Does Your Industry Need Blockchain? Only If You Do These 2 Things

At Chronicled, we get a lot of phone calls from people looking for blockchain solutions for their companies.

Companies are excited about blockchain, and rightfully so. But the complexity of the system makes it difficult for people to understand whether or not their use case actually could benefit from it.

We end some of those calls by telling people they don’t need blockchain.

If we were savvier salespeople we may pitch a product regardless, but it’s more important to us to set up blockchain-based solutions with true benefits.

Blockchain isn’t a searchable database. It isn’t a real-time messaging system.

At the moment, there are two main reasons why we are finding companies could benefit from blockchain solutions: to notarize data or transactions, or to manage business rules in transactions between two or more parties.

The image below shows a good overview of these last two solutions, but let’s dive into the details.

Do I Need A Blockchain?

1. Notarization Of Data Or Transactions

Blockchain is the perfect tool for companies that need something notarized in a way that protects it from change.

It’s ideal for this task because it’s a distributed ledger operated by a variety of players.

The likelihood of collusion is infinitesimal because it would require hundreds — or even thousands, as in the case of the Bitcoin blockchain — of different people all acting together at the exact same time to make a change.

Land titles are a good potential use case for notarization.

In some developing countries, land titles are susceptible to corruption.

A bribe to one corrupt title officer, and a landowner may no longer hold their land.

But if the land titles were registered on blockchain, it would be impossible for any unauthorized individuals to change the records — even under the most dire of circumstances.

For example, Colombia is having problems returning land that was stolen or abandoned during their civil war. The government began a land restitution program in 2011, but there are still conflicts between collective land claims by Afro-Colombians and energy and agricultural companies.

Blockchain provides a truly immutable ledger for those records, one that could help protect the rights of individuals and prevent collusion.

2. Industry Business Rules Respected Between Two Or More Parties

An industry may also need blockchain for managing certain transactions between two or more parties.

These transactions generally involve business rules that have to be enforced along a chain of events.

Take pharmaceuticals, for example.

Each participant in the supply chain wants to ensure the drug being passed to them is authentic. But they don’t necessarily want the entity who passed the drug to know where it’s being sent next. Companies want to control the data about their downstream customers because it has incredible business value.

At some point, they may want to sell that data to the upstream suppliers, but they don’t want to give it away for free.

Blockchain provides a solution that doesn’t share protected data and enforces business rules through smart contracts that can ensure a drug’s authenticity.

It can also manage invoicing and payments based on specific terms set by the various parties involved in drug reimbursement.

So, a pharmacy involved in a blockchain supply chain can receive a drug — knowing it originated at a verified manufacturing plant — without knowing who had it throughout its journey. And the payments could be automatically initiated upon recording the receipt.

The same process can be used by manufacturers receiving raw materials.

Maybe the manufacturer needs to prove their raw material (and all the raw materials used to make that raw material) are responsibly sourced. Maybe they need to know that it was produced from a certain factory.

That raw material can be certified using blockchain, even if its origins are three or four steps upstream from the manufacturer.

The manufacturers won’t know exactly who had the materials at each step, but they will know with confidence that the materials comply with all expected requirements — the business rules — and nothing was switched in the supply chain.

Uncovering More Use Cases

A lot of people assume blockchain is a replacement for a database, but it isn’t.

It’s a place to register events that occur and connect business logic and decision-making around those events. It’s a distributed ledger — an encrypted, connected record that allows companies to build business logic on top of it.

That’s why the true benefit of blockchain comes from networks of trading partners and potential competitors working together.

The intriguing idea behind these networks is that once we put blockchain in place and get companies working together, more use cases will evolve. The more progression, the more attractive reasons for using the network.

We’re still in a transitional place in the evolution of blockchain.

People still need help understanding what blockchain is and how it works. When people call in search of a blockchain solution, we help narrow down the 25 ideas they originally had in their head. We try to settle them in reality and show the actual use cases for blockchain.

Some hang up disappointed. Others are elated when they realize they’ve found a way to, say, simplify their reports to the FDA.

As companies and solutions evolve, people need to evolve as well. This means furthering their education, considering the real purpose of a blockchain, and evaluating which use cases to pursue.

You don’t want to get halfway through implementation, only to realize you were a hammer looking for a nail.

Want to learn more?

Get in touch with the Chronicled team here.