IBM has likened the the revolutionary potential of blockchain technology to the internet, saying that blockchain can do for businesses transactions what the internet did for communications in the 1990s.
Indeed, Big Blue is expecting blockchain technology to be able to potentially save billions of dollars annually and significantly reduce delays in industries such as suppply chain and logistics. This forecast is supported by recent figures from the World Economic Forum, which stated that a reduction in barriers within the international supply chain could increase worldwide GDP by almost 5% and total trade volume by 15%.
However, the question remains as to how best derive value from blockchain technology. IBM has urged firms to develop a close understanding of several key elements of the technology, setting out three adoption principles which are essential for every CEO to consider.
Blockchain technology has the potential to transform trade, transactions and business processes
Business network and ledger are the two concepts underpinning blockchain. When taken together, they make blockchain a smart, tamper-resistant way to carry out trade, transactions and business processes.
The ledger, through which network members exchange assets, is synced across the network and all members having to confirm a transaction of tangible or intangible assets prior to its approval and storage on blockchain.
The shared view helps to set up legitimacy and transparency, even when parties are not familiar with each other.
The value is in the ecosystem as the blockchain network grows
A blockchain can include various types of participants as a business network.
Depending on how many participants are in the blockchain network, as well as the authorising of various credentials and the value of assets being exchanged, IBM urges adopters to observe the difference between “permissioned” and “permissionless” blockchain networks.
The company believes that the real value for blockchain is achieved when these business networks grow, adding that with a strong ecosystem, business networks can more easily reach critical mass enabling the users to build new business models and reinvent the transaction process.
Blockchain can significantly improve visibility and trust across business
Blockchain, according to IBM, can also significantly reduce costs, with the technology having the capacity to reduce transaction settlement times from days or weeks to seconds by offering visibility to all participants. By eliminating intermediary third-parties, the technology can also be used to cut excess costs.
As blockchain is built on the concept of trust, it can help reduce risks of illicit practices undertaken over payment networks, helping to mitigate fraud and cybercrimes.
According to the tech giant, speed, cost efficiency and transparency are among blockchain’s most significant benefits in the enterprise .
IBM Blockchain general manager Marie Wieck said: “The visionaries adopting blockchain today are using the technology to reinvent many fundamental business practices.
“Working with clients to develop open source and permissioned blockchain solutions for the enterprise, we are seeing firsthand how the technology is revolutionising the way organisations recognise value and do business with one another.
“Critical success factors in these engagements are top-down executive support for innovative use cases and bringing key network participants into the dialogue from the start.”