If you still need a more in-depth understanding of what exactly blockchain is, the good folks at NPR’s Motley Fool offer this primer.
Think of blockchain as the transactional engine behind the cryptocurrency bitcoin. Many conversations involve financial transactions using bitcoin and facilitated by blockchain.
This isn’t going to be one of them. Invest in bitcoin, use bitcoin, or not. While it is worth a discussion of cryptocurrency transactions, we’ll save that for a later date.
Blockchain, the open source tool that records and tracks every type of transaction is, in my opinion, worth further examination and discussion if you’re a CIO, a CEO, or, especially a CFO.
In my former life as a legal technology CIO, we needed to keep track of client transactions, which included physical records management, case management, court and regulatory filings, and the like. Accounting was an entirely separate client. The latter actually isn’t such a concern in the legal vertical. The major players like Aderant and Elite, among others, have the financial transactions down pat. But where legal ERP systems fall short, I believe, is tracking the tonnage of paper and electronic information related to clients. Typically, there is an unholy alliance among document management, case management, and records management systems. What if every change to a record could be seamlessly recorded and tracked using an open source solution that eliminated the SQL back end? Get where I’m going?
Obviously, the blockchain solution is vertical agnostic. The potential for patient record management in the medical vertical, component tracking in supply chains, even your FedEx package tracking is enormous, and we’re seeing blockchain already being employed in specific verticals.
However, as this article from the Harvard Business Review states, it’s a long way off from become ubiquitous.
What I found most interesting about HBR’s assertions is that the author doesn’t consider blockchain to be transformational, but foundational. In order for the technology to be truly leveraged, institutions have to scrap their traditional, transactional technology and start building their blockchain from the ground up. As the article states, the marriage-at-the-hip of bitcoin and blockchain will dictate how quickly the technology is adopted, and this poses enormous issues for financial institutions and the financial vertical in general, particularly when it comes to the volatility of a virtual currency, and the attendant security issues.
Which is why I advocate a divorce. Leave the gun, take the cannoli. Continue to leverage the transactional strength of blockchain but leave the cryptocurrency piece out of it. Yes, the strength of cryptocurrency, particularly in micro-economies, as the HBR article states, is enormous. In developing economies, the mobile phone is already ubiquitous. Enabling those populations to buy and sell goods and services using their existing mobile networks without the burden of local currency and traditional banking could be life changing.
But, so can taking the medical records debacle of the Veterans Administration, and absent the bitcoin component, I think even that daunting task could be made easier.
In short, as a CIO you should gather your C-suite and have the blockchain discussion. As you get further down that road, you’ll be bringing your vendors and financial institution into that chat, and, hopefully, they are already having one of their own.