(Originally published on Forbes)
By now you’ve probably heard at least one description of what blockchain is, and that description probably had something to do with money. Blockchain has received a lot of attention for its “distributed ledger” technology, which is the basis for buying and selling cryptocurrencies (such as Bitcoin) and other assets via private markets.
But blockchain technology has applications beyond cryptocurrencies. In the future, it could be a part of many everyday business-to-business transactions, including those powered by enterprise applications.
Consider these four scenarios for using blockchain within enterprise applications to provide more flexible, secure, and streamlined business processes—even enable new business models.
1. Enable distributed, autonomous marketplaces. Blockchain lets asset owners track and trade things of value—such as outstanding invoices—in a more secure, transparent, private, and self-reconciling “chain” of transactions. This capability adds speed and flexibility to cash and asset management.
For example, using verified invoices from enterprise resource planning (ERP) applications, companies could raise needed cash quickly or accelerate cash flow by selling invoices on an autonomous invoice-factoring marketplace.
Autonomous marketplaces for other assets will multiply. Essentially, a blockchain-based transaction lowers the need for third-party oversight because the software itself is a controlled and open framework visible to all transaction participants.
If a company can publish things of value to multiple potential buyers and those buyers all have the trust and visibility to know that these items are genuine and the seller cannot sell them twice, then there will be open, transparent competition to buy those items and the seller will get a better price for them.
2. Reduce friction in business transactions. Managing spending is a challenge for most organizations. But blockchain enables enterprises to create a self-governed network for suppliers and partners to automate contracts, provide instant payments, track shipments of goods, and have visibility into the entire supply chain. For example, if a company is shipping perishable goods in refrigerated containers, it could have an IoT sensor on a truck invoking a smart contract on the blockchain if the temperature of the container went above a certain threshold. This would trigger a canceling of the order, and it could also automatically create a new order so a second shipment is sent right away and the truck with the faulty refrigeration unit can be diverted to a maintenance facility for a repair.
By reducing or eliminating human interactions, such networks can cut down on transaction errors and missing information. And, by connecting buyers and sellers directly, transactions happen faster.
3. Manage and secure decentralized private records. The conventional practice is for Industries to rely on third parties to secure databases of their shared information, using firewalls and restricted access. As frequent high-profile data breaches demonstrate, this practice isn’t always ideal.
One of the fundamental advantages of blockchain is that each individual data record or element is encrypted with a blockchain member’s key. A cybercriminal would need to have access to each key of each member to access all of the blockchain data. This is not to say that blockchain makes all data 100% secure, but it can help to reduce the exposure of large numbers of private records in a single act.
A logical application is employee or student records, where employers and educational institutions and even industry certification bodies can add new qualifications, grades, or work positions as they’re obtained. Imagine giving an employee a key for access to all of his or her employee records as part of a secure blockchain that involves human resources. Individuals would be able to securely share their college transcripts or employment histories with other companies or educational institutions rather than rely on faxed copies that are unreliable and easy to forge.
4. Track the provenance of products and materials. Blockchain can help guarantee product quality and safety by making it easier to track and locate in-use products and materials.
For example, let’s say an automaker forms a quality-focused blockchain that includes parts suppliers, sub-assembly makers, a quality-control provider, and a public regulatory body (e.g., National Highway Traffic Safety Administration). Recalls of defective parts could then progress much faster. This is significant, considering that tens of thousands of lives are lost annually because of defective auto parts.
Blockchain Is in Your Future
These are only four of many ways we at Oracle, which recently announced Oracle Blockchain Cloud Service, see our customers using blockchain. We’re encouraging our customers to think strategically about the technology.
Take some time to learn about blockchain, and then consider initiating pilot projects that can add value to your business. In some cases, using blockchain will require building new business processes or reconstructing existing ones. But it’s a flexible technology that could benefit any enterprise.