It’s suddenly everywhere. As blockchain starts to move out of its traditional cybercurrency home into broader application, we have to ask: Are organisations ready and able to separate hype from reality?
In a time of near-constant change, it’s easy to fall prey to the hype and hyperbole of new technology, but what happens when technology moves past the start-up phase and into the business landscape as a true contender?
Blockchain is one of those technologies that is pregnant with possibility yet few know about it, much less understand it. As the backbone of cybercurrency and evolving over the past decade, it’s suddenly everywhere: In the ASX as its new platform for financial transactions, moving into the supply chain, and showing promise as a potential hub for micro-finance in emerging economies.
From our point of view, recent developments in the blockchain technology and its application to real-world business challenges are starting to really show some teeth as a potential platform for transaction-heavy processes.
So what is blockchain and why should project practitioners, business, and decision makers be paying attention?
Blockchain: What is it?
It’s the new technology touted as ushering in a revolution in everything from supply chain management and cross border payments to currency trading and cyber security – blockchain.
For enterprises worldwide, blockchain technology is being hailed as having the potential to fundamentally change how business is done across a myriad of industries as diverse as financial services, retail, healthcare, accounting and logistics. But with so much hype around the potentially game-changing information technology it can be difficult to separate fact from fiction and determine what, if any, impact blockchain will have on Australian organisations in the near term.
This is especially the case when it comes to assessing whether blockchain will help, or hinder, the ability of organisations to remain agile while maintaining robust and fit-for-purpose assurance processes into the future.
So what exactly is blockchain?
Simply put, blockchain is a distributed ledger that creates a single shared view of transactions. It uses advanced cryptographic techniques to implement its distributed system enabling rapid processing of transactions in a trust-free environment. At its essence, it could be said that blockchain uses code to build trust in digital-economy transactions.
The much-hyped genius of blockchain is that, by the use of consensus across networks of linked computers, verification of transactions is achieved by participants in real-time so that transactions recorded in the chain can be verified and published in the public domain.
Importantly, this means, for the first time in history, that anyone can view the contents of the blockchain and verify that events recorded into it actually took place, without the intervention of a third party like a bank.
How can blockchain assist organisations?
Blockchain’s decentralised networks and so-called smart contracts are already revolutionising a multitude of industries, with blockchain-based applications being used to reduce transaction costs, free up cash, and accelerate business processes across the globe.
Such organisations are commonly those that are transaction-based, benefit from public scrutiny, are advantaged by a digital transaction history that cannot be erased or rewritten, and operate in a context where decentralisation benefits the end user via, for instance, lower costs or increased efficiencies.
More Australian organisations are exploring ‘the chain’
Financial services is a case in point. Banks are increasingly using blockchain for an array of complex and time-consuming tasks including, everything from the settling and clearing of lands and securities, payments, and recording and updating of customer identities.
In Australia, the shift to blockchain in the sector is already underway. Indeed, the CBA is one of several global banks that has tested a blockchain to transfer value between each other. It was also recently the sole manager on the world’s first public bond created using blockchain as part of a $100 million deal with the World Bank to trial the tech in the bond market.
Meanwhile, the ASX’s blockchain-based distributed ledger, set to be used to clear and settle the $2 trillion cash Australian equities market, is scheduled for activation in early 2021.
But it’s not just banks and financial institutions getting on board. Blockchain-based local energy startups like Natural Solar and Power Ledger – one of Australia’s best-known innovators in the space – are working to use the tech to share power between households by reducing the amount of electricity drawn from the grid, thereby easing the burden of rising power prices on families.
HR is another sector exploring “the chain”. Because blockchain is a ledger, the tech has the capacity to verify all claims made in a resume. It’s even being used by one Australian firm, Chronobank, to give workers access to the gig economy and get paid in cryptocurrency.
Healthcare, too, could be transformed thanks to blockchain, with increased accuracy of diagnoses, improved treatments and more cost-effective care due to higher efficiency and lower administration costs all possible outcomes.
Blockchain challenges and unknowns remain
While there are enormous potential upsides for organisations that embrace blockchain, risks remain. One of the biggest of these is that lack of regulation and official oversight.
This is often most clearly seen in the context of cryptocurrencies, which use blockchain technology as their architecture for data storage – a very volatile environment. Due to the lack of regulatory oversight, rorts and market manipulation are not uncommon.
For organisations, especially larger ones, implementing and standardising blockchain requires substantial investment, including integrating the new tech into legacy systems and workforce retraining.
Given the nascence of the tech, there is also an absence of real-world enterprise testing, and the ongoing rapid development of blockchain platforms that can make it tough to stay a sector leader in the space, without significant ongoing investment.
Blockchain and project management capability
With the accelerating take up blockchain looks like it is here to stay and no doubt the impact it will have on project delivery is still yet to fully unfold. But with projects across multiple sectors — and the attendant risks involved given the focus on security — strong project management capability will be essential to help deliver the ultimate benefits of blockchain.
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