Blockchain technology is relatively new. However, that has not stopped businesses from leveraging it, all in the effort of enhancing operational efficiency. Success stories on the use of the technology, justify the need of getting early on the technology. It is becoming increasingly clear of the need to understand various blockchain business strategies, for greater success in different business environments.
Blockchain business ideas are slowly cropping up, giving businesses an easy way of taking advantage of the ledger technology benefits. However, one must first understand what the ledger technology is all about.
Blockchain is a peer to peer network that boasts of a decentralized incorruptible ledger. Every digital record transmitted in the chain comes with a unique timestamp that no one can tamper with. The network is also autonomous and decentralized therefore eliminating the need for centralized administration.
Blockchain Business Strategy Infographic
Blockchain Business Strategy Attributes
Blockchain business network is all about decentralization of data. The network removes reliance on a single storage unit by taking advantage of network nodes. Blockchain business strategies may vary. However, all of them come with critical attributes such as transparency, security, integrity, and efficiency that makes them stand out.
Any Blockchain business Idea should always be open to scrutiny as a way of enhancing transparency on a network. Anyone using such a network should be able to trace the history of a transaction whenever they feel like.
Blockchain business process should always adhere to the highest level of integrity. In this case, a transaction should only go through upon consensus on a blockchain business network. Users in a network should also operate independently.
Immutability of a blockchain new business model curtails the need for manual verification or third party verification. The hash aspect ensures the technology is unamendable.
What You Need To Know Before Implementing a Blockchain Business Strategy
Any Blockchain business idea should always take into consideration three key factors, they include:
- Value of Blockchain Technology
- Short-Term Return on Investment to Scale for Growth
- Tailoring Plan for long-term scalability
Value of Blockchain Technology
The value of the digital ledger technology in a blockchain business network is one that continues to affirm its credibility as the technology of the 21st century. Blockchain is a second generation technology as it is set to revolutionize various sectors of the economy.
Being a global distributed ledger, blockchain allows the handling of items of value such as money to music as well as votes without the need of intermediaries. Getting rid of intermediary’s results in a reduction in transaction complexity as well as unnecessary costs regardless of blockchain business strategy of use.
Blockchain business models also leads to improvements in transparency as well as fraud controls, allowing businesses to generate maximum value from their operations.
Short Term ROI Using Blockchain Technology
While exploring a blockchain business strategy, it is important to come up with a scalable project. For a business to achieve the desired growth, it must be clear on the short term, the probable return on investment. Setting short-term goals is a must, as a way of accruing the actual benefits of the technology.
A business engaged in the supply chain business could structure its blockchain business strategy at first, to focus on reducing the costs of operation. The technology can in return help eliminate discrepancies in the supply chain process as well as product loss, therefore speed up shipping times.
Cost reduction is one of the most successful short-term goals as a way of achieving a return on investment on leveraging blockchain technology.
Tailoring Blockchain Business Idea for Scalability
Integration of short-term and long-term blockchain business strategies on the initial strategy is essential. Finding a way of integrating the two is a sure way of enjoying the full benefits of the ledger technology. For example, a pharmaceutical company can use technology, in the short-term, to reduce product loss as well as shipping time, therefore, increase success rates.
To scale in future, the pharmaceutical company could configure its blockchain business model to partner with patients with a view of commercializing their data for drug research. While the short-term solutions won’t be industry changing, the long-term strategy would allow the pharmaceutical company to scale, thereby establish industry dominance.
How to Implement a Blockchain Business Strategy
Blockchain technology is still in the nascent years of development. However, there are still a number of ways one can put the technology to great use. When it comes to implementing a blockchain business strategy, there are steps a business ought to follow for greater success.
Focus on a Specific Issue
For great success, it would be important to leverage the technology on a specific issue. Rather than trying to leverage the technology on whole business operation, a business ought to configure a blockchain business strategy to focus on a single issue.
By limiting areas of focus, a business would be able to enjoy greater efficiency and in the process optimize blockchain capabilities. For this reason, a business manager should take time to brainstorm with their team to see where the technology would be of great use. This could be in logistics and supply management, record keeping or leveraging the technology to enhance transactions.
A blockchain business strategy, in this case, should focus on an operation that would require additional tweaks in future. The ledger technology is still evolving, and new capabilities, as well as features, are poised to crop up going forward.
Take Small Steps
Nose-diving full throttle into leveraging blockchain technology could turn out to be suicidal in the long run. A blockchain business idea should thus focus on implementing the technology on a step by step basis.
The fact that blockchain technology would require a lot of changes along the way also calls for a lot of caution. For this reason, it would be important to focus on small solutions leveraging the technology that would have a big impact.
Relying too much on technology as part of the blockchain business strategy is not ideal. Instead, remain steady, focusing on using the technology on specific use and avoiding the temptation of scope creep.
Come up with a POC and connect all Expectations
Coming up with a Proof of Concept is an essential aspect of blockchain business strategy implementation. A proof of concept is essential as it allows a business to plan all its goals and outcomes. Planning is essential as it also allows a business to remain focused on using blockchain technology on a given issue.
During the planning phase, it would be important to have discussions with various people with different opinions and visions. By brainstorming, ideas should crop up on how to better use the technology to address underlying issues. Brainstorming is also essential as it allows one to nourish an entire blockchain business idea before the implementation stage.
Implement a Blockchain Business Strategy
After brainstorming and coming up with all the blockchain business ideas, the next step is implementing. Implementation of a blockchain business strategy won’t be an easy task at the start. This is because proof of concept may have a lot of flaws at the start. That’s why it is important to implement in small scales while working on sorting out the issues one by one.
Going back to configure the flaws should come into play as a way of getting the best out of a blockchain business strategy. This would be the perfect time to go back to the team members to brainstorm once more about the underlying flaws and how to better solve them.
Testing a million time after every successful fix is the only way one would be able to get the best out of blockchain technology. The more complex the blockchain solution, the more fixing and testing would have to come into play.
Partnering with other companies may also have to come into play as a way of fine-tuning a given blockchain solution. A good number of companies’ exist, willing to spend a lot on a blockchain project with tremendous prospects.
Blockchain Business Strategy Implementation Steps
|Identify Underlying Issue & Set Goals||-Take a closer look at A business and Identify an Issue that cane leverage blockchain capabilities
-Come up with a use case that would make the technology useful
– Come up with goals that the blockchain technology must achieve upon implementation
|Develop Proof Of Concept||-Brainstorm with a team to come up with a blockchain solution
– Sketch a POC upon brainstorming
– Develop a schedule for implementation
|Trial Blockchain Solution||-Build a prototype of a POC
-Test out the blockchain solution
-Evaluate all the errors and success and try to polish the blockchain solution
|Roll Out The Blockchain Solution||-Roll out the blockchain solution upon carrying out tests
-Check out to ensure it meets all the benchmarks
Where to Implement a Blockchain Business Strategy
A blockchain business strategy can only work on leveraging blockchain technology in three different ways: Private, Public and Hybrid. The three blockchain options provide an easy way of leveraging blockchain technology synergies for either financial or non-financial purposes.
Implementing Blockchain Business Strategy in a Public Blockchain
When it comes to implementing a blockchain business strategy in a public blockchain, a business would essentially give people, from all walks of life, to access a network’s content. In this case, there are no restrictions as to who can enter or when one can enter to access network content.
A public blockchain operates with an incentivizing mechanism designed to encourage more people to join the network. Bitcoin is a perfect example of an ideal public blockchain given that the chain is open for everyone.
One of the biggest drawbacks of integrating blockchain business strategy on a public blockchain has to do with the amount of computational power required to maintain such a ledger. A business would require a substantial amount of computational power, which could lead to additional costs just to keep the business network operating.
In addition, a business will have to be aware of the fact that to achieve consensus each node in the network will have to solve a complex cryptographic problem dubbed proof of work. Another disadvantage of a public blockchain in a business setting has to do with the lack of privacy when it comes to transactions. A business may not be able to keep some vital transactions private given the nature of the public blockchain.
Implementing Blockchain Business Idea on a Private Blockchain
A business in need of hiding some information or transactions from the public domain may resort to using a private blockchain as part of its blockchain business strategy. Implementing business strategy in a private blockchain provides a business an easy way of limiting user access, to some content.
Unauthorized users will have to seek authorization to access the content of the private blockchain in this case. The person manning the private blockchain is the only one who can grant access. Private Blockchains allows businesses to regulate transactions as they find it fit.
Regulations can be made taking into consideration the nature of the transactions as well as their speed and intent. Private Blockchains also allow orders of magnitude greater than scalability when it comes to transactional throughput.
Private Blockchain is an ideal blockchain strategy implementation platform for businesses that want to make good use of blockchain capabilities but in a controlled environment. The Linux Foundation is a perfect example of a private blockchain given that one requires an invitation to join the network.
However, of notice, is that Private Blockchains are not entirely out of bounce from the public. People will still be able to access the contents of the blockchain but based on what the administrator wants them to see.
Implementing a Blockchain Business Strategy on a Hybrid Blockchain
Just as the name goes, Hybrid blockchain combines all the positive attributes of the Public and private blockchain. Implementing a blockchain business idea on a hybrid blockchain would allow a business to get the best out of the two blockchains.
Hybrid is an ideal blockchain for highly regulated enterprises as well as government departments looking to leverage blockchain capabilities. Implementation of a blockchain business idea in Hybrid allows a business to have greater flexibility and control over data shared on a public ledger and that kept private.
While Hybrid blockchain is not open to all, it still comes with some of the features that makes blockchain standout such as integrity, transparency, and security. A hybrid blockchain would allow a business to customize and control people who can participate in the blockchain. The blockchain also makes it possible for a business to regulate transactions that can be made public.
|Public Blockchain||Private Blockchain||Hybrid Blockchain|
|Definition||Public Blockchain is open to everyone to view content and participate in decision making||-Not open to everyone but to people with authorization.
-The blockchain comes with an administrator that limits access as well as blockchain content accessibility
|– Combines Public and Private blockchain aspects to result in a hybrid blockchain.
-Hybrid blockchain allows people to keep some processes and content private and others public
|Transparency||High levels of transparency||The blockchain is only transparent to people with network access||Transparency comes down to how the owners want it to be|
|Incentive||Configured in such a way that participants are incentivized for the growth of the network||Limited access essentially means a lack of incentives as administrators regulate people who can join the network||. Hybrid owners can decide to incentivize users as a way of attracting more people|
|Use Case||Ideal for all kinds of industries where privacy is not an issue.
-An ideal blockchain for creating a commercial cryptocurrency
|-Ideal blockchain for organizations that require complete control of their workflow and transactions on a blockchain||-Hybrid is an ideal blockchain platform for projects that can go public or private at any given time.
-It is also a perfect platform for projects that don’t rely too much on trust
|Know Your Customer Provision||Not Needed||Yes||Yes|
|Transactional Cost||Quite expensive||Quite affordable to set up and maintain given the limited number of people accessing network content||Affordable|
Multiple entities can come together to leverage the benefits of blockchain technology on a single network. While relying on a single network, the entities would still be able to establish a decentralized type of system. In such a case, a Federated blockchain would be essential for meeting the needs of each entity in the network.
A federated blockchain is essentially a hub whereby organizations are able to exchange information on a single network. The entities involved in such network come together from time to time and make necessary changes that keep and make a network work more efficiently.
Federated Blockchain gives rise to a decentralized network whereby each entity can access the network’s content. Unlike with Private Blockchains, where one entity or individual is in charge, in a federated blockchain each entity is in charge of the happenings in a network.
Leveraging Federated Blockchain in Business Strategy
Public blockchains are decentralized networks that come with a good level of security. However, they lack speed and efficiency. Private Blockchain, on the other hand, tend to be much scalable and faster but are not fully decentralized.
Federated Blockchain offers the ultimate solution to a consortium looking to leverage the full benefits of the ledger technology as a whole. Federated blockchains tend to be much faster when it comes to processing transactions.
The fact that the number of nodes needed for validation is always under control reduces the risk of scalability issues. In addition, the fact those transactions are much faster and less complicated leads to lower transactions costs in a federated blockchain.
Federated blockchains are for specific groups or entities. The fact that they do not allow random strangers on the network reduces the risk of 51% attacks.
Blockchain as a Service
Tech giants are increasingly investing in Blockchain given the technologys’ potential in enhancing operational efficiency. Increased investments has essentially given rise to Blockchain as a service.
Blockchain as a service is essentially an offering that allows people to leverage cloud-based solutions to come up with blockchain apps as well as smart contracts. Amazon Microsoft and Oracle are some of the tech giants that have invested huge chunks of money in enhancing blockchain as a service.
Amazon has already unveiled blockchain templates as part of Baas that allows Amazon Web Service users working on blockchain set up hyperledger Fabric and Ethereum networks much faster. The templates also make it easy for people to deploy blockchain networks with ease.
Microsoft bills itself as the pioneer of BaaS industry. Through Azure, the software giant has simplified the process of coming up with blockchain networks thanks to pre-configured networks and infrastructure. Built-in connections allow users to validate and iterate various blockchain developments.
Oracle on its part has unveiled Enterprise-Grade Blockchain Cloud Service. The service offers enterprise customers a fully managed approach as well as a framework for getting involved in the blockchain. Its blockchain as a service is built on open source Hyperledger Fabric Project.
Blockchain Business Process
One of the key advantages of blockchain technology is that it is helping reduce friction between parties involved in the exchange of information. Blockchain business processes are increasingly gaining traction in part because the technology is assisting streamline various operations.
The digital ledger technology elevates the level of blockchain business network in two ways. First, it enables easy recording of transaction history that have taken place in an entire business network. Transactions in any chain are provable and immutable thereby allowing people to have confidence on data a chain.
The technology also ensures business logic in a network by including all the roles and responsibility of people involved in a transaction. The use of smart contracts, for instance, dictates how parties are going to work with one another, such contracts also ensure that people involved in transaction play by the rules all the time.
How Blockchain is revolutionizing Business Processes
Recruitment, contact management as well as Fintech are some of the key areas where blockchain business strategy are gaining traction. Expansion beyond cryptocurrency has seen the technology find its way into key business operations.
Below are some of the emerging blockchain business strategies shaping various industries.
|Blockchain Business Ideas||Sector||Application||Benefits|
Supply Chain And Logistics
|-Blockchain is enhancing the tracking of goods as well as parts across supply chains and throughout their entire life cycle.
-The technology is also helping improve decision making on inventory management and repairs
-Elimination of Intermediaries
-Lower costs of supply Chain Management
-High end tight security
Accelerating Transaction settlements
Finance and Retail
|– Accelerated settlement times is one of the benefits of Blockchain business models in retail and e-commerce.
-The technology is helping accelerate settlement time when it comes to disputes involving transactions.
-Blockchain business networks are also taking advantage of seamless cross-border payments
– Lower Costs
-Better customer experience
Tax and Customs
|-The technology is proving to be reliable in automating and streamlining compliance burdens involving tax and customs.
|-Elimination of Intermediaries
-Increased Transparency and Traceability
Payments Royalties and Licensing
|Blockchain technology is automating predetermined contract terms thereby enabling faster royalty payments and subscription revenue.||
-Payouts are automated
Curbs fraud in royalty payments
|Identity Management||Any Sector||Blockchain technology has found use on the authentication of identity on a blockchain for credential identity as well as loyalty and rewards program management.||-Added Privacy and security
-Unique signed IDs
– Enhancing Data Security
– Curbing fraud
While Blockchain Technology has been around for quite some time, it is only now that people, as well as multinationals, are taking a keen interest on it. It is becoming increasingly clear that the technology has the potential to enhance transactions in various sectors as well as lower transaction costs. In addition, the technology has the potential to enhance the sharing of sensitive information in a more secure way.
That said businesses looking to enhance their operational efficiency should continue to invest big on the technology and embed it as part of their businesses strategy.