5 STEPS TO SUCCESSFULLY IMPLEMENT BLOCKCHAIN
Blockchain is powerful because it has the potential to solve most of the daily issues in finance functions. Although many organizations have proof of concepts, very few have succeeded in having a blockchain up and running, with many stuck in the research phase. Many blockchain projects are stalling because of uncertainties in regulation, lack of trust among users in the technology, and scaling issues. But experimenting is better than sitting back and waiting.
Here are some steps to successfully implement blockchain solutions.
First, understand what blockchain entails.
An effective blockchain technology stores records in blocks connected via a cryptographic technique that forms a digital distributed ledger. Any user with access can verify and share the ledger, which alleviates the need for third-party verifications. The cryptographic nature of every block connects to the previous block in a tamper-proof way.
In the finance sector, blockchain can cut costs, improve speeds in financial transactions and eliminate the need to reconcile intercompany transaction records and data because all users can access the same digital ledger.
Note that blockchain can be decentralized, which means that no single stakeholder can control the blockchain, or centralized, with one stakeholder controlling it. It can also be permissionless, allowing any stakeholder to make additions or permissioned with restrictions regarding which stakeholders can make additions or changes to the blockchain.
Choose your blockchain wisely.
There is a wide range of blockchain solutions in the market, but you have to pick the right one for your needs. Please do not fall for any hype, as you may end up choosing a technology without evaluating its core benefits. First, consider whether you need a decentralized, centralized, permissioned, or permissionless network. Keep in mind that different blockchains serve different functions.
Many blockchain solutions differ depending on whether they are public, private, or quasi-private, meaning a consortium of stakeholders operate them. For instance, a permissionless or decentralized blockchain may not suit finance and security regulations. You can liaise with a company that provides off-the-shelf blockchain solutions to offer all the advice you need.
Establish an ecosystem
You need to establish a community within your organization or industry that understands the technology to improve trust among everyone involved. Blockchain works best when there are many stakeholders involved. Some of the roles of the stakeholders include:
- Ensuring costs and benefits are fairly shared.
- Establishing the rules of participation.
- Developing a control framework to address the shared architecture.
- Coming up with governance mechanisms, including continued auditing to ensure the blockchain works as designed.
You need to design your blockchain technology deliberately to solve organizational issues and ensure it aligns with the existing processes. You must consider cybersecurity, privacy implications, compliance and build a solution around that.
The regulation around blockchain technology is still limited. Furthermore, laws regarding data use and protection can affect how your blockchain operates. It is best to liaise with regulators to monitor the changing regulatory frameworks and even take part in shaping them.
You can implement a blockchain solution without halting your organization’s projects with the right strategy.