From the second half of 2021 onwards, the world is experiencing the effects caused by the lockdown in all countries. The restriction of mobility has irreversibly transformed work, data sharing, businesses, and relationships between agents. Blockchain, better known as the bitcoin cryptocurrency platform, was cited as a lever to resize business models.
This article will present an elaboration that supports blockchain as a re-dimensioning of organizations and business structures and relations.
In post-pandemic times, the changes observed in the international market and in organizations have been definitive for devising new strategies. According to H. C. White, from Princeton University Press, “the concept of digital transformation is formed by the merger of personal and corporate IT environments and encapsulates the transformational effect of new digital technologies such as social, mobile, analytical, cloud technologies and the Internet of Things (SMACIT).”
Digital transformation, until now a goal to be achieved, became part of our reality. The “natural” incorporation of the new “modus operandi” reflected the absence of mobility, which made room for the implementation of new work and solution modules.
Blockchain is a flexible platform that is collaborative, transparent, and unchangeable. Additionally, blockchain allows the proof of the authenticity of each transaction through a verification system.
It is a platform for registration, stocking, and information transfer. In many cases, it can also be defined as a data validating mechanism.
Blockchain is an immutable, anonymous, hard to hack, and decentralized ledger. It is decentralized to allow transactions to be recorded across millions of computers and hard drives. Each block of data is linked to a previous block of data, and these are chained together. This exchange is synchronized, and all the nodes mirror updated information as it happens. When an exchange is validated, the asset (or transaction) becomes immutable as it would be impossible to alter the records on the chain simultaneously.
As such, a blockchain is a timestamped, append-only log. We can further define a ledger as a system that records economic activity, and social or financial relations. The basis for recording transactions is the basis of the system of the economy. Since the beginning of time, the main concern was to successfully register, write, and record data ranging from entries and exits and cash flow.
The relationship between agents in different blockchain integrated systems are coded through smart contracts.
Blockchain offers several potential benefits, and these include:
- Increasing the speed of exchange, which minimizes transacting backlog and overall costs,
- Improving the availability and reliability of data
- Improving auditability as records are verified in near real-time
- The ability to convey titles of physical commodities seamlessly between market participants
The benefits of blockchain are already spreading across various sectors of the economy. As such, the value derived through blockchain applications is compelling. However, initially, it is unlikely that an entire market, commodity, or real life cycle will become blockchain-enabled all at once. We will likely see pilot programs with a select group of market participants centered on specific functional applications such as payments or smart contracts.
Overall, blockchain provides security; it is decentralized and collaborative. Additionally, it also allows for immutability, efficiency, transparency, traceability, and auditability. Therefore, blockchain, due to its characteristics, can be a catalyst for change in the business and financial world.
Benefits when implementing blockchain technology in digital transformation
Given its characteristics (especially being a ledger that allows the recording of all transactions with immutability and traceability), blockchain successfully enables organizations to:
- Optimize different applications and their processes,
- Manage documents digitally,
- Increase event and document reliability,
- Create a competitive edge,
- Track orders on the supply chain,
- Improve applications and processes,
- Increase productivity per file,
- Access new data sources,
- Improve system integrations (like IoT, EDI, AI),
- Expand digital collaboration,
- Enhance transaction integrity and visibility.
The transparency and ability to streamline processes and documents allow for an exponential increase in productivity, being a natural driver in digital transformation through the integration of systems.
Furthermore, it is important to mention that, on a large scale, this tool is relevant to the point that several governments have decided to adopt and base their presidency and reorganization on a system that is supported by blockchain.
Challenges when implementing blockchain technology in digital transformation
The biggest challenge for digital transformation is the transformation of the business itself, which reflects changes in processes, improvements, management, and reengineering, as well as re-organizational changes. Nevertheless, a holistic approach of the ecosystem is essential to identify the biggest challenges to be overcome within that framework. The obstacles observed before 2020 were attenuated by the lockdown as it required organizations, in record time, to readjust their businesses.
The biggest challenges of blockchain and of digital transformation are the constant changes to profiles, skills, mindsets and, the ways in which organizations deal with the lack of knowledge and specialized human resources.
As a consequence of blockchain’s integration into corporate structures, data sharing has raised questions regarding cybersecurity. Additionally, an unavoidable challenge for structures to adopt the blockchain is still relating to the high energy consumption.
Faced with the creation of new ecosystems, the legal framework has reflected the new relationships created and the scope of the impact on business structures and also for governments themselves.
Applications and use cases
Recently, blockchain has presented cases of implementation with results in which it is possible to empirically prove that it has been and will be a catalytic mechanism for digital transformation. Its implementation in business structures has been a precursor for sectorial and governmental solutions. It was observed at this moment that the transformation of business models is based on the pillar of trust and that it reflects the security that the mechanism presents for the control of flows, processes, and exchanges.
Thus, blockchain can not only be a catalyst in the sense of scaling the results of digital transformation, but it can also be the very genesis of the concept of digital transformation in organizations as it requires a change in processes and profiles that represent greater flexibility and transparency.
Through the different applications in multiple sectors of activity, blockchain can be seen as a versatile instrument.
Insurance: Some applications for blockchain are in the budget plan, automatic transactions, and receipts and payments. Additionally, blockchain can cover all the complex international insurance problems.
Energy: It is possible to use blockchain for crude oil trading. More so, several companies have been exploring the tech before for oil industries. With the help of the platform, it is easy to track products along with promoting transparency and preventing fraud.
Supply Chain: With blockchain, companies can make sure they are getting an authentic product to maintain their quality. For example, as soon a product is on the way, they will get on the ledger, and the companies can track where it is going from there.
Banking and finance: Companies are able to utilize blockchain by using the distributed ledger to get rid of the two major issues of global trade and sharing assets. Anyhow, IoT integrating into the blockchain system helps companies track all the processes of global trading in real-time.
Real estate: Blockchain allows real estate to use the platform to list sellers and agents, along with offering transactions as well. More so, with this platform, they can secure all their transactions and contracts without any issues.
Pharmaceutical: Experts claim that in the pharmaceutical industry, blockchain helps by providing the proof of concept for tracking records and managing the digital inventory of pharmaceutical products.
Healthcare: In healthcare, blockchain can help with the diagnosis, exams, prescriptions, and monitoring of patients. Records of the types of data amassed (vaccination history, pathology reports, etc.) can be stored on the patient’s electronic health chain and used later for diagnostic and health care purposes.
Notary: For notaries, blockchain can improve registers and affiliation.
Smart cities: Blockchain can be used in smart cities and can be applied in various sectors: economy and employment, health, identity and culture, education, land use, housing and inclusiveness, transportation, intelligent government services, energy and waste management, public safety, and citizen participation.
Employment: Blockchain will help employment by enabling the mapping skills, recommendations, and experiences. With blockchain, the recruitment and training system will consist of the sharing of information: the candidate’s profile, identity, educational abilities, competencies, experiences, references, hobbies, strong suits, and differentials.
Land registration: Through blockchain-enabled record keeping, it is possible to obtain transparency and be immutable in the records, which allows for greater security to be achieved. As Kaczorowska mentions, “blockchainbased land registration is of interest to both developing and advanced economies.”
Food industry: Blockchain is able to offer consumers information about the origin of their food. Blockchain also facilitates the interconnection of producers, farmers, distributors, and stakeholders in the same chain with traceability and transparency. It is possible to know the origin of the carrots in a baby’s soup and identify all the process until the carrots arrive in consumer’s homes. This allows consumers to have all the information about their chosen products at their fingertips. Without a doubt, blockchain is a tool that is here to revolutionize the food industry.
It is important to mention that before considering implementing blockchain as a starting point, companybased changes need to take place. Therefore, prior to using blockchain as a strategic tool, it is necessary that companies evaluate their business models to identify costs and benefits.
With the COVID-19 pandemic, we saw that some companies would not make the leap to embrace digital transformation. Additionally, over the past few years, digital transformation has been a challenge for companies, as was evidenced by the public cases of failure in implementation. However, now more than ever, market changes regarding the way of living, interacting, conducting business, and deciding to purchase goods and services have changed. There is no way of going back. Therefore, even in the face of challenges within companies, a new ecosystem is created with the implementation of blockchain.