Making blockchain work for your business, from SMEs to large corporations

Understanding blockchain and its implications for your business is key to adapting to the new digital era.
By
Alvaro Llobet

Hello everyone, my name is Alvaro Llobet. My background is in business administration, but I have always worked in the tech industry. I started my career in consultancy services before entering the blockchain ecosystem around four years ago. I currently work at Finboot, where, among other things, I am responsible for business and commercial development.

At Finboot, we facilitate the adoption of distributed ledger technologies (DLT) and blockchain technologies into daily business operations through MARCO, our enterprise-grade, blockchain-agnostic framework (although they have some differences, for the purposes of this blog I will use the terms DLT and blockchain interchangeably). Our focus is on providing solutions to real business problems that quickly generate a return on investment.

This blog is not going to be techy: I will not go into the nitty gritty of blockchain technology, since there are already many other materials that do an excellent job of explaining this, such as Mastering Bitcoin & Blockchain.

The objective of this blog is to give an overview of what blockchain is and explain where, why and how should you apply it.

Where did it all start?

Let’s go back to the year 2008, which I’m sure most of you will remember well. Media focus was centred on banks, the economy and market uncertainty, after a booming financial era came to a sudden end, shocking the world in the process. We had deposited our money and trust in a flawed financial system, worsened by lax regulations, politics and audits.

In the middle of all this uncertainty and mistrust, someone came up with an incredible tool that will change the way people and companies collaborate for years to come; blockchain.

Satoshi Nakamoto created blockchain as a decentralised digital system with no central authority, meaning the sharing of information by different parties is between a trusted network. By using blockchain, Satoshi also created Bitcoin, which is intended as an alternative to the current financial system, where central banks and financial institutions have power over the supply of currencies. Through a programmed system, Bitcoin enables people to share and exchange digital currency with no need for a central entity.

To this date, we still don’t know who Satoshi Nakamoto is — only their pseudonym. Their real identity, location and age all remain a mystery, and this anonymity is arguably reflective of their ideals in technology. If Satoshi, instead of remaining anonymous, had created a startup or a foundation, this would have monopolised media attention, minimised innovation in the sector and given rise to numerous legal issues. This would have conflicted with what I believe was the creator’s real objective; to change the way we understand collaboration between public institutions, companies and people.

We need to understand that blockchain goes far above being mere technology; it is a collaborative tool that creates trust between participants.

How does this work?

Imagine you are in a conference, full of people, listening to an excellent speaker with whom you are fully engaged. Then, the speaker writes the number 10 on a giant board. When the conference ends, all the participants agree that the number the speaker wrote on the board was 10 except for one person, who says it was 9. That participant loses the confidence of the rest of the group because he is trying to manipulate a generally accepted fact that everyone else has witnessed. That is a very quick and basic explanation of the concept of blockchain.

Blockchain is easy to understand because we have been dealing with its concept all our lives; by sharing a piece of knowledge between a significant amount of people, the consensus of knowledge gives the information fidelity.

When we talk about blockchain in a more “techy” way, we refer to a distributed network of connected servers located in different geographical locations and owned by various participants. The bigger the network, the more significant the power of trust and — thanks to its data structure — information proves immutable.

This technological description is generally accepted, although technology spreads and evolves quickly, so now there are numerous different blockchain technologies that work differently. I’m sure that in the future we will continue to see new technologies and variants of the traditional blockchain.

So, how can we use blockchain?

If we look at the evolution of technology in business over the last 20–30 years, we can see that digitisation has been developed and implemented at an internal level. Many companies have moved from on-premise servers to cloud environments, while also adopting SaaS models and delegating the responsibility to qualified third party providers.

In my opinion, blockchain is not about internal processes: it is all about external collaboration between different stakeholders, whether these be business areas, departments, companies or public entities. Blockchain adds a layer of trust between these stakeholders, generating new features as, transparency and immutability. The implementation of these new features between companies creates win-win situations as; increased returns, efficiencies and the creation of new revenues streams.

This is all possible thanks to blockchain technology. Going beyond all the technical specs that make blockchain a great technology, it is the first time in the history of the business world that we have a trusted, unbiased third party that can act as an intermediary between different stakeholders.

If we dig deeper into how companies can use this technology, we see that the approach to blockchain is individual and depends on a company’s objective and size. The following definitions are based on the European Union’s company categorisation:

Startups and small companies

Here, there must be a strategic decision. If you decide that blockchain is going to be essential to your product, this will require a huge amount of work, investment and conditioning to reach full functionality. These means that the end value provided by blockchain needs to be sufficiently significant and beneficial as to make it worthwhile. If, instead, you have the strategic value proposition established but blockchain doesn’t add a key advantage, the use of this technology should come via tech providers that offer blockchain-enabled business tools, saving you the burden of implementing the technology yourself.

Medium companies

Blockchain adoption depends on how tech-savvy you want to be and how much control you want to have. If you are a deep-tech company, you may want to invest more significantly in blockchain and have ownership of the process. If not, you may want to work with providers that will develop and deliver applications that solve specific processes. These providers can then maintain the solution and develop new functionalities as time goes on.

Large corporations

Large companies should take a more strategic approach when determining what kind of role they want blockchain to play: You should decide if you want to be a leader or a follower and look closely at the investment, benefits and risks associated with your decision. Of course, if you are planning to be a leader, there are numerous benefits that can be gained by developing this technology.

The objective is to then capture those benefits and turn them into a strategic advantage. However, you should consider mitigating the potential risks by working with trusted and expert providers, since this is critical to developing and maintaining this strategic advantage over time.

For those companies that are planning on taking a less proactive role in their adoption of blockchain technology and want to mitigate the initial risk of investing, the most crucial part is being able to identify when to start. Remember that technology is slow to implement in established processes and needs time to become a stable strategic advantage. In order to move faster, it is critical to partner with an expert technology provider, such as Finboot.

To finish, let me introduce the concepts of alliances and foundations in the blockchain ecosystem. We are starting to see companies working together to create organisations in specific geographical areas, such as Alastria in Spain, for example. These kinds of organisations are working to develop innovative tools around blockchain and are a crucial tool for adoption in the mid and long term. In our future blogs, we will go into more detail about blockchain networks, foundations and organisations, as this is a big topic that’s worth a closer look.

With the innovation and investment that we are seeing in the blockchain market, we can expect to see the implementation of great projects in the years to come that bring benefits in all sorts of areas, from supply chains to data protection, across a whole range of sectors. These include energy, education, healthcare and banking, to name just a few.

The most important question here is: What role is your company going to have in the new era of collaboration?