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Harnessing Power of Blockchain to Restore Trust

By Dorota Zimnoch, Founder and MD, ZING Business Consulting

Dorota Zimnoch, Founder and MD, ZING Business Consulting

Blockchain has advanced in last few years, and reaching Board level conversations. The question I am often asked is, “What is the biggest problems it can solve?” My answer is: trust.

Is Trust the Issue in the First Place?

Trust is fundamental to conducting successful business, even more so in a digital environment, where people may never have met in person. Yet, according to the Edelman Trust Barometer, trust has fallen in 10 of 15 industries between 2017 to 2018 YOY, translating in real financial losses and missed opportunities. It is estimated that food fraud could be costing the UK food industry £12 billion annually—with cases like the horse meat scandal that wiped £300m off Tesco's market value or the scam with 1.3 million bottles claiming to be the Chateau Neuf du Pape label which resulted in £70million loss. The insurance industry estimates that it is facing £1.3 billion of detected fraud, with a further £2.1 billion undetected frauds. It spends around £200 million a year tackling fraud, yet 62 percent of fraudulent theft goes undetected. Another example includes ticket fraud, which according to the Society of Ticket Agents and Retailers, tickets cost audiences in the UK £1.6 million in May – October 2017. Those incidents have a direct impact on the loss of consumer trust and confidence. In addition, the cost of trust is felt not only in what we do but in what we can’t do. Two billion people are denied bank accounts, because banks don’t trust the records of their assets and identities.

Can blockchain help to restore trust?

Blockchain is a revolutionary technology with unique characteristics, which makes it so powerful. Marc Andresseen called it ‘the distributed trust network that the Internet always needed and never had’. Blockchain is a distributed ledger, which allows recording anything of value in a database that is decentralized and provides a data registry that is Transparent, Reliable and Immutable. Every new transaction is verified by nodes (network participants) and only approved and added to the chain, with unique cryptographic fingerprint, when the consensus is achieved. That means every transaction is traceable, irreversible, auditable, secure and tamper-proof. It provides a foundation for trust.

What does that mean in practice?

IBM was a frontrunner of addressing the food supply chain with blockchain. It developed the Food Trust blockchain platform which provides traceability, particularly in cases of disease outbreaks. It has recently announced partnership with Walmart, which means the platform moves to full adoption of technology and all suppliers of fresh greens are expected to join it by late September 2019.

Buzzvault is an example of addressing trust issue in insurance. It allows customers to record the pictures of belongings via app, and data is stored in digital inventory on blockchain, ensuring at the point of claim there is one version of truth for Individual and Insurer. Blockparty is another example where blockchain technology is used to address fraud prevention, as it eliminates the possibility of counterfeit tickets ensuring ticket ownership and attendee identity.

Xain.io demonstrates how blockchain can help create new business models. Working with Porsche they provide a solution which allows encrypted and auditable data logging. Having full control of data gives the user confidence to assign temporary access authorisations for the vehicle, for example to a courier company that delivers parcel to the boot—in a secure and efficient manner.

Blockchain not only allows cfor hanging business models but also opens the opportunity to create new services and addressing Financial Inclusion. Like the Twiga Foods, the company that analyses purchase records from a mobile device. Next, it applies further technology, like machine learning to predict credit worthiness. That score gives lenders the confidence they need to provide microloans to small businesses. Blockchain is then used to manage the lending process through application, providing offers and accepting the terms to repayment.

Is Blockchain for me?

The above examples may inspire you to ask a question: Is blockchain for me?

Following CASTLe framework helps with the decision journey. Start with ‘C’, which stands for challenge, which means you should ask: What business challenge do I try to address and solve? If it is related to storing/transferring value on an internet, the answer is likely to be ‘yes’. Then follow with ‘A’ like analyses, where you may engage experts, review internal and external sources to determine if your challenge can be solved with blockchain. ‘S’ is strategy as it is crucial that you build the clear-cut business case linked to your overall strategy. ‘T’ is a tactic which addresses all questions related to execution, including KPIs that will help you measure progress, so important with innovation projects. Finally, ‘Le’ are learnings collected. You may have decided to start small (which is often the most recommended approach), solve single but scalable issue, before you take all organization through change.

Powerful technology but not the solution to every problem

The focus of this article was on trust, but it was important to mention that power of blockchain is not limited to it. Equally, it will not be panacea to everything. What is certain, the technology is maturing quickly, and it is reasonable that you invest time and resources in learning and experimenting with it.

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