4 Ways To Experiment Blockchain Integration Into Business

The benefits of implementing blockchain into an already existing company operations or in a beginning startup are immense and not unsung every other time to us. And they have been tried and tested by and on many startups and big companies as well.

If you want to see the next wave of growth in your organization, one out of the four things you may be sure to try is some new or advanced technology, because increased efficiency, cost reduction, and increased data security will be top among your concerns for a growing organization and technology is important to solving difficulties related to these.

The criteria for implementing blockchain will differ from one company to another as will the benefits but there are safer and more cost-effective methods of doing it at the start. Some companies will start using blockchain-as-a-service before proceeding to launch a dApp, then a custom blockchain; other companies will start with a custom blockchain straight away. These decisions may depend on a company's financial and other resources capability, preference, and other factors. 

Motivations and benefits are diverse, sometimes organization-specific

The motivation for implementing blockchain also varies from one organization to another: a bank, financial organization or microfinance may get interested in implementing blockchain because they want to achieve immediate transaction or payment transfers for their customers at low cost, while a supply chain and medical organization may want to implement blockchain to achieve effective tracking of supplies. A social media firm may implement blockchain to ensure increased privacy and security of data and ownership of data by its users, while an educational organization may be interested with better immutable record-keeping for certs and other documents, for payment tracking and to facilitate sharing of data with other educational organization. 

One government ministry may be interested in implementing blockchain to help fight counterfeits, another to facilitate identity verification and to achieve verifiable and fair voting, and yet another may want to use blockchain for improved custom processes at the ports. For artists, blockchain can be used to secure copyrights.

Just about how decentralization, record immutability, data/information security, and transparency as advantages presented for those implementing of blockchain can help an organization? First, blockchain can help all types of business for as long as they are handling payments, records, logistics, procedures, and goods and services. It promises reduced cost by reducing if not eliminating intermediary networks since data and transactions that are verifiable and immutable can be done directly from one party (individual, group or organization) to another on the network.

The decentralized nature of the blockchain allows anyone on the network to run an immutable copy of the blockchain on their machines and to verify the data and transactions that have been shared by anyone, thus making it possible to share a single version of truth that is stored "permanently", while together with the immutability of data, will make it possible to fight fraud and corruption hence achieving improved transparency. Furthermore, data is secured by cryptography that's hard to break.

Decentralization and the fact that data is not stored on central servers means one can store their data on their local machines, own and control their own data and decide what to share with who and how. Given these features, blockchain also unlocks real-time information economies and data sharing economies and through smart contracts, businesses can automate their day-to-day operations, reduce bureaucracy and manual process. Tested with cryptocurrencies, blockchain can help the business to gain massively from low-cost immediate transactions by cutting out third parties and middle-men.  

Integrating blockchain can happen in three major entry points 

The decision to implement blockchain is a major one for any company, small or big; teams will struggle to find the right blockchain technology or solutions they can work with; there might be problems with finding the right staff and strategic partners; issues with interoperability between chains to deal with, and also questions relating to the extent to which or the pace at which an organization should adopt or implement the tech in order to ensure they do not cut out legacy partners/clients. Not to worry about the last point because blockchain integrates with legacy systems seamlessly.

Anyone who understands theory and practice of integrating/adopting new tech by companies understands that it follows a curve in which early entrants look to using technology as a competitive advantage and these will enjoy the benefits of taking an early plunge though costs of doing so are relatively high. A top the curve as the technology matures (as manifested by there having, say more integration technology, more specialists in the area, more hardware and software, etc), everyone is clear of the advantages of implementing the technology and is rushing to do it because it appears as a standard operation in and for the market, but the early-entrant benefits have immensely reduced to zero with flooding of alternatives. Past the mass adoption, the stage is that most will have implemented and there is a continuous hunt for more innovations especially by early adopters who want a "leave" and refresh.

For such technology like blockchain, early entrance or adoption may be discouraged by a number of challenges: mostly it used to be scalability but now we know of a good number of blockchain networks that can scale to thousands of transactions per second though, for some, there is a trade-off between scalability and security and decentralization. For instance, most have already chosen centralized solutions off-chain for scaling. Despite the fact that there are other challenges mentioned such as lack of adequate skills-set in blockchain and poor public perception, there always are workarounds and things are improving in these respect. The dominant challenges today are regulation where sometimes the organizations willing to continue complying with regulators may not get clear regulatory guidelines about the tech, and security where a number of hacks have already been reported.

These are some of the reasons some companies decide to not go "full-blown blockchain" at first but make adequate moves to ensure they are not left out and are strategically positioned to gain the benefits of the change and to continue developing themselves with respect to blockchain. Here are some methods a company may employ to start experimenting blockchain.

1. Using blockchain-as-a-service

Blockchain-as-a-service is similar to what is referred to as cloud-as-a-service or Software As A Service (SaaS) which are all part of the recent wave of outsourcing being referred to as "anything as a service" (XaaS), which is transforming the way technology is being used, adopted and implemented by companies around the world. 

BaaS is a great way of starting out to adopt blockchain because a company does not need to invest a lot of resources or commit much staff to develop or deploy blockchain into their current infrastructure. The company does not have to design their custom blockchain from scratch or worry about technicalities forking a blockchain. Instead, they get to implement already tested blockchain solutions.

In BaaS, cloud-based service providers or vendors such as Microsoft, Oracle or Aws will provide a platform and infrastructure through which a customer will create and run a dApp on cloud while the provider hosts the dApp, provide maintenance and support (for instance bandwidth management, suitable allocation of resources, hosting requirements, and provides security features like the prevention of hacking attempts) work to the client.

Thus the client avoids the technical complexities and operational overhead involved in creating, configuring, and operating the blockchain, and maintaining its infrastructure. Such complexities and overheads act as deterrents to mass adoption in one way or the other.

Of course, the customer will be a fee to access the “blockchain technology and infrastructure” and the provider will set up and maintain connected nodes on behalf of the client. The customer, therefore, avoids worrying of infrastructure and performance-related issues and instead focuses on their core job. In other words, the cloud providers will host your applications and take care of all performance and maintenance issues, without you having to create and run your blockchain on your servers and maintain it, etc.

2. Through dApp/smart contracts as compared to a custom blockchain

DApps or smart contracts are use-case-specific code running on a blockchain -- the equivalents of what we know as "applications" in legacy platforms. First of all, there is a virtual machine, the application-layer software that communicates with machines to update them on status. Smart contracts are software programs that deployed onto a blockchain virtual machine such as the Ethereum Virtual Machine which is an application-layer software for Ethereum.

DApps could deal with decentralized file storage, computing services, financial services, real-life asset ownership records, supply-chain management, personal identity, energy distribution, health records, governance, and more. They provide more flexibility in terms of controlling the inputs and outs but the number of options is limited when compared to options provided by a custom blockchain.

A dapp can be launched as crypto wallets, crypto-tokens, or virtually for any other service. There is much more application of dapps beyond crypto such as launching p2p payments for your business, launching p2p data-sharing, p2p social media, exchange and trading dapps, digital identity, dapps for price tracking and asset management, etc.

Today the Ethereum Virtual Machine is the largest choice for dApp builders and has the largest number of dApps. However, there are other options including Tezos, Dfinity, NEO, Cardano, IOTA, EOS, IOST, ICON, TRON, and Hedera Hashgraph which can be selected based on factors such as block time, security and others. Dfinity VM, for instance, is designed to have its own AI-powered “Blockchain Nervous System” that can upgrade the protocol on the fly. Hedera is not a blockchain but a Direct Acyclic Graph that allows developers to use a Java SDK to build applications in concert with file storage and Solidity-based smart contracts if needed.

These choices may depend on a company's use case for blockchain as their preferences.


3. Partnerships with decentralized ledger businesses

Decentralized ledger platforms such as Ethereum and bitcoin are open-source and are a great alternative for a business or company thinking of launch or use payment services for the first time. While developing a dApp or customizing a blockchain is resource-intensive, you can begin by experimenting blockchain by using already developed solutions at a cost or for free. In addition to ordinarily trying blockchain networks for company transactions and other services for instance through wallets and asset management dApps and other dApps, you might also try out integration through partnerships with wallets and other platforms.

Partnerships are a great way to join others to test upcoming solutions in your company. Such tests can be done on public blockchains and private permissioned networks as well, such as those being run/tried by partnerships and consortia. Consortia and partnerships, for instance, encourage sharing of resources, development costs and time with like-minded organizations, which leads to shorter development times and economies of scale compared to when an organization is building own solution. There are specialized industry consortia, some are open, others closed, some private and others public.

Apart from technology consortium building a platform, there are also business consortia such as the one by Deutsche Bank, UniCredit and Rabobank, and partners who launched we.trade blockchain platform. Other examples include the coming together of over 94 companies which are part of the IBM/Maersk blockchain-based supply chain initiative; and the Hashed Health technology consortium through which members are pooling resources to solve health industry-related problems and to improve efficiency.

4. Build an application-specific blockchain or custom blockchain

Building a custom blockchain can follow two paths: forking an existing chain or building one from scratch.

This will basically require you to determine consensus rules, data privacy for ledger users, and to come up with a set of algorithms to run. This is never simpler done than said. After identifying a use case -- for instance a company might want to have "banking the un-banked, supply-chain management, provenance in the food industry" as the company's use cases for blockchain -- the company is going to need to select a suitable open-source platform that offers the greatest flexibility and interoperability for both building and maintenance. Most of them are free to develop on.

Additionally, as a company, instead of having a situation where your blockchain is suited to just one use case such as smart contracts, asset management (tokenization), data authentication and verification, and digital identities, ensure you create a truly distributed network through which the gap between different industries can be bridged.

Today, there are different multiple consensus algorithms to select from like Proof of Stake (PoS), Byzantine Fault Tolerant (BFT), Proof of Elapsed Time (PoET), Proof of Authority (PoA), Delegated-Proof of Stake (dPoS), etc with each suited to a specific use-case. Different from these algorithms can also, be implemented on different platforms. You then develop a Proof of Concept, the research regulatory needs, and then do marketing and fundraising, hire staff, launch a beta version of the product before kicking off a production-ready app.

With Cosmos Network and Polkadot, developers are able to build application-specific blockchains from scratch by, instead of building a dapp on a VM or forking an existing blockchain, the developers are able to build a VM and choose available npm-like modules that include features like staking, slashing, tokens, accounts, inter-blockchain communication, governance, etc.

David Kariuki

David Kariuki likes to regard himself as a freelance tech journalist who has written and writes widely about a variety of tech issues that affect our society daily, including cryptocurrencies (see cryptomorrow.com and coinpedia.org); climate change (cleanleap.com), OpenSim and virtual reality (see hypergridbusiness.com). He is currently pursuing a MSc in Environmental Management at Open University. He does write here not to offer any investment advise but with the intention of informing audience, and articles in here are of his own opinion. Anyone willing to use any opinion here as advise to invest in crypto should obviously take own responsibility and accountability of their losses (or benefits) thereof. You can reach me at eqariu@gmail.com or david@cryptomorrow.com

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