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As the initial hype around bitcoin begins to fade, it appears to be the turn of this digital currency’s underlying technology, blockchain, to garner more column inches and broader industry attention.
As a protocol for developing an historical record of the value transaction passed between multiple parties, this distributed ledger technology has until now been relatively under the radar despite the criticality of its function.
Perhaps this has been down to its intangible nature, as a behind-the-scenes process with the end user largely oblivious to its inner workings. Plus, it doesn’t represent a new technology per se but is rather the fruition of existing components combining in different ways. The result, however is poised to become one of the most disruptive of all emerging technologies, perhaps rivalling or even surpassing the explosion in API management.
As businesses wake up to blockchain’s broader scope beyond crypto currency and its role in revolutionising the way we exchange and manage large volumes of transactions, the implications for core operations including supply chains and customer relationships are becoming better understood and appreciated.
One service where I expect the impact to be keenly felt is around smart contracts. Their usage is on the rise, broadening out from the traditional domain of finance to other industries that simply want to streamline and improve their digital partnerships and asset transfer processes.
These self-automated computer programmes carry out the terms of any contract, such as a settlement, without the time-sapping and expensive bureaucracy that all too often blights the procedure by eradicating the need for middlemen such as the lawyers traditionally used for verification. Thus, two anonymous parties can trade and do business with each other over the internet, with heavy duty encryption providing the trust element. With all recordings of the transactions unable to be altered, the risk of tampering from third parties or human error creeping in is removed entirely, strengthening security.
This enhanced transparency and traceability has major repercussions for several areas, with foreign aid donations being a pertinent example. Now that the ledger has the ability to trace exactly where the currency is being spent and by whom, the visibility that ensures the donation reaches the intended end-user can be a key driver in building trust amongst nations, encouraging them to donate more and even enabling funders to target key outcomes more effectively.
Then there are the inroads blockchain is set to make in healthcare, touted in some quarters as the ultimate solution for the sector’s interoperability challenges. With both privacy and cost-cutting paramount, this technology is set to be a godsend when used for example, to manage patient contracts for health plans. The automatic verification and authorisation of their confidential information not only provides greater peace of mind, but puts an end to some of the inconsistencies and uncertainties over what has or hasn’t been paid, driving efficiency and curbing administration costs.
However, while the case for harnessing blockchain may be watertight, as ever the implementation can be a deal breaker if the full benefits are to be reaped and the value optimised. Setting up this technology comes with an inherent complexity. As a concept that is underpinned by partnership and collaboration, the need for middleware that supports integration, correlation and analytics as well as driving security and governance must be a major consideration of any project.
Crucially, many different data sources must come together with the rest of an enterprise architecture in real-time. Blockchain is continually generating technical and business information that can offer valuable insights from fraud detection to the behaviours of users throughout the blockchain, so tools that can visualise these become a core ingredient for quick and simple data gathering and enhanced predictive capabilities.
Furthermore, data discovery software that can also drive historical insight on blockchain adds another element that further evolves the simple tracking and exchange of assets around a business to a network in which greater innovation, discovery and enhanced communication is fostered amongst peers.
Parties that have previously been siloed and disconnected within an organisation or even an entire industry can securely converge on the same information. Additionally, the organisation and its network of partners can work together automatically across multiple intelligent devices with major efficiency and cost saving benefits.
As with much of the game-changing technology driving the Fourth Industrial Revolution, success hinges on how blockchain is applied and managed. To ensure that you leverage blockchain events, you need to be able to analyse, correlate and act on these events, otherwise there will be a missing link.