When Bitcoin, a “purely peer-to-peer version of electronic cash”, was released in 2008, blockchain (the technology that runs Bitcoin) made its public debut.1 The brainchild of a person or group known by the pseudonym Satoshi Nakamoto, its expansive technological capabilities were then somewhat unknown. Fast forward 12 years to 2020, there’s now a growing recognition that blockchain can serve as a pragmatic solution to various business problems across industries.
Identified as a general-purpose technology (GPT), blockchain is similar in scope to the disruptive power of the internet, the steam engine, and electricity. Even business leaders wary of tech-based solutions and global ‘hype’ have come to realise the larger, transformational importance of this digital technology.
What is blockchain, and how can we apply it?
Blockchain is a distributed digital ledger capable of recording and verifying a high volume of digital transactions. New information can be added to the record, but previous information, stored in blocks, cannot be edited, adjusted, or changed.3 The ledger can be used to track not only financial transactions, but any digital asset transaction, making it possible to share contracts, information, cryptocurrencies, and more. Additionally, blockchain is a decentralised system, which means the information in the blockchain ledger isn’t maintained by a single controlling entity or intermediary, but hosted across a shared network of devices, making the system almost tamper-proof.
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The disruptive potential of blockchain
The last few decades brought us the internet of information. We’re now witnessing the rise of the internet of value. Where the first era was sparked by a convergence of computing and communications technologies, this second era is powered by a clever combination of cryptography, mathematics, software engineering, and behavioural economics. According to Don Tapscott, a leading analyst of innovation and the impact of technology, “Blockchain technology will have a dramatic impact on business and society by providing a secure, direct way of exchanging money, intellectual property and other rights and assets without the involvement of traditional intermediaries like banks, utility companies and governments.”
How to apply blockchain to a business
Blockchain technology can be applied to any sector or industry that needs an accurate record of information. As blockchain becomes more accessible and popular, it’s starting to revolutionise a vast number of industries and business models on a global scale.
The impact of blockchain on supply chain management
A century of change has shown us that supply chains – the links to creating and distributing goods – are regularly disrupted by innovation. In today’s world, companies need to be agile, flexible, and responsive, by driving continuous innovation throughout their business supply chain, in order to remain competitive and relevant.
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The potential of blockchain in a struggling economy
The records of contracts and transactions are among the defining structures in our economic, legal, and political systems. However, the critical tools formed to manage these notations haven’t kept up with the economy’s digital transformation. Blockchain has the potential to solve this problem.
As a foundational technology, blockchain has the potential to create a new platform for our economic and social systems. Before the technology was developed, there was no way to secure and validate ownership in a digital asset, or verify a transaction in a trustless, public way. With blockchain, contracts are now embedded in digital code and stored in transparent and protected databases. From finance to customs and certification processes, transportation and logistics, insurance, distribution, intellectual property, and government procurement, the applications of blockchain are immense.22 As a result, our traditional association and understanding of intermediaries in these sectors – like lawyers, brokers, and bankers – is at risk of disruption.