Trust is an important part of any business transaction. Trust within an organization is often implicit but it is a more difficult proposition when it comes to the need to share data to third parties, partners and other external organizations.
Most often, this is done via a distributed database of some kind, which could take many forms – for example, a cloud-based platform to share documents. This addresses accessibility but not the trust issue.
Blockchain, at least in theory, should be perfectly placed to solve this problem as a complementary technology alongside automation and remove the risks associated with third-party transactions.
Blockchain is a technology that can functionally provide a service that’s a bit like ‘escrow for anything’, achieved by all transactions being logged on a secure shared ledger that no single organization or group controls. It’s a way to establish trust without the need for a middleman, and one that guarantees the agreed outcomes.
How a blockchain works
The ‘block’ part of a blockchain is a transaction or group of transactions. Each time a new block of data is generated, it’s added to the previous ones. This linear sequence of blocks is the ‘chain’ in a blockchain. The most widely known uses of blockchain so far are for cryptocurrencies (such as Bitcoin and Ethereum) and financial platforms. But a blockchain can be used for just about anything.
Rules can be set (‘smart contracts’) that control under what conditions a transaction can take place and what must happen when it does. This means there’s the potential to create cryptographically secured, automated transactions between external organizations.
And because of the mathematics involved in the verification of each transaction at the blockchain level, once a transaction has been confirmed, any attempt to alter an earlier entry in the ledger would affect all the subsequent blocks. Such an attempted change would be immediately apparent to everyone on the network.
Exactly what that block of data represents will vary by the business, or process, but it’s best-suited to transactions that rely on contracts, agreements or other record-based requirements – once smart contracts are established, the rules for those are enforced automatically when the set conditions are met.
In many cases, a public or private blockchain could eliminate any processes that still rely on paper and manual activity. A whitepaper from Provenance in 2015 details how blockchain can be used to certify a supply chain. The technology’s potential to enhance trust and efficiency for financial services and compliance tasks is also already being explored by many companies.
The challenges for blockchain?
At its core, the blockchain-based smart contract might seem to offer some of the benefits of automated solutions – both connect a transaction or process. For blockchain, this is regulated by the smart contracts a business defines but it’s not a solution that, for the near future at least, scales to more complex contracts.
While blockchain is well-suited to clear and settle back-office tasks in its current state, enterprise users will need to significantly re-engineer legacy systems, and that comes with equally significant costs. It’s a shift that will require some fundamental changes to the way many businesses operate, too – if one supplier in a chain won’t implement it, the notion of an immutable, independent ledger breaks down. These challenges for blockchain adoption aren’t ones that are likely to be overcome in the next few years.
How automation can help
While blockchain is viewed as a more inherently secure form of technology, there’s still a vital role to play for automation.
In one sense, blockchain – regardless of benefits – needs to be viewed as many other technologies deployed into an IT landscape: it’s a system of record that will need installation, operational support, and will rely on accurate data.
With Redwood RunMyJobs®, all of these tasks are taken care of as they are with any other automated process. It massively reduces the cost and complexity of deployment and ongoing operational management.
Perhaps most crucially for blockchain (and even more so given that the reversal of a transaction can get complicated), RunMyJobs ensures that any data entered as part of the process is 100% accurate.
To see how Redwood keeps one eye on your business’s future, get in touch with us today.