Experts who spoke at last week’s CDX Academy Blockchain Summit in New York City helped demystify the emerging technology for the digital leaders in attendance.
The big consensus among speakers was that blockchain can serve multiple purposes for enterprises. Jessica Groopman, industry analyst and founding partner at Kaleido Insights, began the day-long event helping the audience better understand exactly what a blockchain is and how it goes beyond just for verifying transactions. In reality, she said, a blockchain is a shared ledger across multiple parties that can authenticate and distribute transactions or any other type of “event.”
GE is among the companies working to get an early start with the technology. While many pilots are underway, there is a “long way to go until maturity because of trust, adoption, and collaboration challenges,” said Laurie Tolson, chief digital officer at GE Transportation.
Supply-chain management is one of the more immediate use cases for blockchain, according to Kate Merton, head of JLab at Johnson & Johnson. Using blockchain to improve its efficiency is the “lowest-hanging fruit” for enterprises today, she said.
The ability to track a product in transport will help businesses better serve their customer, GE’s Tolson added. “The more data that is visible, the faster things will move through the supply chain,” she said.
Today, Tolson said, over $140 billion a day is tied up in disputes between shippers and receivers. For businesses that have perishables, stalled contracts, handoffs, and delivery could mean loss of cargo.
“If you can speed it up via an open ledger, that saves a lot of money,” Tolson told attendees.
Finance And Smart Contracts
Blockchain technology also has the potential to make smart contracts much more prevalent, according to Amir Azaran, partner of the advanced media and technology practice at Loeb & Loeb.
Smart contracts “aren’t just contracts,” he said. “It’s software that automates execution and business rules and the resulting transaction.”
Azaran pointed to eTrade and TD Ameritrade as examples of companies using smart contracts. Both allow users to set up rules and limitations for their stock plan accounts to stop trading or automatically sell once they hit a specific price point.
Smart contracts can lower costs for transactions significantly, he added. For regular contracts, commercial terms are written by lawyers and negotiated. For smart contracts, commercial terms are written by programmers who distill business rules and develop code for a contract that is self-executed.
There are challenges, of course. Software can contain bugs, Azaran said. And smart contracts require triggering conditions that can be objectively verified. Additionally, contracts often contain terms that are too complex or ambiguous to be reduced to code. Azaran believes that the opportunity outweighs the challenges.
“Blockchain-based systems create transparency and can therefore enable trust among a group of participants,” Azaran said. “That transparency sets the conditions for easier adoption of smart contracts, which can significantly lower transaction costs.”
Research, Development, And Even Diagnosis
Blockchain will also have massive impact on research and development, specifically through the use of permission-based blockchain. A permission-based blockchain ecosystem, which Azaran said can be complex to implement, is open only to a discrete set of participants.
“This enables a consortium of participants to solve a particular business problem or set of inefficiencies,” he explained. “Different levels of access and authority can be established.” Additionally, governance and operation of the ecosystem can be customized, he said.
Louisa Wong, CDO of Dentsu Aegis, said this type of blockchain could be extremely useful in the healthcare field, specifically for R&D. J&J’s Merton agreed, pointing out how the industry is swimming in data but that the data is not always readily available.
“Blockchain is going to help us better partner with people and their medical data,” she said. “It’s going to give us access to not just the data we have on a patient, but all their medical data, to get a better diagnosis. Of course, there are privacy concerns here. But health research is going to benefit from blockchain.”
Artificial intelligence—machine learning, specifically—in parallel with blockchain in the R&D space is huge, Merton said. “There are big buckets of big data in R&D, and connecting them is a big challenge,” she said. “That’s where blockchain comes in.”
Once there's a single view of the patient (think: customer), then machine learning can do its magic in turning the data into insights.
The issue is, customers don’t yet know the value exchange, Merton said. But imagine if someone has a rare disease, and doctors are able to provide a quicker diagnosis if the person shares all of his data. “I think people will be open to that type of value exchange,” she said.