Unlocking the Power of Blockchain: What Every Business Should Know
What is blockchain?
Blockchain is a digital ledger technology that enables secure, transparent and tamper-resistant record-keeping of transactions. Blockchain creates inherent trust because it groups data into encrypted blocks that are very difficult to alter without also altering all subsequent blocks.
Unlike traditional databases, blockchain isn't controlled by a single authority. It’s a decentralized system distributed among a peer-to-peer network, which makes it resistant to censorship and fraud.
Blockchain has the potential to replace dated business models and intermediaries across different industries, including healthcare, supply chain, identity management, financial services, and energy. But in many cases, blockchain may be integrated alongside existing systems to enhance efficiency, security, and transparency.
Why is blockchain relevant to your business?
Any good business is rooted in trusting relationships between customers and vendors — and while developing a smooth-flowing, reliable stream of information to be passed along from person to person is key to fostering those trusting relationships, blockchain's integration into commerce means this affords business owners a new opportunity.
As mentioned, the inevitable synergy between blockchain and rapidly advancing AI capabilities carries the potential to uproot many longstanding "standards" as it relates to running a successful business.
"The same reason that [we at] Vantage Bank has gotten close to blockchain is due to its potential to be very disruptive, and I do expect that it will be very disruptive across all industries." – Jeff Sinnott, CEO Vantage Bank
Any blockchain efforts implemented will be most effective if viewed as ways to reinforce or strengthen your company’s most distinctive capabilities — the ones that differentiate you in the market. Companies that adjust their business models accordingly may enjoy enormous rewards, including increased transparency, lower costs, and greater time efficiencies.
Taking this all in through the eyes of a business owner, it becomes readily apparent that regardless of your industry, market, product offering, or even your availability of capital resources — you'll undoubtedly have to face deciding how best to adapt alongside these monumental changes. No one knows for sure how this process will look as it plays out — primarily due to the frenetic pace of technological innovation in AI — but to reiterate, it is crucial that we all view this new era as the opportunity it truly is.
What should you know about blockchain?
It's critical to understand that blockchain's widespread adoption is inevitable thanks to its synergy with artificial intelligence (AI). Each technology makes the other more functional. Companies are already harnessing the two technologies to streamline processes, predict outcomes, and resolve disputes.
"Blockchain drives efficiency and trust without a middle party involved," said Vantage Bank President and CEO, Jeff Sinnott. "You can use blockchain to manage service-level agreements in your contracts, for example. But you need AI to optimize the business logic and responses related to smart contracts. Then you have a fully automated solution with complete transparency and traceability."
Sinnott reiterated his belief that integrating blockchain and AI would positively impact our customers, commerce at large, and our industry — predicting a drastic reduction in fraud, made possible by the continual intertwining of blockchain and machine learning.
Put simply, blockchain shifts financial power back into the hands of the people. As Sinnott put it, "Another thing that blockchain allows for is to give you — the individual — control of your own data. You're sure in your data with blockchain, and it gives you the ability to take ownership of that at a global level."
How should you prepare for blockchain?
It's bad business to jump headfirst into uncharted waters under any circumstances. However, a seismic shift such as that brought along by blockchain must be understood before its potential can be tapped into. Resist the urge to try and keep pace with your competitors just for the sake of it. Much stands to be gained, but a proportionate amount can be lost if you don’t know what value is being added.
With that in mind, there are three actions you can take today to stay competitive as blockchain continues to evolve.
- Identify opportunities where blockchain can better serve your customers.
Think of a pressing problem facing your business. Blockchain can help you share records securely, cut transaction fees, gain transparency in your supply chain, and streamline your contracts, accounting, and audits.
- Manage employee expectations.
"Your teams should understand that blockchain shouldn't be a threat that might replace them. Blockchain will enhance their productivity, create more value for customers, and ultimately make their jobs more interesting and the company better," said Sinnott.
- Engage with others in your industry.
Attend conferences, talk to other businesses about their use of blockchain, and look into a specialized blockchain vendor to understand the solutions it offers.
What should your bank be doing?
Your bank should understand the efficiencies blockchain brings to credit risk assessment, customer relationship management, account security, and international payments so it can pass those benefits to you.
"If you want to grow your business, blockchain will help you scale much more effectively," said Sinnott. "And your bank should be a knowledgeable, trusted partner in those efforts."