By Emily Houghton, industry marketing lead at NetSuite
In short:
- Blockchain is a hot-button topic when discussing “the future of business.” And while it may seem daunting, understanding the basics of this new tech is relatively simple.
- We often think of blockchain as it applies to cryptocurrencies like Bitcoin(opens in new tab). However, a case study from Solar Site Design(opens in new tab) shows off the technology’s broader applications.
- Blockchain is indeed likely to play a starring role in “the future of business.” It’s a particularly good fit for organizations in which multiple parties need visibility into a common ledger.
These days, you’d be hard-pressed to find a discussion about the “future of business” that doesn’t mention blockchain(opens in new tab). Forward-thinking companies are already finding ways to use this technology for business purposes, and not only in commonly-cited industries like financial services and supply chain.
Understanding blockchain and applying it to your business isn’t as daunting as it may seem. Learn the basics below, then analyze a case study to determine if your company stands to gain from getting involved.
What is blockchain?
At its simplest, blockchain is “a new type of internet(opens in new tab)” that allows users to store digital information on various servers for an extremely high level of security, according to industry blog Blockgeeks.
Just as the Internet is based on protocols and programming language like HTTP and JavaScript, blockchain communicates in cryptography and has different coding languages depending on which chain you’re working in, explained Nathaniel Enders, the cofounder of a blockchain consortium called the Energy Blockchain Network(opens in new tab). (For more, watch one of YouTube’s most popular blockchain explainers below.)
Like the Internet, blockchain has applications that span various industries. Cryptocurrency like Bitcoin are applications of blockchain just as Facebook, Amazon and eBay are applications of the Internet.
And just like in the early days of the dot-com bubble, blockchain’s potential applications remain largely untapped.
“If you start thinking of blockchain in this way(opens in new tab), it’s 1995 all over again,” Enders told attendees in a recent NetSuite webinar.
How might a company use blockchain?
Consider Solar Site Design, whose collaborative platform is built to gather information about solar projects. This company works with multiple independent parties who deliver value at different stages of a project and are compensated for that value on different terms.
This year, the company worked with Enders’ consortium to devise a blockchain system that helps them keep up with their growing community of contributors.
“We needed an immutable record for the state of a project, so that everyone — all the stakeholders in that ecosystem — could go to one place and see where that project was at,” Enders said.
One of blockchain’s key characteristics is that records are tamper-proof and cannot be changed once stored in the system. This is essential when working in an ecosystem of independents. Solar Site Design used blockchain to establish trust with its subcontractors, letting the (unbiased and infallible) system control their interactions rather than any of the (potentially biased and fallible) individuals involved.
With their blockchain system, the company can “precisely program” the state of each project and determine “what is required to help move that state forward so the next party can participate,” Enders explained. “Then, we can automatically program in reward distributions for the value contributions. The ability to reward and incentivize participants earlier for the value they deliver is critical to efficiency.”
How do I know if my company should use blockchain?
Enders urges companies who are considering blockchain (also known by its broader title, distributed ledger technology(opens in new tab)) to think of it just like any other IT infrastructure.
“You need to look at [your] business and understand what the problem is, who the user is and what the [blockchain] network needs to look like,” he said, adding that blockchain will not be right for everyone, but, “If you have multiple parties across organizations or countries that all need to have visibility into a set of transactions on a common ledger … then it might be a fit.”
Is blockchain just a fad? How does it play into the future of business?
Many experts assert that blockchain has a promising future in the enterprise market beyond cryptocurrency. In fact, Gartner predicts that blockchain will create $176 billion of business value-add by 2025.
“There is a whole myriad of energy applications and downstream use cases that [blockchain] can unlock,” Enders said.
To learn more about the future of blockchain and how your company can get involved, listen to this week’s episode of “The Grow Wire Podcast”(opens in new tab) featuring Sand Hill East CEO and blockchain expert Andy Brown.
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