The big buzzword blockchain is revolutionizing the digital world and many businesses are expected to go through an evolution in the upcoming years. However, digital transformation is no longer a choice for businesses, it is essential to survival.
Blockchain technology
Transactions are processes and blocks that are linked within a chain making blockchain act as a shared distributed and immutable ledger for recording assets within a given network. Each block incorporates a cryptogenic hash as well as the hash from the previous block which strengthens security and maintains the integrity of the entire chain. Another big advantage of blockchain technology is that its ledger of blocks and transactions enables all participants to work with a single version of the truth. Blockchain uses distributed ledger technology or DLT to record and share each transaction once to create an immutable record for all participants. Blockchain technology allows users to utilize smart contracts which exist independently without the need for a middleman or human arbiter.
The different workflow hurdles that can be solved with this technology are Know Your Customer or KYC, credit reporting, legal entity identifier, digital vaults and document transfer, personally identifiable information or PII, source of funds, and ACH information. [1]
The need for digital transformation with blockchain
Blockchain could be the next platform to drive enterprise technological transformation. Blockchain technology was developed as part of the Bitcoin revolution. It has been instrumental in cryptocurrency growth and made Bitcoin a legitimate success because it allows for fast and secure transactions.
Business networks, markets, and wealth
Businesses never operate in isolation, they have participants in business networks connecting customers, suppliers, banks, regulators across geographical boundaries. Wealth is traditionally generated as goods and services that move across this network and this flow is referred to as the market. The growth of the network can be constrained if the network is inefficient and hence the need for a business network that can be built in an efficient way that allows a process to go from step A to Step Z in the best possible manner without risk or an intrusion in security.
Transferring assets, building value
Ownership of assets passes across the network in return for payment that is typically governed by contracts. The assets can be tangible and intangible as well. Tangible assets are physical and include houses, cars, buildings, equipment whereas intangible assets lack a physical substance and include mortgages, patents, trademarks, copyrights, intellectual properties, etc.
Ledgers
Ledgers are the system of records for a business and are the principal book of an accountant. Shared ledger technology allows any participant in the network to see the system of record. The technical challenges such as participant identity and privacy, transaction privacy are solved by introducing the blockchain. The pre-blockchain ledger system is inefficient, expensive, vulnerable, and difficult to monitor asset ownership and transfers in a trusted network. As shown in the diagram below, each participant keeps their own ledger that is updated to represent business transactions as they occur.
Technically the pre-blockchain ledgers are implemented using complex APIs that update the contract values in real-time with a centralized server. Incidents such as human error, fraud, cyber-attacks can compromise the business network.
The solution is a shared, replicated, permissioned ledger that is authenticated using cryptography technology. Hence the transactions are secure, authenticated, and verifiable. Blockchain allows the contract for asset transfer to be embedded in the transaction database determining the conditions under which the transaction can actually occur and network participants agree on how transactions are verified through means of consensus or similar mechanisms. [1]
Blockchain for business
The banking and financial services industries have been the pioneers in exploring and adopting blockchain technology to secure capital transactions. Financial institutions can conduct transactions more transparently, more quickly, and in a more secure way thanks to the decentralized nature of blockchain. They can eliminate the need for a trusted, central intermediary to route transactions between them, which reduces the time and costs of each transaction.
Blockchain technology is also being used in other industries. One example is the insurance industry, which is looking into the potential use of distributed ledger technology to increase digital trust and simplify the insurance process. Blockchain can be used for smart contracts between policyholders as well as insurers. It can also be used to offer peer-to-peer insurance that can lower premiums, process claims quicker, verify, and process them faster, and create insurance products tailored to consumer needs. [2]
Blockchain in healthcare transformation
Blockchain technology can also be used in the healthcare sector to increase security for electronically stored patient records. Blockchain technology can be used to store and transfer records in a secure manner, which could help accelerate the transition to the electronic management of healthcare records. A blockchain is a promising option for industries such as healthcare where security is a major problem.
The blockchain can also be used to transform a supply chain in a major digital way, which could make it a game-changer for the manufacturing industry. Distributed ledger technology allows retailers and consumers to interact in a more secure and digital way with one another. Blockchain’s decentralized nature can allow for greater transparency in every transaction within the supply chain, from the procurement of raw materials through shipping to the sale of finished products. A blockchain can record every transaction in a cost-effective and timely manner. This reduces the chance of fraud or human error.
It also gives consumers the ability to track the provenance of any supply chain, giving them complete traceability. In other industries, blockchain can be used to store secure information in a digital format. Blockchain can be used to store digital assets, confidential electronic records, and sensitive or proprietary information. This will allow for transparent and secure access. [2]
HR Digital Transformation-powered by Blockchain
Griffiths (cited in Gale (2018)) believes that blockchain can streamline tedious work in employee verification. Blockchain allows candidates to store their education, work history, and certifications in one ledger. This makes it much quicker than traditional methods of verifying the data. The blockchain ensures data security and trustworthiness by preventing data modification or hacking. Additionally, blockchain could have an impact on HR because personal data can be owned by individuals and not the organization (Mike, Gale 2018, cited). This allows employees to have complete control over their employment data, including education and training history. This also allows employees to move their work identities with them, rather than being held within the same organization when they change jobs.
The future of talent management and talent sourcing could be influenced by blockchain technology. Employees can access a trusted, comprehensive blockchain-based record that includes their education, skills, and workplace performance. Employers can access their blockchain-based employment data to better match candidates to jobs. [3]
