging blockchain applications, as well as build buy-in from company leadership.
What will be blockchain’s impact five years from now? It’s difficult to predict the future technology landscape and exactly how blockchain fits in, but Godwin has identified a few areas of potential impact. Five years from now, it’s possible that a central bank will hold Bitcoin on its balance sheet, making the cryptocurrency increasingly accessible and liquid. Cryptocurrency’s lack of intermediaries makes transferring value a completely new and unique experience. Godwin also expects that blockchain technology will be particularly valuable in the finance, healthcare, and insurance industries. These industries rely on permanent record-keeping and the efficient processing of financial and informational transactions – areas where blockchain can streamline current processes. Additionally, new internet architectures built upon blockchain could emerge.
A few large companies get value from users’ data with the current internet design. Blockchain could aid in pushing that value back into the users’ hands by decentralizing data storage and enabling users to control which applications can access their data and monetize it. Users could get paid in exchange for revealing their data to these new internet applications. Keeping up with technology’s rapid evolution can be challenging, but the earlier that organizations begin conversations about next-generation technologies like blockchain, the more likely they will be able to take advantage of and integrate the developments.