Blockchain, distributed ledgers, and Bitcoin have been in the limelight for the past few years with hype at stratospheric levels. There are thousands of blockchain-based start-ups, and most established vendors are investing/piloting/positioning themselves in the blockchain space. Most large enterprise IT organizations are at least investigating blockchain and trying to figure out if or how it fits into overall plans. That said, blockchain and distributed ledgers are not ready for prime time. Don’t be misled by the flurry of start-up activity, VC funding, consortiums, disruptive opportunities and media coverage. Blockchain isn’t ready for prime time.
Despite these cautionary statements, the opportunities for disruption, innovation, cost savings, greater efficiency and effectiveness without requiring a middleman are very compelling—and organizations should be preparing to take advantage of these opportunities with realistic expectations. So with the mixed messages of big upside and disruptive potential, coupled with a lack of enterprise-level maturity, how should an organization prepare, but not overcommit, to this new model?
For all enterprises, there are emerging blockchain application use cases that may be worth evaluating and piloting to assess and be prepared for future opportunities. Some of these “low hanging fruit” categories for early applications and use cases that are candidates for pilots and proof-of concepts include:
• Asset issuance, tracking and settlement
• Recording, securing and transferring title and land records
• Buying/Selling shares and proving ownership in private companies
• Digital notary services
• Digital banking including Know your Customer (KYC)
• International settlement
• Digital identity for the masses
• IoT security, privacy and ownership proof
• Ridesharing without an intermediary
• Property rental (peer-to-peer)
• Music sharing and rights management
• Valuable property ownership proof
• Property value certification
• Private, secure health records
• Cloud file storage without 3rd party
• Proof of document existence
• Anti-counterfeit solutions
• Proof of title
At a high-level, anything that has high transaction costs, difficulty in settlement, difficulty in maintaining records, finding or sharing assets, and proving claims without requiring a centralized authority is a candidate for blockchain-based applications and services. The elimination of the middleman has the potential of reducing transaction costs while speeding up transactions. Another benefit is the immutable, time-stamped, accessible record of the transaction. The combination of faster, cheaper, secure and auditable transactions have virtually every industry at least investigating the applicability of distributed ledgers.
First, certain industries with a high degree of centralized control are at risk if blockchain and other peer-to-peer distributed technologies are applied in their markets. Financial services, banking, insurance and notary services are candidates to invest more heavily in blockchain given the possible disruption and disintermediation of these areas with successful blockchain applications.
The breadth of ongoing activities is focused on creating applications and development platforms positioned for enabling services for a wide class of industry segments. Beyond financial services, blockchain technology is being applied to solve issues found such industries as education, government, healthcare, insurance, and manufacturing. Also, blockchain approaches and methods are well suited for protecting intellectual property, for instance registering music, art, publications, and so forth, as well as providing for enterprise collaboration as needed for supply chain management.
For those organizations not in these spaces or not being impacted by some of the low hanging fruit mentioned above, the investment today should probably be focused on education and maintaining a flexible technology infrastructure to provide the flexibility to innovate in this area in the future.
TechVision Research has just completed the first of several research reports in the blockchain area with blockchain-based identity management and blockchain-based smart contracts being published soon. Our Blockchain Enterprise Level Set research report provides an overview of the technology, the emerging ecosystem, key early-stage companies, consortiums and major vendor participation. We also provide a detailed action plan for enterprise leaders. Click this link for a 15 page excerpt from this independent research report.