Blockchain technology is becoming more divergent. A technology that’s come into the public conscience per the creation of Bitcoin, which itself is still nascent, blockchain has seemingly become a household term through rampant still-as-yet-unproven efforts in Capital Markets, and we are now seeing company use cases and industry applications expand omni-directionally. Trading and securitization have given way to use cases around operations, administration, and compliance.
From finance, industry groups across insurance, real estate and title services, healthcare, and global shipping have become active in creating consortium and exploring Proof-of-Concepts (POC’s) globally. Blockchain is also gaining wider appeal among governments and regulators as they explore how to use it within their own organizations and regulate it for external application. These trends underscore just how multidimensional blockchain landscape has become, although it is far more diverse a landscape to navigate through beyond finance and DLT (Distributed Ledger).
The key challenge facing organizations today goes beyond simply understanding what they can do with this technology. The focus has shifted to how organizations should apply the technology to optimize their operations. This can only be done by dismantling and reimagining the differing elements of the associated value chain and infrastructure. At the end of the day, we need to recognize that blockchain is fast becoming a broadly generalized term that’s an umbrella and/or conduit to the following differentiated capabilities:
• Decentralized Networks—> Peer-to-Peer Networks; Network(s) of Ledgers
• Distributed Ledger—> Shared, Distributed Databases
• Smart Contracts—>Automated, Digitized, Self- Executing Business Processes and Agreements
• Blockchain Protocol —> The Underlying Distributed methodology of transactions and blocks that makes Blockchain unique
A Real Value of Blockchain–Enterprise Distributed Ledger
Let’s say you are a Chief Risk Officer or COO. You want to know in real-time that everything in your purview is compliant and there is consistent audit supervision. You want to share information in a transparent way and need a holistic view at the parent company level to do so. That’s a major challenge for many firms with today’s internal architecture.
Utilizing distributed ledger values specifically for enterprise internal architecture across a firm’s business units would help solve for industry-wide issues, including:
• Lack of real-time information
• Abundance of centralized ledgers
• Growing resources spent on maintaining multiple systems (and people physically logging into those systems)
• Slow, batch-oriented exchange of information between internal and external systems and related time-consuming and collectively redundant verification, affirmations, reconciliations and middlemen/ outsourcers
Further, large institutions want to have a singular view of what’s happening across their entire organization. That’s the value of blockchain internally as opposed to using the technology externally to connect with different businesses. It also allows for data, information, and analytics to be most efficiently shared across an organization to minimize spend and maximize usage. As a result, a new trend developing is blockchain as a service or BaaS. Similar to PaaS or SaaS, BaaS will emerge as different companies and vendors continue to make blockchain technology functionally available so other organizations can have it coded and built for them to help optimize and automate systems, processes, and business units. This will give inevitable rise to related problems and needs, which will give inevitable rise to generalized and specialized vendors, applications, systems, and technologists.
BaaS is taking on several specific commercial angles:
• Distributed Ledgers like external Peer-to-Peer-networks
• Distributed Databases like internal cross-business networks
• Blockchain Protocol Data Structure design; how your company would define transactions and blocks
• Consortium Management and related Protocol Creation
• Smart Contract Programming Oracle Implementation
• Node Creation and Management
• Related Software, System, and Architectural Model Design
The complexity of these use cases, related technologies and related system and hardware migrations and upgrades means wide spread blockchain implementation is still years away from fruition. A complete understanding of the ever-evolving blockchain landscape and clear focus on what firms are actually trying to remedy within their organizations (e.g., current-state architecture issues and transparency) can help drive the industry closer to optimal use cases. The rest of this year is likely to include smaller scale development and the delivery of applications that further showcase the benefits the technology can provide.
Many will find it difficult to argue the technicalities of something still being hypothesized and theorized within a market that is not yet ready to fully consume and utilize it. Regardless of value and need and simultaneous to the continued advancement of the underlying technology, there is still a long way to go. 2017 has brought with it the launch of the first (and only) production Blockchain network, a Private Equity-based admin-functioned DLT supporting one client in Switzerland with one local regulatory node, Northern Trust built in conjunction with IBM. While much is in progress, while there is news every day around the world, 2017 will clearly end-off still inundated in POC’s and promising announcements.
So, what’s the forecast in the short term? The answer isn’t finance or “blockchain.” In my opinion, it is specifically the beginning of distributed ledger theorized more meaningfully in respect to applications in government, healthcare, retail, real estate, insurance and beyond. Mortgage servicing, land rights, and global supply chain management are where some immediate promise, and many, many hurdles lie.
No matter what, true industry-wide disruption, meaning full-scale adoption and migration, will take most likely 10-20 years. Adoption will occur undoubtedly omni-directional as advancements are realized separately and independently across distributed ledger, decentralized networks, smart contracts, and more.
Check this out: Top Revenue Cycle Management Service Companies