Blockchain is a digital-age technology to transform business models. In short, it enables the creation of a secure distributed ledger to certify ownership and keep records of transactions. This is achieved without the involvement of trusted third parties, such as banks, in money transfers between two parties. It functions in the spirit of a platform-based sharing economy. Information is secured, with many computers connected to each other through the Internet.
Any kind of information can be stored, such as text and pictures, not just official records or transactions. It has an impact on businesses from insurance to industrial management, and from public records to voting. There are many ongoing projects, mostly private inside a large company or a group rather than public, to test the opportunities.
Blockchain is expected to disrupt business
Blockchain is expected to disrupt business with its ability to connect parties peer-to-peer without dependence on one central source, guaranteeing symmetrical information for everyone and reducing monopoly advantages.
The most widespread application so far has been cryptocurrency, like Bitcoin, enabling payments independently from established financial operators. There is, however, still work to do before speculative cryptocurrencies established only between owners threaten the banks.
Another application is to use smart contracts to conclude the task automatically, like buying a soft drink from a vending machine. Blockchain makes it possible to use smart contracts in any business, based on numerous contracts. The contracting rules must be objective and clear, but then the result is achieved right away and without any further paperwork. For these smart contracts to operate reliably, new requirements are set for the quality of the original information fed into the system.
The technology is still at a stage in which plenty of exploring and development needs to be done. The USA and China are the most advanced countries in this development. Cyber risks are, of course, relevant. But it is strongly believed that it is not possible to break the actual blockchain encryption; all the other entities around it are more vulnerable. For business owners, the open and transparent information available to clients means very high-quality operating models, such as for pricing and analytics, are needed to survive. The regulatory status of the applications is still highly uncertain.
Nordic Liability Risk Management Specialist, If