Strategic Value of Blockchain
Understanding the value, feasibility, and impact involved in blockchain solutions requires incredible insight into the probable applications of the technology, and its impact internally and for the public. Companies and investors are faced with the challenge of how to marshal the value of blockchain into tangible and sustainable sources of value.
To nail down the facts, it’s important to first understand what blockchain is. Blockchain is a distributed ledger shared across a computing network, where each node stores a copy of the database. Every piece of information is mathematically added as a “block” to the chain of records and there’s no single point of failure. The core advantages of blockchain include decentralization, transparency, cryptographic security, and immutability. The technology allows information to be shared without having to rely on a third-party authority or we call them intermediary. Blockchain technology can be configured in several ways to meet the requirements and objectives of a particular use case.
The strategic values that blockchain use cases can deliver include:
- Operational Efficiency/Cost Reduction
Blockchain might have the disruptive potential to enable automation of processes, removal of unnecessary intermediaries and the administrative effort of record keeping. This can help organizations improve performance and productivity. Blockchain also supports regulatory and audit compliance, which helps generate significant time and cost savings. Over time, blockchain’s strategic value will shift from cost reduction to enabling new revenue streams and business models.
- New Business Models
One of the most promising and transformative values is the creation of a distributed secure digital identity and the services associated with it. Blockchain can allow companies to expand their portfolios and move up the technology stack in order to move up the technology stack with high-value service offerings.
- Risk Mitigation
Organizations can use blockchain-related applications to better trace and authenticate products across the supply chain. Improved transparency and provenance, for instance, could reduce counterfeiting and related health and safety risks. This helps mitigate financial and reputational damage.
Blockchain’s ability to validate and document items, automate transactions, and create trust and transparency is likely to herald a wide range of change in how businesses operate. As this technology develops, businesses will over time appreciate the strategic value of blockchain. Organizations will further identify points of friction that can be eliminated and derive even more value from a blockchain adoption.
As with previous technological adoptions, early movers will have a significant benefit in defining standards and forging partnerships, which can help them reap the greatest rewards from the technology.