Financial services organizations have been leading the blockchain charge, most commonly for reconciliation of funds or tokenization. But, according to new research from Kaleido Insights, the opportunity is much bigger that that.
A blockchain is a shared ledger across multiple parties. It is technically a shared way of authenticating and distributing transactions, but, according to Jessica Groopman, industry analyst and founding partner at Kaleido Insights, “a little caveat there is that transactions aren’t just monetary or money-based—they are an event.”
Virtually anything could be a transaction, she told CMO.com. “It could be money, it could be a vote, it could be the exchange of information, it could be that a document or product has been accessed,” Groopman explained. “So it’s a shared way of verifying that an action or a transaction has taken place.”
Kaleido’s report emphasizes that distributed ledger technologies can also be applied at the product level as well as ecosystem interactions. Blockchain at the product level could involve tracking a product’s identity, i.e. ownership, over the course of its lifetime. Take, for example, a car: Pilot projects today are using a shared ledger to track the car’s components, its movement through the supply chain, its maintenance records, owners, registration, driving records, emissions compliance, all the way to decommissioning. Other pilots are exploring the use of blockchain to enable products to make transactions—for example, if an autonomous vehicle could negotiate and then transact a repair on the owner’s behalf. Blockchain also can be used to track all interactions associated with a product.
“Using some kind of distributed ledger to track interactions and encode contracts based on those interactions becomes a central enabler for service-based business models wherein multiple businesses can monetize connected products. This has been a huge challenge for traditional product companies to date—in no small part because there is no single architecture to do this,” Groopman said. “When looking at blockchain as more than just a transaction ledger to include use cases for identity, transactions, and interactions, companies can unlock broader ecosystem opportunities, including major cost efficiencies in areas like supply chain, IoT network management, and potentially new revenues in areas like asset-sharing or loyalty programs spanning multiple companies, among others.”
For example, she explained, “General Motors has a car-sharing program called Maven. Among other areas, GM is experimenting with distributed ledgers to deepen the value of the Maven program by extending the authenticatable data associated with both user—e.g., personalized vehicle settings—and vehicle—e.g., maintenance records, diagnostics. Imagine if users could also tailor their personalized settings to include favorite media, restaurants, local attractions, etc.”
Why is this important to business leaders? According to Kaleido, 10 billion more devices will be connected to the internet over the next four years. That’s an estimated 44 zetabytes of data flowing through them. The result is an internet of intercommunicating objects, which is going to require a secure and efficient way to track the identities, interactions, transactions, and activities of every “thing” in the network.
“Often, companies don’t have very much visibility into their supply chain or even their ecosystem of partners,” Groopman told CMO.com. “This is, of course, a huge issue in many industries. Companies have historically operated from a very proprietary, siloed point of view—never mind having to share any kind of visibility or accountability or compliance, and even business models, with other companies. You might call it the network effect. The network is only so valuable as the entities on the network when it comes to blockchain.”
Groopman will be presenting the results of Kaleido Insights’ research at Adobe Summit in March. Her objective, she said, is to offer a clearer picture of the opportunities for IoT and blockchain and where they come together.
The research also surfaces a number of best practices businesses should apply to foster ideation and pursue experimentation. “This is, for many, an esoteric technology to grasp, exacerbated by all of the cryptocurrency craze,” Groopman said. “Specifically, the report offers best practices around how to get leadership on board, how to inspire employees during planning and use case development, how to think about incumbent architectures, and, most importantly, how to really foster ‘ecosystem’ collaboration from day one.”