CIOs Are Turning to Blockchain Technology
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Blockchain is a rising star in the business world. It has moved beyond a tool for financial services and transactions and is filtering into diverse industries.
CIOs are keenly aware of the complexity of managing digital transactions. As data, goods and money flow across organizations and supply chains, verifying the authenticity of dealings is a growing challenge.
In many cases, traditional approaches to auditing lack the level of visibility and security organizations require. "They're also extremely labor-intensive and often inefficient," observes A. Michael Smith, a partner at consulting firm PwC.
Enter blockchain. The distributed ledger system, created by Bitcoin, relies on sophisticated cryptographic methods to ensure that transactions are authentic and secure. What's more, by scattering the ledger across many computers, while allowing participants to verify and audit blocks easily, it's possible to take transactions to a more traceable and secure level.
As Arushi Srivastava, senior director of NTT Data Services, puts it, "The underlying secured distributed ledger properties of blockchain have much more to offer than simply a virtual currency exchange."
Blockchain is a rising star in the business world. According to market research firm Decision Databases, the global market for the technology will swell from U.S. $687.6 million in 2016 to more than U.S $5.7 billion by 2023. This represents a compound annual growth rate (CAGR) of 42.3 percent.
Equally important is the fact that blockchain has moved beyond a tool for financial services and transactions. It's filtering into areas as diverse as healthcare, retail, manufacturing, gemstones, agriculture and government.
"Companies are mostly building private blockchains now," says Paul Brody, global innovation blockchain leader at consulting firm EY, "but we're only in stage one. In the future, we will have private blockchains in public networks with a common infrastructure, all secured by encryption."
Blockchain Gains Visibility
It would be foolish to dismiss blockchain technology. It can produce cost savings, boost security and even fuel innovation. In recent months, a spate of companies have adopted the technology.
For example, in China, Alibaba is now working with the government to secure healthcare data through blockchain. In the U.S., Walmart recently established a consortium with food giants such as Dole, Nestlé, Unilever, and McCormick and Company to trace raw foods and other items through the supply chain. The initiative will make it easier to track food-borne illnesses and recalls across a complex supply chain that spans famers, brokers, distributors, processors, regulators, retailers and consumers.
In fact, blockchain use cases are nearly limitless. Although banks and financial institutions are early adopters—and have turned to the technology mostly to manage discreet internal processes—the technology can be used for everything from complex peer-to-peer transactional systems to helping track refugees that lack documentation.
PwC 's Smith says that the United Nations is considering this approach. Government entities might also use blockchain to verify that funds for public assistance recipients are spent correctly and that no fraud took place. This approach is already taking shape in the United Kingdom.
Already, many organizations are beginning to experiment with blockchain and are conducting proof-of-concept trials, says NTT Data Services' Srivastava. They may be interested in tracking physical goods through the supply chain, managing digital assets and transfers, securing electronic records and data, building a better contract management framework or improving regulatory compliance.
"By focusing on these use cases, the technology promises simplification in business processes, security via transparency, and efficiency via disintermediation of brokers and middlemen," she notes.