No longer synonymous with cryptocurrencies like Bitcoin alone, blockchain is being tapped by enterprises to fill gaps across a range of IT functionalities. But do its benefits outweigh its costs?
The most common misconception associated with blockchain is that it’s essentially only useful when it comes to cryptocurrency. That notion may have held some truth at one point, but that’s increasingly no longer the case. From Walmart to Mastercard, more and more businesses are finding new ways to tap into blockchain’s potential. If enterprises are to use them efficiently in their operation, it’s important to understand how the technology functions.
The first thing to understand is the difference between a public and a private blockchain. Public blockchains are permissionless, meaning anyone can join the network — anonymous users can read, write, or verify hashes just by opening their computer and downloading an application. This makes them ideal for cryptocurrency, which often requires that masses of people verify transactions.
Private, or permissioned blockchains, on the other hand, only grant select users access to their networks. This means users must be identified (and verified) to join, which adds a second layer of accountability to the blockchain. For a corporation using a permissioned blockchain, they will know who an individual is, what their role is, and which department they belong to when they interact with the network.
No matter the vertical, most enterprises could ultimately benefit from using a permissioned blockchain somewhere in their operations. This technology can provide better security, efficiency, and transparency across organizations. This is because blockchain offers a few networking advantages that traditional networks cannot.
For one, private blockchains are decentralized, meaning they don’t rely on a central server to store and grant access to data. Traditionally, when companies are dependent on central networks, the central server operates as a bottleneck — it needs to function at all times and if it’s hacked or goes down, the entire company will be affected. In a decentralized, peer-to-peer network, there’s no authority. If one computer goes offline or is compromised, other peers can keep operations running without a hitch.
Likewise, private blockchains are immutabile — once data enters the chain, it cannot be undone or altered. Company employees wouldn’t be able to steal money or data by deleting or altering ledger entries. This is possible because blockchains are time-stamped and verified by the hashes of their previous blocks. The technology essentially has a built-in red flag system that lets companies know what data was tampered with, where, and by whom.
In the automotive industry, Volkswagen has started testing blockchain to improve transparency in its used car fraud protection protocols. By using an immutable ledger that records car data — mileage, incident history, repair records — they have made it easier for consumers to gain verified information before they purchase a used car. Considering that in 2018, fraudulent car purchases exceed over $6 billion in value across the industry, blockchain seems to be an ideal solution.
Blockchain is also useful for enterprise supply chain management. Blockchain technology can help ensure provenance, providing traceability across various supply chains, no matter the industry. This traceability can thwart counterfeiters and allow for better data aggregation. With better insights into supply chain data, suppliers and manufacturers can critically evaluate their operations to analyze trends or perform predictive analytics. One company already taking advantage of this is Everledger, which is using blockchain in the diamond trade to help prevent fraud and illicit trading.
There are also many disadvantages to using blockchain as an enterprise application. For one, it can take a toll on network speeds and costs. Likewise, it can be a major suck on computational resources. Because every action in a ledger requires consensus from the whole chain, energy needs to be spent constantly. A traditional computer will use power more efficiently, making it a much cheaper option.
It’s quite understandable that businesses are excited by blockchain’s promise. It has the potential to fill gaps in IT, security, computing, and more. But we shouldn’t let these potential benefits cloud our judgement — blockchain hasn’t yet proven that it can consistently reduce costs for the enterprises that adopt it. Most uses cases are still being tested by businesses and we have yet to see if their benefits are worth all of their shortcomings.
What’s more, there’s an inherent idealistic flaw in our perceptions of decentralized, tamper-proof ledgers — just because ledgers themselves are accountable doesn’t mean the data they hold is trustworthy. A fruit farmer on a supermarket supply chain is not always going to be honest about how fresh his produce is just because he inputs his data into an “accountable” system.
As companies seek new ways to improve efficiency, cut costs, and fill IT gaps, there are other solutions that will be cheaper — and more reliable — than blockchain. As blockchain evolves, so will other technologies, and many will prove to be more efficacious in the end.
As enterprises search for solutions to improve their operations, they will need an experienced partner capable of providing top-notch IT solutions across the board. That’s what Turn-key Technologies (TTI) is here for.
TTI has over 30 years of professional experience in designing, installing, and managing enterprise networks that outperform the competition. We bring a full slate of solutions to the table. If your team could use expert support in keeping your IT environment ahead of the curve, get in touch with the experts at TTI today.
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