How Enterprise Blockchain Can Change Businesses In 2018?

We live in the digital age. It was never in doubt that digital currencies would become a regular form of payment.

Since the emergence of Bitcoin in 2008, we are inching closer to the enterprise blockchain.

And 2018 is tipped to be the year when disruptive technologies become more noticeable in the [online] public eye.

In this article, we will discuss how enterprise blockchain can change businesses and how will they adopt blockchain technology while benefiting both companies and consumers.

The points we will cover are:

  • Online transactions
  • How blockchain will impact B2B sales
  • Disruptive FinFech companies
  • How banks will utilise blockchain
  • Top 6 companies that have implemented enterprise blockchain

While blockchain technology promises many benefits, to date, only a handful have come to fruition.

The challenge for businesses to reap the benefits of this disruptive technology boil down to five enterprise-grade requirements:

  • The ability to scale without compromising performance
  • Resilience to operational changes
  • Improved security and confidentiality
  • Efficient support and management systems
  • Integrated the technology into existing business systems

We’re all for encouraging innovative technologies, and while we applaud visionaries that are brave enough to lead us into a new future, it’s equally important to soften the excitement…

….we really shouldn’t expect too much too soon, so let’s have some patience during the implementation process and ironing out of blockchain initiatives.

Online Transactions

How Enterprise Blockchain Can Change Businesses In 2018

One of the advantages crypto-commentators rave about is the blockchains potential to cut-out the middleman (banks and credit agencies) in online transactions.

Furthermore, blockchain leaves a digital signature that tracks the identity of all parties involved in the transactions while keeping personal details private.

To date, online transactions with cryptocurrencies have been limited to a handful of vendors, most notably gambling sites, online games and a few forward-thinking retailers.

The capacity to swerve bank charges has also seen online sites adding payment gateways that accept Bitcoin to their online stores. There will still be fees to pay in digital transactions, but the “admin” costs will be or should be, substantially lower.

However, before firms can adopt digital payments on masse, blockchain technicians have to resolve the issue with scalability. At the moment, there are less than a handful of digital coins that can process transactions in a practical time.

For blockchain to become the norm, the technologies in place will have to handle thousands of transactions per second.

To date there are less than two handfuls of digital tokens that can handle payments in real-time; Ripple (XRP) is the fastest and can process 1500 transactions per second (tips).

Steem and NEM/XEM can both handle over 1000. Bitcoin can only manage 7tps.

Given this state, companies are naturally concerned that an enterprise blockchain crossing the globe and needed to providing instant authorisation for thousands of members could create potential conflicts.

The real-world issue has not been put to the test. Existing blockchain applications that have been put to use have not needed to handle massive throughput levels.

Scaling a commissioned blockchain is going to cause some technical problems. Businesses that use them, or want to offer digital payments to customers, are concerned they could lose customers.

And consumers do have a history of being impatient.

How Will Blockchain Impact B2B Sales?

Blockchains impact on B2B Sales

The sensible approach to enterprise blockchain in 2018 will be for B2B firms to adopt the technology first.

Nobody will prevent forward-thinking retailers from joining blockchains of course, but the most likely scenario is this will take effect over the next half-decade or so.

Another advantage enterprise blockchain offers businesses is that it does not replace legacy software. In fact, the technology complements existing systems and presents firms with new realities.

Tweaks will be needed no doubt, and technical hitches are a definite possibility. That’s just the nature of technology. Anybody that has performed a simple software update on a smartphone will tell you that.

Given B2B sales relationships are typically ongoing contracts, firms have built up relationships.

Trust will play a significant role in the implementation and adoption of digital currencies and enterprise blockchain.

Establishing trust is one of blockchains greatest strengths.

Smart contracts make agreements legally binding, expedite payment and plays a crucial role in establishing trust between parties.

The capacity for blockchain to bypass banks and credit card processing checks reduces the cost of financial transactions which will benefit consumers and merchants that can reflect reduced fees in the value of the service.

Disruptive Fintech Companies

fintech companies

Financial institutions used to look upon FinTechs as a threat. However, now banks recognise the potential of disruptive technologies they are embracing FinTechs like a long-lost brother.

Especially since the banks discovered blockchain would save them $10bn a year!

Over 80 global banks are now piloting Ripple blockchain, developing their technologies. Many financial institutions are also promoting or talking about developing their cryptocurrencies to existing rival ICOs.

The increasing relevance of digital currencies means adoption of the blockchain is inevitable. Fintech firms will continue to increase and expand into other industries.

Global investment in fintech in 2017 was $31bn.

Last year, New York-based consortium R3 comprised of over 80 investment banks and financial organisations from around the world raised $107bn in fundraising to develop a blockchain initiative aimed at proving “cost and efficiency.”

Despite the narrowing focus of investors, the FinTech market has plenty of momentum and looks set to grow in the foreseeable future.

The sharing is caring philosophy will also become part of the FinTech scene, and blockchain fosters the ability for consumers to bank under one umbrella but drink cocktails from a variety of financial and insurance companies.

Rather than being limited to policies with firms their bank has partnered with, consumers will have the liberty to shop around for the best deals.

Seamlessly integrating multiple financial services into the blockchain will give customers more options and enable financial institutions to communicate and share information more effectively.

The benefit of this is to speed up payment processes and make it more convenient for consumers to perform financial transactions and take out loans.

The flurry of digital activity across multiple industries will also mean regulators adopt an increasing number of technologies to gather and analyse more significant quantities of data. Blockchain’s public ledger will inevitably have an integral role.

Another advantage crypto commentators impress on people is that the blockchain will eliminate fraud and other types of online activity. To date, there are suspicions that cryptocurrency is being used to assist criminals to launder dirty money.

Cryptocurrency scams are also more common than honest ICOs would like, and although governments are introducing regulations, there is nothing legislation can do to prevent scammers.

The only way to avoid cryptocurrency traps is to do your due diligence on ICO investment opportunities and make a judgement call.

However, blockchain will enable financial regulators to supervise digital transactions efficiently – thus all [future] transactions – and forecast problems that may occur within the global economy.

For example, the Bank of England runs stress tests on corporate banks around the globe to predict financial crashes and plan for economic survival.

History shows this system does not always work, especially when a bubble is created.

The blockchain will record information more accurately than the current stress test, thus giving the BofE precise data. This will help policymakers identify unnatural spikes and economic downturns and take effective evasive action.

How Will Banks Utilise Blockchain?

How are banks going to use blockchain

More than 80 banks are trialling blockchain technology. Financial institutions have also been vocal in voicing their concern about cryptocurrencies aiding criminals and financing arms trades and terrorism.

It should not come as any surprise that the initial round of regulations imposed on transactions and investments involving digital currencies predominantly focuses on customer verification in line with “Know Your Customer” (KYC) protocols and the money laundering and fraud Acts.

Banks have struggled for decades to initiate an airtight system that governs KYC protocols. In recent years there have been some high-profile cases including banking fraudsters in India and multiple officials embezzling money.

Furthermore, regulators and watchdog groups have been pressing banks to tighten their systems of customer verification for years. The distribution ledger provides a solution if banks get the initial identification process right.

Blockchain has an incorruptible encryption code, and data cannot be updated once data in the block is sealed. Also, data is transferred between auditors within the network in an instant.

However, if banks fail to implement the blockchain correctly, the costs involved in getting it wrong could be enormous.

The growing threat of cybercrime is a primary concern and if the “super-complaint” launched by Which? To pressure banks in the UK into refunding victims of online fraud gathers pace, banks would lose the billions that blockchain will save them.

In response, global banks are evaluating blockchain technology to launch their cryptocurrencies. The official line is that the increased adoption of digital technologies expediates the cybersecurity issue.

Cybercrime is a pressing issue for blockchain developers as well. With the increasing number of consumers using mobile phones to make online purchases, digital transactions are vulnerable. Mobile phones are notoriously easy to hack.

Financial institutions are also susceptible to cybercriminals using sophisticated technologies to acquire data. Banks are naturally a primary target for criminals.

Claims made by blockchain developers that say the technology cannot be hacked has already been proved false. Perhaps. There have been some high profile cases in which cryptocurrencies claim to have been hacked.

The other scenario is these incidents were fraudulent acts by the exchanges – if blockchain is unhackable.

Financial institutions are not taking any chances.

The aim is to introduce their cryptocurrencies will, of course, provide competition for existing ICOs and give banks more control over the monetary system.

This would ultimately undermine one of the key purposes of the blockchain in the first place. The public ledger is supposed to remove the monopoly of the financial system away from a financial institution that manipulates the economy for their ends.

Banks will, of course, advocate blockchain technology to process faster payments. International transactions will be made in a matter of seconds rather than the 2-5 days the current banking system does. Transactions fees will also be lower.

Before banks facilitate consumer transactions, the entire supply chain from the merchant to shipping companies and ports will need to digitise their administration systems.

While enterprise blockchain eliminates the greater parts of the trade process, implementing the technology on a large scale naturally presents problems. But some major companies are making headway.

Top 6 Companies That Implemented Enterprise Blockchain

blockchain enterprise is changing businesses

Microsoft

The software giant has adopted R3’s Corda platform to develop its Coco Framework. Microsoft plans to help make enterprise technology overcome issues regarding latency, governance and confidentiality.

JP Morgan Chase

The investment bank intends to use the distributed ledger of the Ethereum blockchain to show “spot trades” on the foreign exchange market for global currencies, so consumers will instantly know exactly how much they are paying when currency exchange rates are involved.

Intel

Intel advertises they are “better together” with blockchain and will use the technology to improve privacy, security, scalability and trust across the blockchain ecosystem.

Google

With 140 equity investments totalling $1.2bn, Google is one of the major financial backers of the blockchain. However, the company’s plans for the technology is mostly unknown.

The only project the tech firm has revealed to date is the auditing system for processing healthcare data. How underwhelming.

Amazon

Blockchain has obvious uses for Amazon, but the eCommerce platform has a hidden agenda also. The company has registered three domains; amazonbitcoin, amazonetherum.com and amazoncryptocurrency.com.

IBM

IBM has gone full-throttle with blockchain because they recognise how “things will get a new life.” The company has revised its compensation policy to reward sales associates that persuade companies to join them on a blockchain network.

How do you think enterprise blockchain will impact business in 2018? Share your thoughts by leaving a comment below!

In the meantime, read more on The Ways Blockchain Will Change The World.

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Michelle is a Marketing and Communication student from Berlin. As a part of her internship, Michelle had a chance to work BiteMyCoin, where she developed a huge interest in for the FinTech and Cryptocurrency world. She has decided to share her newbie point of view by writing articles and contributing to BiteMyCoin!