Only 15% of organizations have an active project in progress with blockchain technology, according to a global survey of 600 executives conducted by PwC. If you want to start a blockchain project, some important factors need to be considered.
Understand what blockchain is
Technology can potentially reduce costs and increase speed in several areas for the finance function. Because all blockchain participants have access to the same digital ledger, it is no longer necessary to reconcile intercompany data and transaction records.
Digital tokens in some blockchains represent assets such as cash. According to the PwC survey, the financial services industry is a leader in blockchain applications; however, raw materials, finished goods, and membership rights are assets represented on blockchains. ERP platforms, which serve as the engine of business operations, are beginning to incorporate blockchain technology.
A blockchain can be decentralized, meaning it is distributed across machines or servers (nodes), with no single stakeholder having centralized control over the blockchain, meaning a single stakeholder controls it. Blockchains can also be permissionless, meaning that any stakeholder can view or add to the blockchain or permission, with restrictions on which stakeholders can view and change the blockchain.
Develop a business case
The first step in developing any blockchain solution is determining what problems you want to solve and whether blockchain is the best way to solve them.
PwC has developed a set of criteria that organizations can use to determine whether the problem they are attempting to solve can be solved by blockchain:
- Do multiple parties share data?
- Do multiple parties update data?
- Is there a requirement for verification?
- Do intermediaries add complexity?
- Are interactions time sensitive?
- Do transactions interact?
Choose your blockchain carefully
Because there is no such thing as a single type of blockchain and a variety of blockchain solutions exist, you must ensure that you select the appropriate type of blockchain for your needs.
Blockchain types vary depending on whether they are private, public, or quasi-private, which means a group of stakeholders runs them. Blockchains can be permissionless or permissioned, as well as decentralized or centralized. The type of blockchain you require will be case-specific. For example, security and financial regulations may preclude an organization from adopting a permissionless, decentralized blockchain.
Someone with blockchain experience would be crucial in ensuring you choose the suitable blockchain for your organization, whether they are on your team, from a third-party blockchain consultancy, or from a business that offers off-the-shelf blockchain solutions, like IBM.
Build an ecosystem
Blockchain works best when there are a large number of stakeholders involved. By enabling everyone involved to work out the standards and rules which define the blockchain model, building a community within a company or industry that is aware of the technology and its potential can help to increase corporate trust.
According to the PwC report, stakeholders should decide the following:
- The participation rules.
- How to ensure that benefits and costs are distributed fairly.
- What can risks and control frameworks be used to address the shared architecture?
- What governance mechanisms, such as continuous auditing and validation, are in place to ensure that the blockchain works as intended?
Blockchain must be carefully designed not only to solve organizational issues but also to integrate with existing processes. If not, those processes may need to be revised to lay the groundwork for the blockchain.
Working with not only the tech team but also management and operations to pick apart problems and pain points and build a solution has been some of our best work. Organizations must also consider privacy implications, cybersecurity, compliance, and how they will collaborate with a blockchain.
Blockchain is still in its early stages, and regulation is minimal. This may change in the future, which means that organizations must monitor the evolving regulatory framework and actively participate in shaping it.
Asking regulators questions and making regulatory suggestions can be beneficial to businesses and the community as a whole.
According to PwC, regulatory approaches to blockchain vary by country. Singapore and Switzerland are attempting to accelerate the adoption of blockchain technology by regulating tokens. In contrast, regulatory efforts in the United States are led by individual states rather than the federal government. Data privacy rules in the EU make public blockchain initiatives difficult. China has banned cryptocurrency but supports regulation to encourage the growth of blockchain applications.
According to PwC, businesses should collaborate with regulators to shape emerging blockchain policies, best practices and monitor evolving regulations.
That’s all about The straightforward strategy to start a blockchain project. If you need help with blockchain development services, do not hesitate to contact SmartOSC right now!
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