By Jaime Zarate, Chief Strategy Officer, Richardson Communications and Consulting
I’m often asked what blockchain technology is and how it can be used in customer environments. It’s best to think of blockchain as a tool that goes well beyond its role as the underlying platform that supports cryptocurrency. As with IoT, if you can imagine an innovative application of the technology, you can probably achieve it.
Blockchain technology, also known by its more generic name, “distributed ledger technology,” can support a variety of business processes and workflows requiring secure and permanent records. Conceptually speaking, think of it as an encrypted records database that can be securely shared between two distinct parties. Businesses looking to set up new intercompany processes or workflows and/or improve the customer experience can share sensitive data in a more secure environment than rewritable databases provide. Blockchain-based platforms require authentication of when data is posted to the ledger, and by whom. Moreover, data is encrypted and cannot be changed once written to the ledger. Thus, in business processes where there is risk of data being breached or changed, a trusted record can now be deployed between two federated entities.
Blockchain technology is a tool for governing accountability in business. Contracts, transactions and the records of them are among the defining structures in our economic, legal and political systems. They protect assets and set organizational boundaries. They establish and verify identities and chronicle events. They govern interactions among nations, organizations, communities and individuals. They guide managerial and social action. And yet these critical tools and the bureaucracies formed to manage them have not kept up with the economy’s digital transformation. In a digital world, the way we regulate and maintain administrative control has to change.
Blockchain promises to be this change by recording transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.
With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering and revision. In this world, every agreement, every process, every task and every payment would have a digital record and signature that could be identified, validated, stored and shared. Intermediaries like lawyers, brokers and bankers might no longer be necessary. Individuals, organizations, machines and algorithms would freely transact and interact, with little friction. This is the immense potential of blockchain.
Here are a few ideas for how blockchain-enabled workflows and processes could empower customers:
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