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Enterprise blockchain usage is one of the most critical factors driving the adoption of this exciting and potentially revolutionary technology, not to mention cryptocurrencies as well. I have worked in multiple industries and know that when the enterprises and corporations are excited about something, it shows. It has a lot of value and potential. You cannot picture Microsoft, IBM, Amazon, Facebook, and similar companies spending time and effort on a fly-by-night phase.
But with this growth in enterprise blockchain adoption, the question that keeps coming up to me is why should they use it? Companies want to know if they need blockchain, and why they should use it, especially with decentralization being one of its flagship pillars – something that flies in the face of corporate governance.
I want to answer this question once and for all and show why blockchain is a good fit for companies even if decentralization is not necessarily for them. Blockchain is such a powerful tool, such a disruptive force, but because of its broad application, it can be manipulated to provide many benefits.
A look at the other pillars
If we talk about decentralization being one of blockchain’s primary pillars, another key one holding the technology up is its transparency. Transparency, in companies and corporations, has gained a new level of importance in the digital age.
As people have become more aware of how they have, in many respects, become the product due to their data, they are demanding protection and accountability. The GDPR in Europe, the Cambridge Analytica Facebook scandal, to name a few, has brought the need for corporate transparency to be part of an organization’s culture when it comes to individual data.
The demand for transparency in corporate structures has come to the fore even more because of shady work practices emerging from the shadows. Sweatshop workers for clothing manufacturers and animal cruelty for food processors have forced the demand for transparency – and this is what blockchain can offer: immutable, definite proof of practice.
A corporation that uses blockchain technology in its supply chain, for example, can unequivocally prove that their coffee beans are fair trade; their food is cruelty-free; produce is 100% vegan, or originates from where the company is stating it does.
More so, consensus layers where consortium members are not incentivized to collaborate against the rest helps increase transparency further and creates more friction points in which regulators can step in and introduce accountability.
Another aspect of blockchain, perhaps not a pillar, but certainly a plus-point, is its ability to increase efficiency in many different sectors and situations. When we talk about disruption, in corporate sectors especially, it is usually predicated on an inefficient system which is ripe for change, for the better.
In enterprises, efficiency is usually lacking because of inadequate levels of communication, and a lack of trust between linked parties. Again, with the supply chain example, moving goods from a farm to a factory requires farmers, transporters, border control, regulators and other companies all to work together, communicate together, and trust one another.
This also applies to different systems and ways of doing things – from paper and even faxes, to different digital software. But, if we can get all these parties under one blockchain, the technology can immediately remove the need for trust, with transparency and immutability, and make efficiency suddenly skyrocket.
We are already seeing examples of this increase in efficiency in the supply chain through IBM’s TradeLens, which is an attempt to digitize the global supply chain using blockchain.
More than blockchain
Part of the reason why enterprises are asking why they need blockchain is because of the misunderstanding of how blockchain and Bitcoin (cryptocurrency in general) can work independently.
Many enterprises are fearful of cryptocurrencies because of the way the bitcoin market has been portrayed: volatile, dangerous, unregulated, etc. However, some of these enterprises are being smart and tapping into a whole other world of potential with cryptocurrencies.
JPMorgan, which at one time was one of the biggest critics of Bitcoin, has now introduced its cryptocurrency – the JPMorgan Coin. This coin is using blockchain’s ability to transfer value globally without the same hold-ups and regulatory sticking points as seen with traditional finance.
It doesn’t necessarily introduce a significant change externally, but internally it creates much improvement for banking costs while increasing the speed of payments for the company and its clients.
Unfortunately, some companies do it for marketing purposes alone. One of the most prominent examples of this is “Long Island Blockchain” which pivoted from an Ice Tea company to a blockchain businesses by slapping a new hype-word to its name.
This boosted its stocks massively, but even to this day, it is still under scrutiny with the FBI investigating them for insider trading after the pivot.
A starting point
Like I said in the opening sentence, enterprise blockchain adoption is massive for the technology. Currently, it is about connecting the decentralized with the centralized until proper decentralized solutions and governance models allow us to distribute value among ourselves more easily rather than to enterprises themselves.
However, this doesn’t happen instantly, but over a long period, and without the entrance of some brave enterprises into the waters, we would have never been able to push the technology as far as we have in its short life span.
Jack Lu is the founder and CEO of Wanchain, an open and decentralized network operating since 2018. Wanchain wishes to bridge between different blockchain networks – private and public, and to connect the centralized & decentralized worlds.