Do all businesses need blockchain

The blockchain technology is actively penetrating all new areas of business: from agriculture to jewelry. In our Wirex payment service, distributed registry technology is at the core of the business model. But does everybody need a blockchain? For which business processes will the technology be as efficient as possible, and where is it absolutely useless? We will try to answer these questions below.

Key principles: openness and decentralization

With the development of the blockchain and the emergence of more and more information about this technology, two of its key principles stand out: openness and decentralization.

The openness of the blockchain is the ability for system users to see the entire history of operations in the block chain, without having the right to change the data of already completed transactions.

The decentralization of the blockchain is expressed in the absence of a single decision-making subject. It is possible to characterize the blockchain as a distributed registry, the operation of which is provided by a group of participants with equal rights. The regulatory and supervisory authority is represented not by a narrow number of administrators, but by all network participants as a whole.

Successful experience with blockchain technology

The blockchain functionality can be useful to organizations whose business processes are based on principles of openness and equality that are consonant with technology. That is why blockchain's prospects are so obvious to the financial sector. In particular, in the banking sector, the blockchain is relevant for those areas where openness and equality of participants becomes a key factor (interbank and scoring systems). Even closed quasi-blockchain systems currently being developed by many banks are a significant step forward.

The system of interbank operations, existing since 1973, SWIFT has already recognized the prospects of the blockchain technology. A 20-page SWIFT report published in April of this year contains informationintentions to create a blockchain platform focused on the development of financial applications. The document discusses the possibility of using distributed registry technology to comply with the principle of KYC (Know Your Customer or know your customer).

At the beginning of October in Russia there was a testing of masterchain - blockchain-infrastructure of the Central Bank. Sberbank, Alfa-Bank, Otkritie Bank, Tinkoff Bank and QIWI international payment service took part in the pilot launch. Masterchain is based on the Ethereum blockchain. Thanks to this decision, participants in the Russian financial market will be able to quickly exchange data and reconcile information about their customers. The openness of the blockchain technology allows in this case also to increase the degree of trust in mutual settlements between counterparty banks.

The advantages of the blockchain in the field of clearing operations (non-cash payments) are reflected in the report of the International Economic Forum for this year. The document talks about the benefits of the blockchain for automating clearing operations and reducing risks for their participants.

As international experience shows, blockchain opportunities are also suitable for other areas of business outside the financial sector.

Startup Agriledgerdemonstrated this in the field of agriculture. The project is intended to account for the harvest harvested by farmer cooperatives. On the startup site there is a link to the UN statistics, according to which up to 50% of the harvest does not reach the points of sale. Paper notes, verbal promises and complex contracts create an intricate and non-transparent system of financial relationships between farmers and points of sale. In this situation, a significant proportion of the harvest is lost on the way to the points of sale due to unscrupulous intermediaries. Agriledger solution provides a transparent crop accounting system that eliminates the risk of corruption and falsification.

The Everledger blockchain technology allows you to count diamonds. More than 40The characteristics of each gem can be digitized by users of the service and recorded on the blockchain. Such multi-level accounting allows you to create a cryptographic proof of authenticity for each gemstone. Everledger’s main customers are insurance companies and gemstone suppliers.

Spheres in which the blockchain is useless

Not all areas of business use of technology appropriate. It does not make sense to use the blockchain simply as a database, since it is so far ineffective in this capacity. The criterion of applicability of technology in business processes is an obvious and obvious profit from its use. Many existing blockchain projects will not be developed, as they do not solve any pressing business problems. But in the process of implementing blockchain projects, areas will be highlighted in which technology is really needed, and they will receive serious development.

Gideon Greenspan, founder and CEO Coin Sciences, the company-developer of open platform for MultiShain blokcheyn applications, published this spring material , which described how to determine the feasibility of using blokcheyna in this or that project.

Greenspan identified a number of signs, in the presence of which the blockchain may be more useful than other solutions. Here is a list of the most important:

• The use of a public database in business processes,
• The presence of several subjects that make changes to the database
• The default distrust between subjects who have the right to modify the database and seek to test each other,
• The real need for a lack of intermediaries who can maintain a database and participate in operations,
• The interdependence of user operations, the creation of chains of transactions,
• The presence of established rules for conducting operations on the blockchain within the project,
• Security and understandable principle of using assets located on the blockchain.

If at least one of the first five signs is missing, then, according to Greenspan, there is no need for a blockchain. In this case, the project is quite suitable traditional solution like standard file storage or proven working databases, for example, from Oracle, SQL Server, MySQL or Postgres.

The future of blockchain in business

Blockchain technology is still quite young. Most of the above cases are either at an early stage of their development, or presented in the form of initiatives and plans for the future. In order for the blockchain to come to court, the project management must be 100% sure of the need for this particular technology and clearly understand the benefits of using it.

Despite the trend of global development of blockchain technologies, the efficiency and actual need of the market for them will be tested by time. It is likely that in the process of attempting to implement the blockchain in various business sectors, a number of areas are highlighted in which this technology is really needed and will be able to reach a new level in its development.

Open systems (in the spirit of Bitcoin) will coexist with closed blockchain systems, but real innovation can only occur within open systems. The future of blockchain technology behind them.