Identifying Opportunities for Blockchain Within Your Organization

Contracts, transactions, and the records of them are among the defining structures in our economic, legal, and political systems. But they were built for a paper-based society. In a digital world, the way we regulate and maintain administrative control has to change.
Blockchain promises to solve this problem. Blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. Questions then turn to how organizations can identify opportunities to modernize their industry.
This can be divided into two parts:
  1. Conceptual fit: Is blockchain fundamentally suited to a given use case, regardless of current practicalities?
  2. Near-term feasibility: What challenges would a blockchain implementation of that use case need to overcome, and what is the near-term outlook for solutions or workarounds?

Conceptual Fit

Determining conceptual fit is relatively straightforward. Various indicators allow for a quick-check of whether an idea merits a further look:
  • A requirement for data to be shared between multiple parties.
  • A low level of trust between parties – possibly stemming from geographical separation, lack of verifiable references, or inherent incentives for parties to behave dishonestly.
  • Inability / reluctance to rely on a central authority (e.g. an exchange, trade repository etc.) as a common source of information, in some cases reflecting a lack of trust that extends to state-run organizations.
  • Potential for contractual ambiguity, which may translate into high incidence of disputes between parties.
  • Information being held in either non-digitized or otherwise non-standardized structures, leading to significant effort in reconciling statements.
  • Duplication of logical processes on each side of a transaction (e.g. modelling of cash flows to validate terms of a derivative contract).
  • Significant back-and-forth interaction between parties in the course of a transaction, multiplying reconciliation and status tracking effort.
  • High transaction frequencies, providing a natural incentive for automation
It’s simple to show that many of the most commonly-cited use cases – cross-border payments, trade finance, Know-Your-Customer etc. – satisfy some, if not all, of these indicators.

Near-Term Feasibility

Assessing near-term feasibility is a far more involved process.
On the technical side, it demands analysis of the privacy, performance and scalability requirements inherent in a use case. Legal and regulatory questions must also be tackled, with litigation and compliance risk varying massively depending on the parties involved and data being shared.
Access control permissions would be flexible and would handle more than “all-or-nothing” permissions. The user woulAdded to this are the challenges of multi-party dynamics. Most use cases have no business case unless an organization can transact with relevant partners, operating on the same network. Hence, such initiatives need to be multilateral from the outset, adding major decision volatility to the process.
Ultimately, those organizations willing and able to lay these foundations now will emerge as the real leaders in this space. It is they who will reap the business rewards. It’s a question of when, not if.