Karl Kleinert | September 30, 2020
A blockchain can be described as a digital ledger consisting of “blocks” of records. A blockchain is used in order to record digital transactions – this occurs across multiple independent computers, and these blocks of information cannot be modified. Companies across multiple industries can benefit from blockchain-based solutions because these shared records can be more securely verified, and all records are incredibly easy to trace.
When most people think of blockchain technology, they immediately think of cryptocurrencies – a way to utilize a peer-to-peer monetary system. In truth, blockchain is so much more than that and has a wide variety of uses in industries ranging from finance to gaming companies to agriculture for tracking food from the farm to the grocery store.
How Can Partnering with a Blockchain Company Help Your Clients?
Scalability and Cost Reduction
Commercial blockchain can encourage network sharing and scalability. Perhaps your clients process transactions between a number of different businesses – how is data shared between them? Who owns what data? Who has permission to view or edit this data? This is where blockchain technology comes in – a distributed blockchain of records with customizable permission levels. You can easily share data (and the value this data brings) with partners and customers with the security of automated control.
It also reduces the need for storage of trusted records, transactions and supply chain data; you no longer need to fund a team entrusted to deal with or securely store a database of such information. Due to this, blockchain can be hugely effective in reducing costs. So many administrative processes can be cut out altogether that it has been estimated 70% of the short-term value of blockchain technology is cost reduction.1 The money saved frees up cash to be reinvested into other parts of the business or returned as savings.
We spoke with Mike Chadwick, one of P2P’s newest members and the SVP of Sales at Cedrus Digital, who demonstrated an interesting blockchain use case in the medical industry. Cedrus Digital specializes in blockchain technology along with providing customer solutions, tools, and services to help organizations to adopt the latest technology advancements for their businesses.
“One of the big challenges in healthcare is storing provider data and keeping up-to-date provider credentials. For example, regulatory healthcare bodies are frequently adding new requirements and certifications that service providers must meet in order to be allowed to provide certain services and to be reimbursed for them. Every payer has their own separate information database and they have to manually update them to reflect that they’ve completed these new certification and requirements. Providers then have to send their own mass raw emails with these changes, and then each payer has to update their system.
A central blockchain storage system that all the payers agree upon automates and scales these information updates and data storage, and massively reduces administrative costs – by nearly 90 percent.”
Blockchains, and the records they hold, are protected by cryptography. Private keys are used by participants that are bonded to any transactions made. Think of these keys as a kind of digital signature. The network this utilizes is one of the main reasons blockchain technology is so disruptive – if any record is altered, then this key will become invalid and all other participants will be alerted immediately. This allows for early detection of any issues or security threats.
Another security benefit of blockchain’s decentralized model is the issues it poses to potential hackers. If an individual is looking to hack into a blockchain and access sensitive data – they’re going to have to hack the whole “chain,” not just one person’s computer. There is no central storage location for blockchains, they are distributed amongst and managed by many peer-to-peer networks or “nodes,” meaning hackers would have to be able to seize control of at least 51% of a specific blockchain (and falsify or change them simultaneously) to penetrate the chain. This is no easy feat considering many blockchains can consist of thousands of computers and participants.
Efficiency and Speed
Blockchain technology has another huge advantage. It’s easy to use – and it’s fast. Without (often costly) middlemen, the transference of cash and data is much quicker. Blockchain does away with needing to wait for working days to pass before transactions can be completed because it is 24-7. It doesn’t matter if the financial institute you handle money through is closed early due to a public holiday when you use blockchain.
Also, because blockchain is based on open-source software, you can trust that there is no single entity who would benefit from creating a choke point in the software. It is decentralized and shared freely and transparently. Everyone stands to gain from an efficient and transparent product; this means any bottleneck in the development process is likely to be dealt with quickly.
How Do You Know When Clients Need Blockchain?
The biggest challenges when deciding whether there is a blockchain need typically stem from a misunderstanding of it. Many companies have misconceptions about what blockchain is or how it is used, such as:
- Blockchain is cryptocurrency and associated with fintech only
- Blockchain is a security and data panacea
- Blockchain is primarily useful inside of a single organization
- They don’t have to have a concrete strategy with all parties involved to efficiently use the technology
This misunderstanding often leads those companies to assume that only large-scale businesses stand to benefit from blockchain technology. The truth is that many mid market clients can reap rewards from this emerging technology too.
“The challenge for blockchain is the same as IoT: Companies start with the technology rather than the use case. Because they think it’s a cure-all for data integrity and security, they will say ‘I want a blockchain app’ without determining what they want to use it for. Blockchain is not a mammoth solution for all problems. In order to qualify the need, solution providers should ask clients questions around their need for traceability and security of transactions.”
Here are five identifiers you can use to qualify a need for blockchain technology2:
- Given that blockchain is so easily customizable in terms of its automation, if your client’s company has any ongoing or repeatable processes or transactions, then blockchain could be a good fit.
- If your clients’ companies have multiple stakeholders or partners involved in their processes or transactions, blockchain could be incredibly useful in creating a transparent, secure network. If this is true of your firm, it could also be a good fit for you. Many clients think blockchain is useful within an organization, but often it is of more use between organizations (whether that’s B2B, B2C, C2B, and so forth).
- Does your business require any unchangeable records to be kept, and if so, how many? When it comes to blockchain, there is arguably a higher-value benefit if there is a long “chain” of records or contracts needed.
- Is synthesizing disparate data up to one party or a limited number of parties? Blockchain increases security and inhibits hacking by preventing data from being under the control of a single party.
- If traceability is important to your client’s organization, blockchain could be a great solution. Mike gave an example of a seafood client he worked with who used blockchain to track inventory. Blockchain makes it incredibly easy to quickly trace the source of the inventory, and the transparency eliminates price discrepancies or mislabelling. The value comes from knowing that if you have a problem, you can precisely trace where that problem occurred.
In short, blockchain technology has numerous benefits for clients. Solution providers can offer clients solutions built on blockchain that can help them automate transactions and scale. Blockchain is also useful for companies that are part of a partner-to-partner (P2P) ecosystem: Multiple contracts, the need for transparency and accountability, and the ease of automating transactions mean that blockchain can help both service provider firms and client organizations hugely by helping them eliminate inefficient and time-consuming processes. Solution providers who are able to leverage the strength of blockchain will be able to stay competitive by providing their clients with a better way to scale, improve transaction security, and boost efficiency.
How Can P2P Global Help?
P2P Global is a marketplace of top technology solution providers – we facilitate firms who are looking to partner with a wide range of IT partners. We ensure a secure, confidential platform for companies to match with other companies that fit the IT criterion they are looking for and streamline the process of partnership agreements on their behalf. P2P Global examines market trends and emerging technologies to provide information on the next big data insights. We can connect your firm with blockchain partners who can help you implement and manage this innovative solution for your clients.
Blockchain technology has the potential to be hugely disruptive and powerful but is currently misunderstood by many businesses who see it as simply a funnel for cryptocurrencies. “In the coming years, as people learn where blockchain is appropriate and where it doesn’t make sense, that will enable them to leverage it better,” Mike said.
While many of the benefits of blockchain are perceived only for large enterprises, industries of all shapes and sizes can reap the rewards from solutions built on digital ledger technologies. Blockchain is unlikely to fully replace bankers, lawyers and administrators, but it certainly can make their jobs easier and more efficient by securing transactions in a transparent process between their business partners, suppliers and clients. If you would like to know more about building a P2P ecosystem, we at P2P Global welcome the opportunity to discuss how we can help.