Blockchain Utilization in Companies: Understand From the Basic

There are many companies that are surveying and researching blockchain-related businesses and technologies. They are involved in new business co-creation with companies in various industries. They offer multiple thoughts on blockchain and its adoption. This way you can get all the blockchain resources online every day.

We think that many people are familiar with the term “Blockchain”. But in this column, we will focus on “Blockchain Use by Companies”. Also, we will try to explain why companies are paying attention to blockchain and how they are using it. We’d like to tell you about the progress of blockchain enterprise use so far.

Blockchain is a technology invented to support Bitcoin, the world’s first virtual currency (crypto asset). This is a technology called “Distributed Ledger Technology (DLT)”. Many companies have turned their attention to this technology. They have tried to use it for applications other than the virtual currency in various industries such as finance, distribution, and manufacturing.

One of the reasons companies are paying attention to this technology is because it is possible to give digital data “authenticity (created and not altered by an individual)” using blockchain.

In business contracts and transactions, it is essential to prove the “genuineness of data” and “accuracy of data included in transaction details”.

In the past, we have used a trusted third party to intervene to provide this evidence

For example, if you want to send a money transfer, you will send it from a bank. If you want to import or export, you will use a trading company. And if you want to prove your financial status, you use an auditing company.

A third-party intermediary allows secure transactions and information sharing. But remember here you have to add extra cost and time cost.

If you are starting a new business and maintaining a reliable third party from scratch, it will cost you more money and time.

For this reason, companies hoped that by using blockchain in their business, they would be able to “increase operational efficiency through reliable data sharing and transactions between companies”.

So, how has the use of blockchain in companies actually progressed?

Around 2018, the use of blockchain in companies other than virtual currencies began to gain attention. Demonstration tests started in various industries. Mainly in Europe and the US, it started with businesses like finance, distribution, and manufacturing.

Many demonstration tests were not conducted by a single company. However, several companies have formed a consortium to conduct joint tests.

As a result of the demonstration test, a few things became clear. As such, companies based on cryptocurrencies such as Bitcoin (public blockchain) have difficulty using blockchain. For example, in terms of performance, there is no processing performance required for inter-company transactions. In terms of confidentiality, details of the transaction and the parties involved in the transaction are disclosed to parties other than the Consortium.

To address these issues, a new type of blockchain, the “consortium blockchain,” will be developed specifically for enterprise use.

Many enterprise-led blockchain projects adopt consortium-type blockchains. Consortium Blockchain is now also known as Enterprise Blockchain.

In other words, the use of blockchain for many companies does not seek a “fully decentralized and autonomous process”. “So that anyone can participate” as Bitcoin realizes, rather than “a system between authorized companies”. We are working to improve operational efficiency.

From here, we will present some representative examples of consortium-type blockchain usage among companies.

The focus of the initiatives we are going to introduce is to improve operational efficiency. Many cases can be implemented with conventional technology and operations without blockchain. It can save cost and time.

Traceability

The supply chain is a representative example of corporate blockchain usage. This includes trying to find things ranging from food items to automobiles.

Traceability is the visualization of work history and movement history that shows “when, where and by whom” the item was created. Modern supply chains are highly complex with diverse stakeholders worldwide. Many companies were involved.

Thus, we have formed a consortium with multiple supply chain-related companies. And we realized traceability using blockchain.

The point of blockchain adoption here is that the data brought by the companies participating in the consortium can be reliably and efficiently shared between the companies.

The realization of traceability not only improves food and drug safety but also supports various initiatives. Such as compliance with trade regulations on conflict minerals and resource recycling management.

Another common example of using blockchain is to improve the efficiency of back-office operations in intercompany transactions.

In inter-company transactions, there is the problem of the content of the transaction being different from that of the trading partner due to miscommunication. Although the content of the transaction is the same between the companies. To prevent this, every company handles confirmation work as back-office work after the transaction. However, it takes time and costs proportional to the transaction volume.

A common example of this is the task of processing large numbers of paper contracts.

There’s a reason why paper contracts and confirmations remain business practices. One of them is that documents can be handled as originals by signing and stamping them and keeping both originals and duplicates. Thus, copying and rewriting the contract in PDF format is easy if it is simply digitized. As a result, the originality of the paper is lost.

So, when digitizing paper, a blockchain is used that can “give originality to digital data”. It can digitize information and dramatically speed up business while retaining the characteristics of paper contracts. It can also be improved

In businesses like commerce, where paper documents remain a business practice, there are many enterprises that use blockchain.

Five years have passed since companies started paying attention to blockchain and exploring its use in business. (As of 2022)

Among them, the use of blockchain by companies such as “traceability” and “improvement of back-office operations” is launched today compared to Web 3.0 and NFT, which are hot topics these days. Cool (enough) and not in the use cases where blockchain is going to change the world, but we’re definitely at the point of solving problems in society.

Additionally, we will contribute to the realization of DX (Digital Transformation) by accelerating data exchange within companies through the use of blockchain. Information that was previously managed on paper or managed digitally by only one company is starting to be shared and used between companies through blockchain.

For example, when considering the supply chain as a result of realizing data sharing between companies,

● When purchasing products, it is possible to ensure continuous traceability from raw materials to sales outlets

● Achieving a stable supply of products by optimizing wins

We have already initiated initiatives to provide new value to customers that cannot be achieved by a single company.

More recently, companies have announced that they will be working on Web 3.0 and NFTs, which have taken the discussion in a different direction than the use of blockchain introduced in this column.

In the future, we will focus more than ever on introducing how the use of blockchain by companies will change. So here is the finishing end. If you found this article helpful or interesting, please please let us know how we can help you with more ideas.

Originally published at https://blockchain101.famecoin.ai.