Customer Experience Tools
Blockchain, a form of distributed ledger technology (DLT), is a shared ledger formed by a consensus of synchronized, encrypted digital data, removing or reducing the need for central intermediaries. Blockchain addresses many deficiencies associated with each step of a transaction, including verification, matching and agreement, value and information transfer, and recording.
Blockchain can make exchanges more private and secure, boost speed, expand access to participants, enhance transparency and accuracy, reduce costs, simplify operations, and increase the quality and quantity of available data.
How companies use blockchain
Financial services firms have adopted the technology most widely, but almost every industry has developed a range of blockchain use cases. Costs will likely drop as DLT matures.
Blockchain can be applied simultaneously with other digital technologies to amplify benefits in the following areas:
- Data security. Tokenization helps companies create digital identities for parties and goods involved in distributed ledger transactions, allowing them to track goods along a supply chain, for example.
- Contracts. Companies can use blockchain technology to execute and verify “smart” contracts, enabling synchronization of delivery and payment.
- Internet of Things (IoT). DLT can eliminate the need for central control and reduce the risk of data tampering in IoT devices.
- Artificial intelligence (AI). Blockchain’s ability to maintain privacy and data integrity promotes data exchange, which is essential to AI tools.
- Application programming interfaces (APIs). APIs enable communication between applications and DLT.
Key considerations with blockchain
Several factors will affect the rate of blockchain’s adoption, primarily:
- Technology. Companies must meet high standards to link users’ identities and maintain interoperability—the ability to share information across blockchain systems—at scale, while also maintaining security.
- Ecosystem. Regulatory approval and establishment of common standards will be necessary to create a network effect.
- Cost. Compelling use case cost-benefit analysis, allocation of cost for infrastructure and other needs, and aligned incentives are key for successful blockchain implementation.