Blockchain beyond the hype: What is the business value?
Overview — How does Blockchain add value?
In a business, the use of blockchain technology for payments and recording & controlling the supply chain has benefits that can be shared with customers. Lower transaction costs mean micro-payments become more viable whereas previously it would not be possible. In addition, the anonymity by design of digital currency means the customer’s personal data will not be at risk of misuse.
Customer convenience can be increased through Internet of Things (IoT) technology, such as smart packaging. The guaranteed provenance of goods and services through connected supply chains can also be shared with customers, further increasing value for the end consumer. Below are some of the different ways Blockchain can add value for customers.
Sharing blockchain information
On current systems, each member of the supply chain operates their own centralised ledger which increases the risk of errors and fraud. On a blockchain, supply chain information will be open to all members of the chain — suppliers, customers, and producers. The design of blockchain and its distributed network means the information can be trusted as authentic and reliable across all members. In addition, it will be possible to ensure traceability to the original producer using existing mobile technology such as NFC or RFID. This will build trust between consumers and producers in the supply chain especially in the food and pharma industries. More information being shared in real-time between businesses in the supply chain can prevent surprises and fluctuations in stock levels that can lead to waste.
As supply chain information is recorded on a blockchain, the information can be gathered by customers using a mobile phone app, enabling them to scan a QR code or product barcode. This allows customers to gather sourcing and production information. For pharmaceuticals, temperature sensors will be able to update to the blockchain. These will be able to be viewed by the consumer increasing safety.
Ultimately, these ethical considerations will need to be discussed with the stakeholders. Sharing information needs to be within the constraints of confidentiality, privacy, and commerciality.
Using IoT Technology with Digital currencies
The Internet of Things (IoT) is made up of devices that collect, store, and transmit information that can be collected and analysed. The Internet will become an Internet of transactions, combining information and value submitted by IoT devices. The expert opinion is it’s unlikely that IoT devices will use an existing currency or current financial systems to transfer value. This is due to the difficulty in making micro payments and the slow processing and settlement.
By Placing IoT transactions on a blockchain, it enables the connected devices to perform actions and transfer value automatically through the use of smart contracts and a digital currency such as bitcoin. However other currencies are developing in regards to particular industries or local context. Being on a blockchain also improves the security and resilience of such transactions.
There are any ways in which IoT can be employed in small and medium-size enterprises. The SME can create a secure digital identity to which machines and sensors can be linked, performing programmed instructions using smart contracts. The smartness can be moved closer to the customer through smart packaging — a developing market in which the item can report to the customer and others about its condition via sensors. This can increase the perceived customer value.
Does this all enhance customer value?
Original producers and end customers can be linked using blockchain technology, with the potential for the whole supply chain to benefit through increased connectivity. In doing so, it may be possible to increase prices to reflect the improved authenticity and to encourage increased repeat purchases by offering information on which genuine choices can be made, ultimately increasing sales.
The customer is given smarter buying and consumption choices with complete information, which can lead to increased sales. Customers can use this information to benefit in noneconomic terms from ethical practices of their suppliers, such as reducing waste or participating in the circular economy.
Initially, total costs may increase as the producer operates parallel systems and both parties have to adapt to new processes, but this can be recovered in extra sales. In addition, the blockchain information could have the effect of reducing waste and inefficiency, causing costs to ultimately fall. Because blockchain technology is secure and anonymous, the customer is sharing less confidential personal and financial information and retains more privacy when transacting, lowering purchasing risk.
Blockchain technology and digital currency can give your company an edge in an increasingly competitive marketplace. Blockchain technology can be used to protect your customers and their information, increase customer knowledge of your products and services, and enhance customer convenience, adding value to your products and services.
If you would like to read more about the weaknesses of blockchain and when it should not be used then click here.