We are very much used to exchanging information across the Internet, e.g. emails, documents, pictures, but when it comes to exchanging value through the Internet, we are just scratching the surface with Blockchain.
Things of value are naturally more prone to fraud and theft and in the case of some digital assets, measures need to be put in place to prevent double-spending. In this context, Blockchain is sometimes referred to as the enabler of the Internet of Value.
To some extent, Blockchain is showing signs similar to the beginning of the Internet and the potential to have a comparable disruptive impact as it gains more maturity.
Whereas the promise of the web was to enable the sharing of information across the world; the promise of Blockchain is to enable the exchange of value across digital channels without friction!
Blockchain technology is currently going through a phase in which it is gaining more maturity and the concrete benefits are becoming clearer.
Classification of a wide range of use cases, consistently shows the formation of clusters around a few areas of application, with many specifically leveraging Tokenization and Smart Contracts.
Blockchain is a technology that, amongst other things, enables two or more people or organizations to confidently and securely transfer value (e.g., money, data or a digital asset) electronically from one person or Organisation to another without or with fewer intermediaries (e.g. a bank).
This technology provides the environment to manage information and more importantly the movement of value through digital channels.
While there is a lot of focus and coverage related to cryptocurrencies, which are built on Blockchain technology; the range of use cases goes well beyond digital currencies. As a general rule of thumb, Blockchain fits well in areas where there is a need to establish trust between multiple parties.
The value chain across the industry is inherently very collaborative with many partnerships between providers to collectively orchestrate the delivery of products and services.
Smart Contracts have a high potential to enable streamlining of business to business interactions. In particular to disrupt processes such as invoicing, reconciliation, settlement, and accounting in the context of a marketplace.
As we introduced above, Blockchain technology has many areas of applicability regardless of the industry. The classification of a wide range of use cases has led to the following non-exhaustive generic areas of application:
- Smart Contracts: Codifying agreements with an emphasis on the procure-to-pay area.
- Tokenization: Turning assets into pervasive digital twins.
- Provenance: Tracking of valuable physical and virtual assets.
- Certification: Streamlining certification for safety and security.
- Digital Identity: Managing digital identities of entities across the value chain.
The choice to consider Blockchain as the solution to a problem is not trivial. The hype and fear of missing out, both play an unwanted role, and as a result, the decision making could become slightly biased and focused on the technology. On the other hand, there are many use cases where the technology is very uniquely positioned and could be an ideal solution.
In any case, there are still a few key challenges that need to be dealt with before adoption gains traction. Scalability, governance, and cost of usage have been identified as the main obstacles.
As a general rule of thumb, we could generalize that Blockchain fits well in areas where there is a need to establish trust between multiple parties.