How to Use Blockchain to Automate Business Processes
Posted on Feb 4, 2019
Blockchain isn’t just used for cryptocurrency.
Blockchain is quite a new technology for business. Most often, its application is associated with the cryptocurrency market. However, blockchain technology is also suitable for traditional business. Classic databases are based on the Create-Read-Update-Delete (CRUD) process and imply that a user with administrative rights can change data at any time. Blockchain technology implies the opposite principle - data that enters the chain cannot be changed or edited. Moreover, this data is distributed and decentralized. Recently, this technology that began with the “digital gold” of Bitcoin and other cryptocurrencies has been applied in other aspects of accounting and data storage. Leading car manufacturers such as General Motors, Renault, BMW, Ford created a joint blockchain consortium MOBI (Mobility Open Blockchain Initiative) to automate the process of supplying components, accounting for cash flow, and logistics management.
Blockchain can be used in almost any sphere of production and service. The only question is where this technology will be most effective and necessary.
Healthcare and smart contracts
Blockchain technologies are universal and can be used almost anywhere where it makes sense. Blockchain is already being introduced in diamond industry, which allows distributors to quickly and clearly identify the origin of minerals. There are also many examples of implementation in the service sector. For example, the use of blockchain in the logistics for delivering goods allows visibility into the entire history of a transport chain. This ensures maximum transparency of the delivery process, increasing the processing speed through smart contracts, and improving quality control.
One of the most promising areas for blockchain implementation is healthcare.
Blockchain in healthcare would allow several processes to be improved at once. For example, it would save clinics from long lines at the registrar’s office. Currently, medical history is recorded by doctors in patients’ personal records. The introduction of blockchain would allow the storage of digitized information, which means it would be easier and faster to find, and patient data would not be lost. In addition, the automatic record of the results of all tests and previous examinations would allow the most accurate diagnoses, reducing medical errors to a minimum.
Blockchain is also easy to use in production. For example, in the production of milk, it would be possible to see not only the basic parameters of the product and its composition, but also under what conditions it was produced, how and when it was transported, and other data. But most importantly, this information would not only be easy to access, but also reliable.
It is worth mentioning smart contracts which were first implemented in 2013 in the Etherium network. A key feature of this type of cryptographic contract is the absence of a third party controlling the contract execution. For example, when renting a room, payment should arrive from the 10th to the 15th day of each month - if payment does not arrive or does not arrive in due amount - access to the room is automatically blocked. This principle could be applied to mortgages and credit cars as well. Theoretically, all contractual relations could be transferred to smart contracts. In trade, this could apply to purchases on the internet - until you get the goods in your hands and approve it, the seller does not receive payment. This could also be beneficial to international deliveries where payments and delivery terms need to clearly be controlled. In law, most disputes would be able to be resolved without participation of courts and notaries.
Industry and Agriculture
The introduction of blockchain technologies would create new conditions for the development of entire sectors of the economy. It would help manufacturors validate the product and keep track of all participants in the supply chain, since data would be impossible to replace. Blockchain introduction in the agricultural sector would minimize the number of intermediaries, which now account for most of the operating profit. The new technology could provide market transparency, since it would be possible to track each delivery of products, for example, a batch of low-quality meat and so on.
Blockchain is suitable for any business process in which many counterparties are involved, where each of them could somehow affect the entire chain. A simple example - documents confirming legal aspects with several signatories. It is important to understand here that each has put his/her signature according to the law and that nothing should been corrected or removed afterwards. This signature confirms the signing of the document before the final approval. Blockchain helps ensure the transparency of transactions or actions within the system. For business, these are huge opportunities.
Blockchain is not just another innovative paradigm that could be embedded in existing economic models. This is a paradigm shift, a transition to fundamentally different algorithms for building a global market. Today, such countries as the United States, Switzerland, Singapore, Korea, Japan, New Zealand, China, Estonia and Belarus are at the forefront of this trend. Estonia, for example, plans to transfer all state databases to the blockchain platform, as well as to issue licenses for crypto exchange operations, thus creating conditions for registering crypto exchange. They, in turn, would bring new financial flows, both investment and tax, into the country.
Despite many opportunities, blockchain brings serious risks that could lead to significant financial and reputational losses for businesses.
As already mentioned, blockchain technology is quite suitable for automating commercial processes. It allows tracking of all financial consumables of a company, actions with assets and liabilities—it actually reduces the company's “black” bookkeeping to zero, if it exists. However, it is not possible to fully automate commercial processes, since all company financial decisions are made by a person, even if based on the results obtained using digital analytics.
It is necessary to take into account the fact that when introducing automated systems based on blockchain technologies for commercial processes, the company exposes itself to additional risks. If the system is hacked, attackers will receive all information about the company's activities.
Also, the issue of storing large volumes of data that blockchain assumes in organizations, has not yet been resolved.
In addition, blockchain contradicts the laws of personal data, which require not only to store information, but also, to remove it from the chain at the request of the owner. And in this case, the main advantage of the blockchain is the reliability of data storage, and it also becomes the main drawback. Developers of the European regulations on personal data (GDPR) already believe the use of blockchain in individual projects related to the collection and storage of personal data could be the main reason for future trials and serious fines.
Blockchain or CRUD
Businesses will decide with regard to its financial capabilities, risks and benefits which data storage to use. It is clear that this new technology allows problems in the field of reliable data storage to be solved and the automation of some processes. Blockchain technologies attract attention, first of all, by their versatility. They are actively used in the banking and financial sectors. In addition, blockchain could and most likely will be applied in different areas from copyright to managing the voting process and government. Because of this, it is necessary to create a good legislative base to ensure immunity from initiatives related to digital oblivion and the need to edit and delete data. It is possible that blockchain technology eventually will be introduced into all spheres of human life.