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Over the last year, there has been an overwhelming amount of excitement around blockchain, but will the technology live up to the hype? From cryptocurrencies to supply chain platforms, the emerging technology that underpins these networks is a powerful tool that should be sensibly evaluated by business leaders to understand whether it is worth the investment. To help executives assess the potential return on investment (ROI) of a blockchain deployment with IBM, a Forrester Total Economic Impact™ study was commissioned. In this study, Forrester analysts interviewed real IBM clients to build the framework for a financial analysis of the business benefits, cost savings and risks associated with blockchain.
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To dive deeper into this subject, IBM also invited Forrester Principal Analyst Martha Bennet to sit down with some of the clients featured in the study to discuss their experiences with adoption. During this webcast, these early adopters shared firsthand the challenges they are facing and the benefits they seek from being pioneers in their respective industries. There was amazing response from the audience, but there is never enough time. Here are some questions and answers we didn’t get a chance to dive into:
With so many technologies available in the market, why should our business choose blockchain technology?
Blockchain is a tool that approaches various business needs from an innovative perspective but is not a panacea for all business problems. From this angle, the technology should be viewed as a tool to address a specific need and not as a goal in itself. Therefore, it is important to understand the problem your business is trying to solve and consider the value that adopting blockchain could bring to your use case. Blockchain is a technology that adds value by fundamentally enhancing trust between multiple parties. Some of the trust benefits it can bring to a business solution are:
- Allowing multiple parties to access a single source of truth for transaction data
- Assuring multiple parties, including regulators, that data is valid and hasn’t been tampered with
- Improving efficiencies and reducing costs by removing intermediaries in processes between multiple parties
One example is Walmart, which has deployed a blockchain-based supply chain tracking system, taking a business-led approach to solving food traceability.
What can be achieved with blockchain that cannot be achieved with a traditional distributed database?
Blockchain has various advantages over a traditional distributed database. The most significant one is creating trust between parties with an immutable ledger of transactions that has no single point of failure. The distributed and auditable nature of how blockchain data is managed means that no single party has the power to alter data integrity.
You can also read this article discussing the differences between blockchain and the distributed database, along with the benefits that blockchain provides.
How does IBM solve the scalability problem in blockchain?
A lot of factors can affect the scale and performance of blockchain, the most salient being a permissioned versus permissionless network architectures. While some permissionless blockchains such as Bitcoin and Ethereum are only able to process tens of transactions per second, performance reports are starting to show that permissioned enterprise platforms can process hundreds to thousands of transactions per second. The IBM Blockchain Platform is underpinned by The Linux Foundation’s Hyperledger Fabric, an open source framework for permissioned enterprise blockchain that can handle 1000+ transactions per second. It can also deploy peers both on hardware architecture or cloud, making the scaling of storage and computational power very flexible.
What is the barrier to entry for creating a new blockchain network versus joining existing ones?
There are several factors that business leaders must consider when deciding whether to join an existing blockchain network or create a new one.
When creating a new network from scratch, many considerations such as network participants, development costs, governance rules and business operations must be taken into account. Although benefits are gained by having a stake on these considerations, addressing these challenges can take up time and resources for network founding members.
On the other hand, joining or building on top of an existing network such as IBM Food Trust, we.trade or TradeLens has a much lower barrier to adoption. Many of the networking costs such as setting up governance and operations that are incurred by founding members have already been addressed. This means that onboarding can be done easily into a network that is already functioning.
Reasonably assessing the ROI that blockchain can bring for your company can be a daunting task. However, by exploring real use cases and learning from pioneers that are already building networks, you can get started on your blockchain journey.
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