Blockchain, it’s a word that’s greeted with many ‘woops’ of excitement by budding finance-technocrats and economics students alike.
It’s no secret that our world is becoming increasingly digital and thus, tech-bound. So we shouldn’t be surprised that discussions surrounding blockchain are becoming commonplace.
Those of us who are usually ‘not that hot’ about computers and other tech-related stuff are being forced to get clued-up, and get stuck into the digital programme in order to keep up.
For those of us who continue to feel a little technophobic about where society, and business generally, is going, it’s time to stop burying our heads in the sand.
We need to start taking these technological advancements seriously in order that we, and our businesses, don’t get left behind in the dark ages.
Should we be more engaged with blockchain, what it means, and what it could possibly do to accelerate our businesses?
Real Business sits down with blockchain and cryptocurrency expert Cathy Mulligan to find out more…
The initial promises?
For many entrepreneurs, blockchain looks like the shiny new kid on the block, in terms of business-boosting technology. But just how exciting is it?
” Blockchain is about more than just money, its a fundamental?transformation in the way we do business. It can reduce the costs of operations and can create new revenue streams for businesses”.
Blockchain provides a platform for the swift exchange of capital, and means that the big banks no longer monopolise the global ‘money story’.
” And this is especially significant considering the great loss of reputation and investor confidence the banks experienced following the Global Financial Crisis.
Blockchain is not as secure as you might think
A misinformed cultural myth has taken hold concerning the positive uses of blockchain, namely that its technology means its more secure as a system.
According to Mulligan, this simply isn’t true, and businesses should be warier before taking up the technology without proper assessment of why they need it:
” Some say its inherently secure, its a lie. It’s no more secure than any other solution out there, you will still need to implement traditional security methods as in any other system”.
Not only is blockchain NOT fail-safe security wise. It also requires management from those with tried-and-tested experience in the crypto-currency industry.
“The best applications of blockchain is from those with good industry experience, for example, R3, a consortium of banks highjacked blockchain and have put it into their way of doing business, and have done it well. But that’s because the business is underpinned by a blockchain software firm and associated experts.”
In short, if you’re not a crypto-expert-whizz-kid-tech-genius, don’t retrospectively fit on blockchain processes to your business.
” If you do have the intent, but lack the experience, dig deep into your pockets and hire an expert, or a team of experts to implement these processes effectively.
Blockchain will?revolutionise supply chain processes but not yet
Mulligan believes that the blockchain system will be able to crack-down on supply chain related scandals and even be able to prevent the spread of diseases in the food industry.
“Take the horsemeat scandal in British supermarkets a few years back, for example, we had a bit of a problem with our food supply chain and where things were coming from. In that instance, blockchain technology would have been useful to check the provenance of those disputed products to see if they were made from horse-meat.”
The idea is that blockchain can track every part of the payments and exchanges process throughout the breadth of the supply chain system.
” Let’s say there’s a disease outbreak in a food-based supply chain, you can shut down that element of the supply chain easily”.
Now in terms of public health, and saving face both legally and in terms of brand image, both businesses and consumers win if health-damaging supply chains can be shut down before they’ve made it into supermarkets.
This means in theory, that from the farms where the Beef is produced, right up to it’s packaging in a supermarket factory, it’s provenance can be traced and recorded accurately.
“More recently, the Chinese government was using blockchain to combat the counterfeit?goods problem in their country, something which has been an endemic problem there for a number of years”.
For a corporate and brand PR perspective, being able to track, record and be able to share the provenance of goods means businesses can embark upon a more pro-active customer facing relationship with consumers.
” Our students made their own blockchain system where they?traced the provenance of goods in the food supply chain. They used the bitcoin network to record every single transaction across the network, from grapes, right up to their final manifestation as crates of wine. The idea is that the customer can scan the product tag in the supermarket and be told ‘here’s where the grapes have come from’.”
Mulligan uses an example of the humble ham-sandwich to drive home the point of just how effectively blockchain could be to provide evidential backup to brand promises and authenticity:
” With the implementation of blockchain technology in the food industry, consumers will be able to drill down to the original provenance of an item such as a ham sandwich. This means that consumers can trace back their product to the farm where the pigs were reared on”.
This means that unlike the events surrounding the horse scandal, food and supermarket brands can make 100% certain promises to consumers about the origins and ‘validity’ of their products. Thereby avoiding law-suits and reactive moves where PRs have to put out the flames of sporadic threats to their brand.
Blockchain may be an effective tool to ensure consumer satisfaction and brand strength and authenticity, but it’s mighty time consuming and expensive to implement, according to Mulligan.
” The biggest issue is that you’ll need a wallet at every stage of the supply chain, its a great concept but it’s not very efficient. Also cost is a big issue, if your going to implement an extenstive blockchain for a ham sandwich, its a prohibitively expensive way to do it.”
In the future, blockchain could also be useful for retail brands to ensure they’re not unknowingly selling knock-off product imitations or fakes.
” This process could make a dent in the ‘fashion’ sweatshop industry, for example.
” Just putting something onto the blockchain doesn’t mean the physical product is what it says it is. You’ve got to make sure the blockchain?truly represents the physical product, for example, you should make a unique fingerprint for the product, not just a serial number for that product”.
” But again, the costs will be high and the implementation process lengthy if businesses want to track every single part of the manufacturing and transportation process involved in the retail industry.
Look at your business: Does it REALLY need blockchain?
“Blockchain is fun and easy to work with, but it’s not useful everywhere, it can cost you more money than using a database in some cases.”
Building on what’s already been mentioned about relevant industry expertise needed to effectively implement blockchain, ask yourself, does your Northampton-based tailoring business need it?
If your business is set up to totally disrupt the way traditional money-lenders, such as banks, do business ?” then blockchain is probably for you.
But for most businesses, especially for those in food and retail, it’s better to wait until the implementation costs come down before trying it.