Manish Sharma
Principal Consultant

Chain the Block but do not Block the Chain – How Blockchain will Potentially Disrupt Every Facet of our Life?

Before you scroll your eyes down further to sift through the thoughts and insights shared below, let me promise you something that this article, unlike various easily available articles on the web, does not focus on cryptocurrency. For all those cryptocurrency enthusiasts, I will be disappointing you but for all the Blockchain and distributed ledger technology (DLT) enthusiasts, you may find this as a food that caters to your taste buds and provides you a culinary delight on blockchain.

Let me start by answering a very fundamental question – are blockchain and DLT transposable terms? The answer is no. Prima facie, blockchain and DLT look like identical twins, however, not every DLT is a blockchain. Moreover, every blockchain indeed is based on DLT. Before you get deeper into this conundrum, I will simplify this for you. DLT is based on a distributed database and network focusing on recording and tracking the same version of truth across the value chain, whereas, blockchain lays down a pivotal emphasis on creating an immutable set of sequential records where every data element or the block is irretrievably linked with the preceding block creating proof of work, agreed between the coherent set of participating entities which are an inherent part of the blockchain network. R3’s Corda platform is a classic example of DLT which is not blockchain.

Let us now try to comprehend the kind of disruption this technology could potentially bring into the future. The technology market research firm IDC says that Worldwide spending on blockchain solutions is forecasted to reach USD 2.1 billion in 2018. To me it is just like scratching the surface and this iceberg named blockchain is much deeper into the water than what any Titanic of today can fathom. When I say Titanic here, I am talking about lot of those large organizations who may be underestimating or ignoring the power of this technology, just like the erstwhile Titanic crew ignored the impact of Titanic’s collision with the iceberg.

One potential reason that may have slowed down the blockchain adoption is the concern created by cryptocurrency volatility. With multiple initial coin offerings or ICOs going bust, lot of risks have beenraised on the entire blockchain adoption. Although, cryptocurrency was the first logically documented use case of the blockchain technology it is not the end of the world anymore. Over the last 3 years, a lot of platforms have emerged and evolved which target use cases much beyond cryptocurrencies. We have platforms like hyperledger which has established the trust of one of the most sensitive organization base around the world that is banking institutions. Currently, the hyperledger platform boasts of around 120 organizations running various blockchain use cases on its platform. We also have emerging platforms like Ethereum which vows to solve the transparency challenges in the blossoming IoT-based use cases using smart contracts.

Let us now drill down to some of the interesting problems which the blockchain is already solving for a lot of organizations globally. Mind you, these use cases have nothing to do with the cryptocurrency which are the standard run of the mill examples you have been habitual of looking at, in most of the forums when it comes to blockchain.

Know your customer (KYC). Financial services institutions especially banks spend a good amount of money in verifying customer credentials. Moreover, disparate systems further create inefficient scenarios where multiple KYCs are done for the same customer while upselling or cross-selling products or services. When KYC moves to the blockchain, it creates a single view of truth per customer and validates customer information across the value chain. This not only makes the KYC process much faster but brings in a strong transparency in the ecosystem.

Trade financing and cross-border settlements. Corporate as well as retail customers of banks worldwide are grappled with two large problems: the first one being the transaction settlement times and second being the transaction settlement costs. While banking institutions are privy to this fact but the way current systems work, intermediaries play a very powerful role in this ecosystem. By adoption of blockchain, lot of banks have not only been able to reduce the transaction time but slowly they are also able to focus on bringing down the role of intermediaries. As a result, the transaction timelines of some days have been reduced to some minutes and even to some seconds in few scenarios. This not only improves the customer delight but also paves way to an ecosystem which has more trusted parties collaborating with each other to solve real customer problems.

Smart contracts. For many years now, we know that an emerging technology like IoT is  going to be inevitable, it is just a matter of time. By design, IoT as a technology relies heavily on system integration. This essentially means that, as against a single partner catering to a technology need, IoT relies heavily on a network of partners which would bring in a unique specialization in areas like devices, gateways, networking, sensors etc. However, all these will come together to potentially solve a specific business problem for a client by implementing IoT. This complex ecosystem will further lead to lot of challenges due to managing multiple contracts. Smart contracts built on blockchain technology simplify this entire ecosystem by bringing a trusted network of partner ecosystem on DLT. Not just the IoT-based use cases, smart contracts on blockchain are poised to disrupt the traditional business ecosystem as well.

Loyalty management programs. This is one of the less risky and more rewarding use case that the banks are experimenting with, by tying up with merchants utilizing blockchain as the solution stack. Disparate loyalty management programs often lead to lack of benefits being transferred to the loyal customers. Moreover, this also is a potential loss to the merchants or retailers who could have boosted their sales under the purview of loyalty management programs. Using blockchain for loyalty management programs will drastically improve the customer shopping experience. While above stated use cases are gaining a lot of momentum with regards to Blockchain implementation worldwide, however, there are lot of unique use cases emerging beyond the financial services industry and disrupting the business landscape.

Maersk. The largest container ship and supply vessel operator in the world was affected by the Petya ransomware attack in 2017. The losses attributed to the attack was estimated to the tune of `235 million. Maersk started looking at a solution that not only can digitize the supply chain but a solution that can bring in more transparency and secure methods for conducting global trade. That is where Maersk partnered with IBM to develop a comprehensive blockchain solution on the Hyperledger platform. The consortium has already onboarded 24 organizations and has declared that there are 70 more in the pipeline to jointly target numerous use cases using blockchain.

Fizzy by Axa. This is another interesting implementation of blockchain which is beyond the archetypical use cases that you may have come across. Axa specifically looked at the market of travel insurance and tried to evaluate how customers can be compensated for flight delays in a more predictable and transparent manner. Fizzy uses a parametric insurance (in this case it was flight statistics as a parameter) which is the underlying logic of triggering performance of a contract. This not only brings in transparency in settlement in case of flight delays (customer knows at the time of buying the insurance what will be the actual settlement amount) but also offers an automated system that settles the transaction in real time. So, by the time the flight lands at the destination, you are compensated. How cool is that?

Closer to India, Government of India (GoI) has discouraged the use of cryptocurrency like Bitcoin, it has emphasized that India wants to stay invested in other use cases of blockchain to bring more transparency in the overall ecosystem. This government-backed Blockchain network is called IndiaChain which will be linked to the IndiaStack. The first use case targeted will be awarding of degrees by Indian Institutes of Technology (IIT) – the premier engineering institutions of India. This will be piloted in IIT Bombay starting 2019. The idea is to use Blockchain to put an end to the counterfeited degrees.

With the blockchain use cases spawning across industries whether it is banking, insurance, manufacturing, or healthcare, all we know is that in the coming years blockchain use cases will become more and more pervasive, irrespective of the type of industry it will cater to. If 90 percent of the use cases of blockchain are not moving to production currently, it is not potentially due to the weakness of the technology but I would say they are largely, if not all, due to lack of alignment with the business needs or real customer problems. We had a similar predicament when it came to cloud adoption a few years back and now we all know the status of cloud adoption with behemoths like Amazons and Microsofts of the world making billions of dollars of revenue purely on their cloud business.

Blockchain is here, blockchain is now!!!

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