Distributed Ledger Technologies: The Next Big Digital Transformation?
By creating greater online transparency and accountability, Digital Ledger Technologies provide the antidote to one of today’s biggest online problems for both businesses and society – a lack of trust.
Even in this age of digital transformation (DT), protecting assets across organisational boundaries, establishing and verifying identities, chronicling events, and guiding interactions between individuals, communities, organisations and nations, usually happens offline.
Web pages and apps digitise only some parts of the process. They tend to be administered and regulated by intermediaries, that maintain administrative control and charge significant fees for their slow awkward processes and leaky databases.
People and their data are not protected, complexity and lack of integrity slow down commerce – our digital life doesn’t fit together securely. These fundamental issues stand in the way of streamlining and securing our world.
Blockchain as a Transformative Technology
Blockchain is a decentralized software protocol for managing a shared dataset. Enabled by a public distributed ledger system, it allows the tracking and recording of assets and transactions without the presence of a central trust authority or intermediary.
It relies on public key encryption, or cryptography which makes it difficult for hackers to change or steal data. It enables peer-to-peer exchange of data, assets and currencies through rules-based smart contracts in a more efficient, transparent and cost-effective manner. Spotify’s acquisition of Mediachain ensures royalties reach the artists through open and trusted Distributed Ledger Technologies (DLT).
The principles and underlying protocols originally utilised for cryptocurrencies can be leveraged by organisations in many different ways. The United Nations is supporting the development of a digital ID network using blockchain technology to provide legal identification to 1.1 billion people worldwide with no official documents. Blockchain’s smart, and trusted infrastructure will change how we interact with each other and has the potential to retool the internet.
Creating Greater Online Trust
DLT makes the internet secure enough for modern use and create an antidote to one of today’s most vexing online business and societal challenges — how to create greater trust, transparency and accountability for everyone transacting and interacting online.
With blockchain, businesses can exploit new business opportunities and emerging ecosystems built on sustainable foundations. Blockchain’s transformative technology is the missing link needed to bring integrity and control to our digital lives. It does so in a way that is safe and secure yet transparent, sustainable and democratic.
Blockchain makes data storage, sharing and protection cyber secure. Blockchain is an open distributed ledger that can record transactions between two parties efficiently in a verifiable and permanent way. With it, contracts are embedded in digital code and stored in transparent shared databases where they are protected from tampering.
Processes, tasks and payments have a digital record and signature which is validated, stored, and shared. This enables individuals, organisations, and machines and algorithms to interact and transact with minimal friction. Transactive energy grids are transparent, auditable, non-repudiable, cryptographically secure energy DLT platforms enabling peer-to-peer trade of electricity.
Blockchain is more than just hype; it is a distributed ledger of peer-to-peer consensus, not requiring an intermediary and a common-sense way to improve and secure peoples’ digital lives. For the individual, blockchain can secure and simplify the process of voting online, paying taxes, applying for a mortgage or opening a bank account.
For society, it secures record keeping and sharing for and between local authorities, government agencies, banks and businesses. On a global level, DLT facilitate international collaboration on environmental matters, security and trade.
As blockchain strategies gain traction and DLT matures, forward-looking companies have proven these concepts in their sectors. The Australian Securities Exchange (ASX) is using blockchain to record shareholdings and manage the clearing and settlement of equity transactions. Dubai’s Land Department have built Dubai Real Estate Blockchain to record transactions with improved transparency, timestamping and credibility making buying and moving easier and quicker.
Some of the most compelling use cases have been in tracking items through complex supply chains, and around identity management with registries and for licenses. Technical advances have enabled enterprise-grade implementations and production level deployments in manufacturing, financial services, retail, healthcare and the public sector.
Air France KLM is testing blockchain to track workflows within its aircraft maintenance systems. De Beers have turned to blockchain to track gems each time they change hands starting from the moment they are dug from the ground to guarantee diamond purity and ethical source. Intermediaries such as insurers and lawyers have started to use the technology to resolve disputes via smart contracts.
Adding Value and Efficiency
So why and how can blockchain deliver new value propositions and optimise processes for your organisation? Businesses can start on this new DT journey by becoming educated on what possibilities blockchain/DLT offer, and then develop strategic thinking around how these new technologies could practically be applied in creating new value propositions, new business models and learning from collaborations.