Blockchain, which for its brief history has been inextricably tied to cryptocurrencies, is starting to cut its teeth as a serious business technology.
Whether it's bringing transparency to a supply chain, reducing risk in financial transactions or defining ownership and value of so-called "non-fungible tokens," or NFTs, blockchain is increasingly seen as much more than a Bitcoin database.
In the short term, blockchain has the potential to completely transform the movement of information through a supply chain or to change how bank reconciliation unfolds. Down the line, blockchain is shaping up to be the connective tissue for a new approach to ERP, making it possible for networks of ERP systems to work together.
And as the world begins to emerge from the COVID-19 pandemic, blockchain is finding new momentum as businesses look for new ways to address a variety of fresh challenges. The ability to decentralize data and applications, establish blockchain-enabled networks that support multi-entity value chains and bring transparency and verification to all sorts of data is like music to companies that have been confronted with every imaginable supply chain interruption.
"Blockchain has a big future in the enterprise," said Avivah Litan, vice president and distinguished analyst at Gartner.
With that simple yet ominous declaration in mind, let's take a look at seven blockchain trends that business decision-makers will want to pay attention to as they move closer to blockchain adoption.
1. Truth and transparency in the supply chain
Modern supply chains are complex, multi-organizational beasts. Information has generally existed in silos, with little visibility into any entity other than the one a company is buying from, making it difficult to see potential interruptions coming.
"What you get in a conventional supply chain is a very limited view," said James Wester, research director for worldwide blockchain strategies at IDC. "It may be good to know about stuff happening way above the upstream vendor that impacts you."
Not only does a supply chain blockchain network make that upstream visibility possible, it also offers the peace of mind of knowing the upstream data is accurate.
"With blockchain, everyone has the same copy of the same data, verified," Litan said.
Big examples of blockchain networks have been popping up in the supply chains of various industries for a few years now. IBM Food Trust offers inclusion in a food industry blockchain to a consortium of clients. One such client, Walmart, has for the past couple of years mandated that suppliers of leafy green vegetables participate in Food Trust, and it's expected to add more suppliers to the list. And the pharmaceutical industry is embracing blockchain in a big way, as well.
At the end of these blockchain networks, consumers can scan QR codes to find out exactly how the product they're buying got to the shelves. They'll know more about what they're putting in their bodies, how products were stored and shipped, or whether they were produced with sustainable methodologies and materials.
At its simplest, tokenization is digitally representing something of value. That can be cryptocurrency, the poster child of digital tokens, but it can also be goods that are unique but don't have inherent value, such as artwork or a piece of video. These so-called non-fungible tokens have become one of the hottest blockchain developments, with NFTs taking the world by storm. (See this snarky and very helpful piece describing the wacky world of NFTs.)
"It's a much more efficient way of making things liquid that are illiquid," Wester said.
How mainstream have NFTs become? None other than the NBA's Golden State Warriors just jumped into the fray, becoming the first professional sports team to introduce an NFT "collection" for fans.
NFTs clearly present a huge opportunity to build a new form of digital commerce, but they also hold potential for enterprises in storing and verifying various types of digital assets.
3. Transformation in financial services
The financial services industry has been one of the early adopters of blockchain with good reason. Having been dependent on proven methods of managing traditional assets, financial services companies are not only seeing the assortment of assets they deal with expand into areas like cryptocurrency, NFTs and other blockchain use cases in finance, they've also seen their own supply chains get increasingly complex, said Ronak Doshi, a vice president at Everest Group.
Banks and other financial institutions have found that blockchain helps them establish networks that deliver value to customers, particularly investors. Doshi noted that JP Morgan Chase has built its own wide-ranging blockchain platform, and Bank of America, UBS and Morgan Stanley have all established blockchain teams.
In a recent report, CB Insights said blockchain-enabled decentralized ledgers for payments could mean faster payments and lower fees, and that distributed ledger technology has the potential to reduce costs and make real-time transactions between financial institutions a reality.
Meanwhile, a report from Deloitte argues that a blockchain-based infrastructure could help to re-imagine global trade finance by driving efficiencies, lowering costs and opening up new revenue opportunities.
When blockchain and smart contracts are used to minimize or even eliminate the role of intermediaries such as banks in financial transactions, digital assets, including cryptocurrency, become the medium of exchange in a peer-to-peer process sometimes called DeFi, or decentralized finance.
4. Mainstreaming of cryptocurrency
If there was any doubt whether digital currencies have arrived as a mainstream payment option, look no further than cryptocurrency exchange platform Coinbase's recent IPO.
Cryptocurrency is taking on more forms. There are the best-known forms, such as Bitcoin and Ethereum, that have fueled the trend; there are Stablecoins, which seek to bring more stability to cryptocurrency by pegging value to some external reference, such as the dollar; and there are the central bank digital currencies of various governments: Imagine the Federal Reserve issuing a digital dollar, as China is preparing to do with its currency using blockchain.
This is an unavoidable trend that will force enterprises to embrace and legitimize cryptocurrencies in relatively short order. Proponents say it could someday lead to a blockchain economy in which cryptocurrencies have replaced today's monetary systems.
"You better figure out how to manage them," said Litan, "because they're happening whether you like it or not."
5. Identity management and verification
Blockchain has the potential to bring more privacy into a privacy-starved world. As we give up data about ourselves every day -- both willingly and unbeknownst to us -- blockchain makes it possible to tokenize an individual's identity, Wester said.
Think of it this way: When someone presents a driver's license to buy beer, the seller gets inadvertent access to data such as the person's address and driver's license number, when all that's needed is the date of birth. Blockchain-enabled tokenized identities will allow the beer buyer to only reveal the pertinent data point.
This approach is being considered for COVID-19 vaccine certificates, with Korea already at the forefront.
For enterprises, blockchain offers a way to securely establish "decentralized identity," giving users more control over when, where and with whom they share their credentials.
6. Blockchain, meet artificial intelligence
This is really a no-brainer. Blockchains of verified data moving through multi-organizational networks are a literal smorgasbord for AI. By unleashing AI and machine learning algorithms onto the river of data flowing through both private and public blockchains, companies will be able to unearth patterns they'd never have identified otherwise.
Each technology can alleviate some of the other's shortcomings. Blockchain could make it easier and safer for individuals and small organizations to share their data, for example, while helping to "democratize" AI, making it more widely available and less restricted to large corporations. Conversely, AI could make blockchain's consensus process more efficient.
There are already numerous examples of how the combination of AI and blockchain can help with everything from predicting hurricanes to fighting the opioid crisis. For example, Bext360 is a supply chain digitization company that's using AI and blockchain to analyze crops and predict growing patterns, driving efficiency in industries from coffee and seafood to timber and minerals.
Make no mistake: The possibilities for applying AI to blockchain data are literally endless.
7. ERP of ERPs
This isn't so much a current trend as one that's coming, but it's included here because of its potential to profoundly alter the way enterprises operate, a development Everest Group has been tracking closely.
Consider the reason ERP has become such a standard in most enterprises: It enables a complex and dispersed organization to communicate internally between the various parts of its business, ensuring that one part knows what another is doing. As the internet has expanded as a business platform, these ERP systems have become part of larger, multi-organizational networks filled with other companies running their own ERP systems.
Blockchain will allow the different ERPs to be linked together in what will essentially be super ERP systems that Everest Group calls network resource planners (NRPs).
Doshi offered an example, describing how an insurance industry blockchain network could prevent double claims by giving all the insurers access to shared, verified data, helping them to avoid unknowingly processing the same claims simultaneously.
Looking across this array of blockchain trends, a theme emerges. Whether blockchain is being used to manage supply chain operations, confirm identity or extend the capabilities of ERP systems, the overarching goal of blockchain applications is generally the same: creating more transparency by freeing data from organizational silos, and enabling more multi-entity intelligence.
In this way, blockchain has the potential to become the enterprise platform to end all enterprise platforms.
"We are trying to create a single language of communication between multiple parties to achieve a common objective," Doshi said. "That's how we look at blockchain for networks."