Beyond Bitcoin: Why Blockchain Is Poised to Revolutionize Business

The elusive and, at times, nefarious rise of bitcoin has created a certain euphoria around blockchain technologies while, in reality, the basic concepts and core components of blockchains, such as immutable data stores and distributed ledgers, are not exactly new.

What is new and truly exciting is the level of investment and amount of creative thinking that the bitcoin revolution has kicked-off around the application of blockchain-based solutions for the enterprise. The use cases for blockchain are poised to revolutionize a broad range of industries, including financial services, government, healthcare, education, energy, entertainment and media, and broader consumer markets.

Mike Quindazzi, managing director leading sales for US Digital Alliances for PwC, shared his thoughts on some of these promising new blockchain applications, noting, “We are primarily focused on core set blockchain offerings in smart contracts, supply chain, cryptocurrency/payments, distributed ledger technology (DLT) security, DLT assurance, and identity.”

 
Finance Continues to Serve as an Incubator of Blockchain Innovation

Blockchain began in the world of finance, and some of the more interesting developments are still happening there. Nearly one in three of the 600 executives PwC surveyed in 15 territories for its “Blockchain is here. What’s your next move?” research view finance as an important area in which blockchain will gain enterprise traction. According to Quindazzi, “The office of the CFO is in an ideal position to create a real impact with blockchain based on its access to valuable enterprise data, including sales, purchasing, and the supply chain data. But finance leaders must be prudent in evaluating emerging blockchain solutions, both for business value and to better meet regulator's expectations given the enhanced transparency of the technology.”

He further cautions that there are a number of assumptions leaders should evaluate before over-investing time and money in the blockchain. Leaders can quickly access the applicability by looking for areas where parties share and update data, there is a requirement for verifications, transactions are time-sensitive, and, most importantly, intermediaries add complexity to the process.

A prime financial services use case is leveraging asset tokenization for financial and real assets. Previously lliquid assets can be converted into tokens and efficiently fractionalized, traded, and settled more quickly and efficiently.

Where Is Blockchain Going Next?

Although activity in financial services has cooled slightly, it's picked-up in manufacturing, energy, utilities, and healthcare, based on the PwC survey results. China also has emerged as a leader poised to gain ground on the world into the near future.

Quindazzi notes that “it's ironic that blockchain projects intended to bring consensus and engender trust often struggle to gain agreement on standards while companies confront trust issues on multiple fronts.” Challenges exist not only around the technologies' scalability but also the interoperability with other blockchains around multiple and, sometimes not fully defined, parties. “The top three barriers to blockchain adoption in our survey,” he says, “included regulatory uncertainty (48%), lack of trust among users (45%), and the ability to bring a network together (44%).”

But the situation is changing. New and refined use cases are being further explored, and new blockchain platforms are emerging from leading technologies providers. And the use cases are far and wide. Citing an example, “Think about the aerospace industry; the number of parts on an aircraft, the multiple parties in the supply chain, the criticality of the data showing a plane’s history and condition that are spread across countless systems, and in the hands of multiple parties who may be competitors reluctant to share data.”

More broadly, multi-nationals are all running enterprise software platforms to manage finance and operations and leading providers like Oracle are beginning to integrate blockchain. Using blockchain with ERP systems, companies can streamline processes, facilitate data sharing, and improve data integrity, notes Quindazzi.

He adds, “Even in our business, blockchain and its distributed ledger technology has the potential to move us toward a continuous audit in which blockchain transactions can be monitored in real-time.”

Blockchain Challenges Businesses to Reimagine Their Processes

Quindazzi provides even more intriguing details on how blockchain challenges the business model itself. He explains that distributed ledger technology and digital tokens provide not only a technology play but a discussion platform to reimagine business processes, create new ecosystems, and drive new business models.

Blockchain provides an immutable, single record of the truth and eliminates the need for many checks and balances. This opens opportunities to explore process automation and efficiency gains across the organization and with outside partners.

He discusses some of the innovation that can happen: “Taking advantage of digital tokens, companies can create new kinds of customer loyalty programs. Smart contracts and digital tokens could facilitate joint ventures and alliances, as well as create new kinds of partnerships around shared affinity. Blockchain's inherent security reduces fraud and waste by eliminating the potential for record manipulation, double-billing, and other potentially malicious activities. A group at PwC is even piloting blockchain to validate a job candidate’s credentials with the goal of speeding up the vetting process to identify high-value talent.”

While blockchains themselves are tamper-proof, another ironic detail is that the solutions built around the technology are still subject to risk. Legal, internal audit, risk, and compliance teams need a way to audit their blockchain implementations. To that end, PwC has developed what is possibly the first blockchain validation solution to help address these concerns.

A Note of Caution

One final caution from Quindazzi: “The first set of hurdles are sometimes the most difficult. More than half (54%) of the PwC blockchain survey respondents who reached the pilot stage say the result didn’t justify the effort on a grander scale.

It's all about developing the right use case, with the right return and building trust early on. If project teams are constrained by legacy processes and systems, they most likely will miss the high-value business model that blockchain may unlock.”

Mike Quindazzi is the managing director leading sales for US Digital Alliances for PwC. He has 30 years of industry and management consulting experience, leading teams and global companies on strategy and transformational initiatives. He is responsible for growing a $1.5 billion cross-sector digital practice where he works with his team in shaping innovative approaches to solving complex issues for clients. He works with diverse teams across a range of clients (startups to Fortune 500) and tech alliances (Amazon, Microsoft, Oracle, SAP, Salesforce, Workday). Mike is also a keynote speaker on the global megatrends that are shaping future paths for business and society.