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Blockchain - New kid on the block

By Ramanath Shanbhag, Senior Principal Technology Architect

In some of the conversations I've had with our clients, I get asked about how to identify the applicability of blockchain to their organization. There are many articles on technical aspects of blockchain as well as their implications in various industries. There is a very good PoV on Infosys digital site on few applications of blockchain in some industries. 

Without going into the history of block chain, which started with crypto-currencies called bit-coins, blockchain at a basic level is a distributed ledger system. What you record within the ledger is a matter of your business. You could choose to record the value of money itself, in which case it becomes a crypto-currency, or you could record payments trail, in which case it becomes a payments system. One could choose to record proof of evolution, as in case of agriculture demonstrating the origins of a particular produce, in which case it becomes a certificate of assurance. Or one could choose to record a contract, so that the terms and conditions are tracked, audited and enforced. Whatever you log within the ledger, it will guarantee immutability and audit trail.

The key characteristic of blockchain is its ability to establish trust worthiness by demonstrating audit trail. So what are the key characteristics of a block chain process and how do we find processes in which blockchain can be implemented. I would define a worthy blockchain process as having few distinct characteristics which can be uncovered by asking the below questions.

  1. Does the process involve ecosystem players, especially outside of your organization's control?

  2. Are there existing processes which are costly in terms of operations, because of issues of trust between ecosystem players?

  3. Are there processes / businesses which are un-explored / not possible today because of issues of trust and provenance in the ecosystem?

The fundamental problem that blockchain solves is the problem of trust between multiple parties in an ecosystem by providing immutability to distributed transactions. Let's take the example of shipping industry. A simple process of shipping goods from one location to another involves multiple parties including the sender, receiver, shipper, freight forwarders, ocean carriers, port & customs, bank. A lot of effort, time and costs goes managing and co-ordinating documents across these different parties, given the nature of the entire process. There is obviously a lot of cost savings which can occur if we implement blockchain to resolve some of the issues of trust. But it's not just the system that needs to be built. It's the entire co-ordination within the ecosystem which needs to be built, so as to ensure that the cost savings and time and transparency benefits are shared. That is a business process re-engineering exercise and involves business and management effort, not just technology.

Let's take another example of agriculture industry. Within agriculture, a lot of focus is on sustainable agriculture practices. Companies have committed to adhere to GAP and sustainable farming and procurement policies. Consumers are becoming more health conscious and may be willing to pay for products adhering to sustainable agriculture practices. The ecosystem has disparate players from farmers to commodity processors to FMCG manufacturing companies / retail outlets. It is difficult to provide proof of the origin of the produce and adherence to GAP at a batch level. Will the ability to provide proof of provenance, allow companies to create products / brands with higher value for the players? Will customers be willing to pay more for such brands? If technology is able to provide this proof of provenance, will companies be able to create new differentiated products? These are questions that need to be validated with market research and refined using design thinking and business ideation. And if the answer to the above questions is that more value can be created by increasing trust and transparency in the ecosystem, then block chain is the right building block for the process.

Blockchain can be an enabler, but by itself, it may not be sufficient to create value within the ecosystem. Supported by other technologies such as IoT and mobile, it can create new ecosystems. Take for example energy industry where microgrids can be created so that supply of energy which is typically centralized, can be de-centralized. By leveraging blockchain, IoT and mobile applications, a new ecosystem driven by local communities can be created to supplement an existing ecosystem of energy distribution, as has been demonstrated by the Brooklyn microgrid.

Block chain, is the new kid on the block. But it can be useful only if we are able to discover the right use cases for the tool, and engage with the right ecosystem of partners to extract value from the value chain or to create a new value chain. At Infosys, we can help you find the right processes for your organization and help implement the same. For more details on Infosys block chain offerings refer to https://www.infosys.com/blockchain/#offerings.

The question remains as to which organization will take the lead in creating this eco-system and what additional benefits can be accrued from building this ecosystem. Well, the answer depends on who is the dominant player in the ecosystem who wants to take the lead. Or is it about who wants to become the dominant player in the ecosystem by taking the lead. Do share with us your views about the potential of blockchain for your organization.

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