The problem businesses face when adopting blockchain technology

Blockchain technology has come a long way since its debut in 2009, when the mysterious Satoshi Nakamoto built the revolutionary Bitcoin currency.

At the time, it was only known as the system that powered such cryptocurrencies. However, the technology is seeing wide adoption among businesses for uses that range from increasing visibility in a supply chain to building games. In Deloitte’s 2019 Global Blockchain Survey, 53% of respondents said that the technology has become one of their business’ top five critical strategic priorities, up from 43% in the previous year.

Why adopt blockchain technology?

A big reason why companies are interested in blockchain technology is its potential to reduce operational costs.

“It always comes down to where you can get the most value, and the lowest-hanging fruit is in reducing costs,” explains Kyn Chaturvedi, chief business development officer of public blockchain company TomoChain.

This is true for industries like cross-border payments. Banks traditionally play an intermediary role in international money transfer, so people need to consider several factors – such as whether they’re sending on a business day or during work hours – before making cross-border transactions. Sending money when banks aren’t active can delay payments by several days.

Photo credit: 123RF

But with blockchain technology, transactions typically don’t require an intermediary, which means they can be executed much faster.

In IBM’s case, the multinational company used the technology to create its global payments network Blockchain World Wire, which it launched in March this year. The platform’s “straight-through model” uses protocol developed by blockchain infrastructure Stellar that allows transactions to be made directly between two individuals within seconds.

The challenge with integration

However, businesses looking to leverage blockchain might run into problems if they’re not careful.

Because the technology is complex, integrating it into a company could require changing established processes. This can be challenging, as teams must find methods to adopt it in ways that don’t harm existing operations or risk changing consumer behavior too drastically.

You have to ask where’s the problem – the core issue – that blockchain can help solve.

“Often, what I’ve noticed is we’re being approached by so many different companies who are curious about blockchain, but many of them are still not quite sure how to use it,” Chaturvedi observes.

This lack of understanding leads businesses to incorporate blockchain technology into processes where it isn’t needed, which the business development executive warns could unnecessarily complicate their operations and incur heavy costs.

“You have to ask where’s the problem – the core issue – that blockchain can help solve. Then you can see if it’s even a good solution for your business,” he says. “Not every solution needs blockchain.”

Not just “plug and play”

Additionally, the process of integrating the technology isn’t just “plug and play.” Chaturvedi says it’s necessary for businesses to have a strong tech team with a deep knowledge of blockchain to keep abreast of developments in the industry.

“The blockchain space isn’t stagnant; it’s constantly developing,” he explains. “You could implement a solution today, but tomorrow, that solution could need a significant upgrade. You might even have to scrap it altogether and build a whole new solution.”

Photo credit: Matt Wildbore

This might pose a problem for smaller firms that don’t have the resources for a development team to build solutions on their own. In these cases, it’s best to work closely with established industry partners that can educate the company on the best ways to use the technology and assist it in hiring the right talent once it’s able to.

“Building a blockchain solution from scratch might not always be the best way. It’s easy to hack if it’s not done properly,” cautions Chaturvedi. A good option, he recommends, is to look at examples from other smart contracts that have already been developed and tested, and then using or adapting them to fit the company’s needs.

“If you work with a public blockchain like TomoChain that’s already implementing solutions for other enterprises, you’ll have access to its expertise on how smart contracts should be built on the blockchain. That reduces the risk of running into potential issues,” he adds.

TomoChain is a public blockchain that allows developers to create decentralized applications on its platform for global adoption.

To find out more or reach out for business partnerships, visit the TomoChain website.