Use cases for blockchain are getting increasingly common in various sectors, but how can companies achieve a perfect blockchain strategy?
What should companies consider when it comes to perfecting their blockchain strategy?
Perhaps best known as the technology behind Bitcoin, blockchain is being implemented in more and more industries. It helps users to gain added visibility from supply chains, as well as providing the benefits of enhanced security and the reduced costs that come with a lower amount of necessary third parties than other technologies. But these advantages fail to be substantial if companies don’t perfect their blockchain strategy.
But, what can organisations do in order to ensure that their ventures into this technology are a success? Three experts provided their top tips for perfecting blockchain implementation.
Get the workforce on board, and identify pitfalls
Firstly, much like any new venture into technology, an airtight blockchain strategy should get the entire workforce on board with the idea, ensuring that they are clear on what it is, and what its benefits are.
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“Ensure there is a shared understanding of blockchain within your business, and make sure that the team who will execute the project have a strong understanding of how the technology works, including knowledge of what it can do as well as its limitations,” said Sukhi Jutla, COO of MarketOrders. “This will also help to get management buy-in and support from stakeholders.
“Identify where you may have skills gaps in your team and recruit the right skillset to help you build your solution.
“Then, you must define the problem – don’t waste your time boiling the ocean! Instead, take the time to identify a specific business area or process where you think blockchain could create benefits, such as increasing efficiency or improved transactional performance.
“Once you have a solution that works you can then start to think about scaling this to other areas of your business.”
Think twice before storing data
Blockchain has an array of benefits for a growing number of industries. However, according to Kevin Curran, senior IEEE member and editor of the Journal of British Blockchain Association (JBBA), using the technology to store data could grind your strategy to a halt.
“Many people are not aware that a major weakness of blockchain is that storing data or large files on the blockchain is a non-starter as it can barely sustain small strings of text, that simply record a balance transfer between two parties.
“Yes, there are new initiatives such as the Interplanetary File System (IPFS) that can provide much of the infrastructure needed for content tracking and attribution as it provides a permanent, decentralised Web where links do not die, and no single entity controls the data – however, there is little real-world uptake in IPFS to date.
“There is also the immutability of the blockchain which can be an issue when we later discover that a transaction needs amending due to incorrect data – this is not a trivial problem.”
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Think of the customer
Marcus Treacher, senior vice-president, customer success at Ripple, explained how organisations shouldn’t rush into implementing blockchain, and must be deliberate in considering how it will benefit customers.
“Like any business-transforming technology, blockchain encompasses new models that cannot be built and perfected overnight,” said Treacher. “It not only needs careful planning and attention, but also a commitment to prove its ability to solve real customer pain-points.
“As we’ve built and deployed blockchain technology from the outset, we’ve been unflinching in our purpose to transform cross-border payments for the financial services industry – ensuring our solution benefits everyone from the clearing bank to the end-user.”
Establish trust with regulators
Treacher went on to emphasise the importance of getting on the good side of regulators, as past incidents in which companies have done otherwise have proven to be the death knell for developments.
“The hyper-focus on solving an industry-wide problem has allowed us to bring regulators, governments and industry players along with us, on every step of our journey to redefine cross-border payments. In turn, this has allowed us to test, adapt, prove and deploy our technologies worldwide on an industrial scale.
“Trust is critical in financial services, and new technologies can evoke scepticism from the industry if they are not approached in the correct way. Consider, for instance, how Facebook’s Libra whitepaper was met with industry-wide criticism because it sought to circumvent the existing financial services system. Libra was trying to run before it could walk and, as a result, alienated its partners which led to the project inevitably hitting a wall and pivoting altogether.
“Ultimately, Libra presents just one example of the importance of working within the financial system and with the regulators who oversee it to ensure responsible and compliant innovation – a crucial component to ensuring your blockchain strategy is robust.
“Once you’ve established trust with regulators and industry members, your blockchain strategy can develop naturally. “