There are many myths and common traps surrounding blockchain that are hindering businesses from fully harnessing its true potential. Although the technology is now past the “trough of disillusionment” phase, many business executives still not fully confident in their understanding of blockchain.
Debunking these blockchain traps can help business leaders track a path to achieve success with their pilot solutions.
Trap #1: Blockchain is essentially bitcoin
Many business leaders assume that bitcoin is the blockchain— and so they cannot integrate cryptocurrencies in their businesses. However, the truth is that bitcoin is implemented over the blockchain framework. True, bitcoin is the most popular application of blockchain but it does not mean blockchain is only meant for cryptocurrencies. This is a common trap to avoid.
While cryptocurrencies rely on the public permissionless blockchain framework, there other versions of blockchain that are particularly useful for businesses. For instance, a private permissioned blockchain framework is most relevant to enterprise applications with a focus on privacy. Permissioned blockchains emphasize privacy and as such, require permission to validate transactions. They are usually widely implemented in situations that require collaboration between businesses such as the supply chain.
Business executives need to understand its marketplace and industry well enough to able to pinpoint how blockchain might make every process better. The key to success is aligning business processes and services with the technology to effectively address your clients’ market needs.
Trap #2: Implementing new technology like blockchain is cool
The appeal of becoming an early adopter of emergent technology draws many business leaders to the prospect of launching their own pilot programs. What lots of people find is that while they leave behind old systems of records, they exchange them for new demands. Sure, there will be more improvement in terms of cost savings and efficiency, but blockchain implementation often comes with its set of challenges.
Taking interest in emerging technologies is important, but so are planning, talent, resources, collaboration and a host of other factors. The blockchain solution being explored should be driven by customer value rather than simple interest. Asking the following questions could help clarify the applicability of blockchain:
- Does the new solution enhance experience for end customers?
- Will it offer great value to unfulfilled or under-served needs?
- Can it accomplish complete or partial disintermediation?
- Does it improve transparency by digitizing and preserving the provenance of an activity?
These four questions can help companies to identify suitable use cases for blockchain in their business operations. While having an enthusiasm for blockchain is sensible, it is important for companies to carefully evaluate how the technology can be used to solve tough business problems when other technologies fail. Otherwise, blockchain initiatives will fail and discourage people from using or exploring them.
Trap #3: Industry-wide collaboration is required to make blockchain implementation successful
Some business leaders mistakenly believe that unless everyone else is part of it, blockchain cannot be successful. So they want to wait till someone takes the lead, sets standards and builds a usable infrastructure for effective deployment of blockchain before they can jump into the train. This is a mistake.
Although joining a consortium can help accelerate the implementation process, companies could benefit more if they built the blockchain solution on their own. Rather than outsource from outside, firms could take the DIY approach and develop their own private blockchains. This approach also allows the company to maintain a high level of trust and data integrity when dealing with different sets of partners. It also makes it easier to integrate legacy systems that are unique to the business. As a result, companies can benefit significantly in terms of cost and time savings by implementing blockchain.
For instance, deploying blockchain in the supply chain has resulted in reducing shipment errors. It includes effective and real time tracking of goods from one port to another among other benefits in this industry.
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