Blockchain for medium sized businesses

When you talk about blockchain, many people associate it with the digital currency Bitcoin. However, blockchain and Bitcoin are not the same: blockchain is the technology that is behind Bitcoin and was initially developed specifically for Bitcoin. So, without blockchain, there would be no Bitcoin, but it has gradually become clear that blockchain technology can be used for many other purposes than serving the world of Bitcoin. This is exactly what we will explore in this article. Blockchain is used, among other things, by major companies such as SEB, Siemens, Walmart, and DHL. But how can medium-sized companies take advantage of this technology?

What is blockchain and how does it work?

Blockchain can be explained easily with the following scenario: you purchase a product on the internet and within the purchase, there are a lot of different parties involved. We have the manufacturer who created the product, the carrier who transports the product to different locations, a dealer, and we have one or several banks that manage the financial transactions, and many, many more steps that would make this article too long to write out.

However, all parties involved have their processes, systems, databases, and so on. If something happens in the chain between the parties, an update, sync, and verification are done based on each system.

Blockchain can solve this by decentralizing information and making it available to everyone involved. Think of it as if they were all provided with a copy of the same digital ledger, and when one copy of the ledger is updated with new information, they are all automatically updated with the same new information. When new information is updated, a new block is added to the chain and the new block gets a secure connection to the previous block so that the chain is up to date. This way you can see who has done what, and when they have done it.

A major advantage of this technology is that the blockchain can be verified safely. No block can be erased, and the technology also makes it impossible to change registered blocks, you can only add new information. A correction would, for example, become a new block in the chain. Therefore, blockchain technology could be useful and effective for several different industries and companies.

Now, we understand the basic principles of blockchain and maybe even understand what added value you could get from it. But why then are so few medium-sized companies using blockchain today?

Improvement potential around blockchain

Blockchain as a technology is not mature enough to be used in a business today. One of the arguments behind this statement is that because the information cannot be verified before it is added, incorrect information can potentially be added to a blockchain. Blocks with information that is either incorrect or irrelevant will make it difficult to understand the context of all the information included in an entire blockchain.

Another argument behind the above statement is that a blockchain can be built up over time with very large volumes of information, and there is no efficient way to transport this large amount of data between different parties and units.

So to conclude, blockchain is currently facing two challenges which are 1) control of information, and 2) transporting large volumes of data. These are just a few examples that make it difficult for companies to implement blockchain in a relevant way, which will need to be improved before we will start seeing blockchain as part of general business processes.

However, this should not stop you from looking at the potential of blockchain or keeping you up to date on the evolution of the technology.  Despite its immaturity today, the digital market advances so rapidly that blockchain can become mature and very relevant tomorrow.