Now that the dust has settled around the hype of Blockchain technology, it is time to identify how your business can utilise the technology in practice and realise the benefits. Blockchain may not be a one-size-fits-all solution which solves everything. However there are several exciting use cases which can create opportunities in all industries, for everything from efficiency savings to new business models.
When beginning with your Blockchain strategy, it is vital to always begin with the problem you want to solve or what you want to achieve. From there you can assess whether Blockchain could form the solution (or part of the solution), or whether you should look to other technologies. The framework described in this article will help you to carry out this analysis.
Do you find it hard to grasp what the Blockchain technology is and what it can do for you?
A framework for assessing the suitability of Blockchain for your use case
I recently studied a course from Oxford University in Blockchain strategy, in which I was introduced to the Oxford Blockchain Strategy Framework. In the framework, there are 6 key criteria which can be used to assess whether Blockchain could be useful for your use case.
1. Is the process predictable and repeatable?
You should first ask if the process you are looking at is something which can be predicted. For example, does it always follow the same steps? Are there a limited number of scenarios and responses which can be programmed? Is it a good idea to automate this process?
A good example is Trade Finance. A sale always follows the same fundamental steps, a credit can either be approved or not, and goods can either be delivered or not, governing whether the sale goes through and whether the funds are released to the seller.
2. Is the process a recurring, long-running process?
The next question to ask is whether this process is something which is carried out regularly over a long period of time, i.e. not a process which occurs only once. For Blockchain to be an attractive solution, one should ideally be able to re-use the process steps, and the information stored.
For example, a KYC (Know your customer) check is done for a customer each time they open a new bank account, and again periodically as part of due diligence. The same checks are done each time against PEP (Politically Exposed Person) and sanction registers, and much of the customer data can be pre-populated and reused. See an example here.
Following this, you should ask if the process you are looking at involves multiple stakeholders. There must be some advantage with using distributed ledger technology.
An example of a process where this is the case is music copywriting; this process involves musicians, songwriters, record labels, legal representatives, and agents.
If on the other hand, the process occurs entirely within your organisation without external stakeholders, then Blockchain technology is probably not necessary.
4. Is a central trusted party responsible for reconciling disparate data?
Today, even in processes where there are multiple stakeholders involved, the role of verifying, matching, and storing data is often done by a single, central, trusted party. If this is the case, then Blockchain could bring multiple benefits to the use case.
Firstly, there is no longer a need to trust this central party since the data is verified by the entire network (in some cases there may no longer be a need for the trusted party to be involved in the process at all).
Secondly, the data is more secure. Today, if the central trusted party is hacked, then the data is compromised. With distributed ledger / blockchain technology the hacker will need to access a majority of the network simultaneously to do any damage.
5. Is there an element of value transfer?
Value does not necessarily mean money, so remember that Blockchain is much more than just cryptocurrencies. For example, value transfer could refer to copyright, ownership (eg. Land) and even voting.
For example, I have the right to a single vote which I can use in an election which is valuable to me, and that value is used up once I exercise my voting right; one vote is then attributed to the candidate for whom I have voted.
6. Is there a need for an immutable record?
The final question to ask is whether there is a value in having an immutable record. Do we really need to have a register or ledger which cannot be altered? Voting is a good example of a process in which there is great value in having an immutable record for obvious reasons. (To learn about the solution behind this visit: https://agora.vote/.)
Looking at your use case, is there information which needs to be audited and traced, or is it only for your own records? What are the repercussions if the data is tampered with?
If based on the above you decide that Blockchain is something which could help solve your use case, the next step is to analyse how you would use blockchain. The second part of the Oxford Blockchain Strategy Framework will guide you in doing so, and I will cover this in a future article.
Interested in learning more about the Blockchain technology and its use cases? Take a look at our Online Blockchain Course: