6 Things to Know Before Building A Blockchain Strategy For Your Business

Blockchain technology makes every business transaction secure, transparent, and fosters trust. Over a third (38%) of US workers said that blockchain technology is widely used within their businesses, according to a February 2023 survey. This shifts the focus of many businesses into incorporating blockchain technology into their existing online entities.

However, simply jumping into blockchain for its inherent benefits to your business isn’t enough. To truly capitalize on its potential, businesses need a well-defined blockchain strategy. Before jumping on the blockchain wagon, ask yourself these six questions to make sure you’re ready for the ride.

You don’t jump into a business blindly! Understanding blockchain technology is the cornerstone of developing a successful blockchain strategy. Without a solid foundation, businesses risk making costly mistakes or missing out on the full potential this revolutionary technology offers. Here’s why a clear understanding is crucial:

• Complexity: Blockchain is a complex system. Without a thorough grasp of its inner workings, businesses may struggle to implement it effectively or unlock its true potential.
• Relevance: Not every business needs blockchain. Think about the challenges your business faces. Can blockchain help you do things faster, more securely, or with more transparency? If not, there might be simpler solutions.
• Cost: Implementing blockchain can be expensive. You’ll need to invest in new technology, training for your team, and potentially changing how you work. Weigh these costs against the potential benefits to see if it makes financial sense for your business.
• Security: Blockchain is known for being secure, but no system is perfect. Businesses must be aware of potential risks and take additional steps to keep their information safe.
• Regulatory: Since blockchain is a relatively new technology, the rules around it are still being figured out. Businesses need to stay informed about any regulations that might impact their use of blockchain.

By considering these factors, you can make an informed decision about whether blockchain is the right fit for your business. It might be a powerful tool, but it’s important to use it the right way for your specific needs.

#2. Identifying Use Cases

Identifying the right use cases for blockchain is a critical step in developing a successful strategy. It ensures you’re focusing on areas where blockchain can truly add value to your business. Here’s why:

• Relevance Reigns Supreme: Blockchain isn’t a one-size-fits-all solution. Carefully identifying areas in your business where blockchain can address current challenges or enhance existing processes is crucial. Misalignment can lead to wasted resources and unnecessary complexity.
• Efficiency in Focus: Implementing blockchain where it’s not needed creates unnecessary costs and complexity. Analyzing your current operations and pinpointing bottlenecks or areas lacking transparency can help identify ideal use cases.

Businesses that have successfully implemented blockchain have done so by focusing on the right areas. Identifying relevant use cases increases the chances of a positive outcome for your blockchain project. Now, let’s look at some real-world examples of successful blockchain use cases across different industries:

• Supply Chain Management: Companies like IBM are using blockchain to bring transparency and efficiency to supply chains. This allows for better inventory management, reduced fraud, and improved customer satisfaction.
• Financial Services: Banks are embracing blockchain to streamline processes and slash fraud risks. J.P. Morgan, for instance, is using blockchain to facilitate faster and more secure transactions, paving the way for a smoother financial future.
• Healthcare: Securing patient data is paramount in healthcare. Blockchain offers a solution by creating a secure and tamper-proof system for storing and sharing medical records. This fosters better interoperability between healthcare providers, ultimately benefiting patients through improved care coordination.
• Real Estate: The paper chase associated with property transactions can be a nightmare. Blockchain simplifies the process by streamlining recordkeeping and reducing the need for physical documentation. This translates to faster closings and a less stressful experience for all parties involved.
• Energy: Companies are using blockchain to create decentralized energy markets, enabling peer-to-peer energy trading and promoting renewable energy sources.

#3. Building a Blockchain Team

Blockchain isn’t a one-person job! To make it work in your business, you’ll need a team of people with different skills:

1. Complexity: Blockchain is a complex technology that requires a deep understanding of its workings. Having a team ensures everyone understands different parts and can work together to solve problems.
2. Efficiency: A team can move things quicker by splitting up the work, building your blockchain system, and testing it.
3. Collaboration: Blockchain implementation often requires collaboration between different departments in a business. A team can bridge the gap and keep everyone on the same page.

Who should be on your team?

• The Project Leader: This person keeps the whole project on track, like a coach for your team. They need to understand blockchain, be good at planning, and communicate clearly.
• The Builder: This person actually creates the blockchain system, like a mechanic building a car. They need coding skills, especially for blockchain languages, and a deep understanding of how it works.
• The Tester: This person makes sure the blockchain system works without any bugs, like a quality checker. They need testing experience and some knowledge of blockchain.
• The Lawyer: Since blockchain rules are still being figured out, a lawyer is important to make sure everything stays legal. They need to understand blockchain laws.
• The Business Whiz: This person connects your company’s goals to the blockchain system, like an interpreter. They understand both business and blockchain.

The perfect team size depends on your company. A small company might start with a few key players and hire more people later. You can even hire specialists for certain tasks instead of having a full-time team member.

Choosing the right blockchain platform is a critical decision that can significantly impact the success of your blockchain project. Here are some factors to consider:

1. Scalability: Can the platform handle your business’s transaction volume and grow with your business? You need a platform that can handle more transactions as your business grows, not one that gets overloaded. There might be a trade-off between scalability and other features, so choose one that fits your needs best.
2. Security: How secure is the platform? What security mechanisms does it have in place? Your blockchain stores important information, so a super secure platform is key. Make sure it has strong defenses to prevent things like a 51% attack (where someone takes over the whole system).
3. Consensus Mechanism: This is how the network validates transactions. Some ways are faster, while others use less energy. Choose one that balances speed and efficiency for your needs.
4. Smart Contract Functionality: Smart contracts are like tiny programs that run on the blockchain. They can automate tasks, reduce errors, and save time If you need them for your project, make sure the platform supports them.
5. Community and Support: Does the platform have a strong community and good technical support? Active communities are often involved in updating and improving the platform, which can lead to better functionality and security.
6. Cost: Blockchain platforms can have different costs. Consider these three main areas:

• Transaction fees: A small fee you pay to use the network.
• Development costs: The cost of hiring people to build your blockchain solution.
• Operational costs: The cost of keeping your blockchain running, like server fees.

Some popular blockchain platforms for you to consider:

• Ethereum: Known for its smart contract functionality, Ethereum is a popular choice for many types of decentralized applications.
• Hyperledger Fabric: This platform is designed for use in enterprise settings, offering a high degree of flexibility and modularity.
• Ripple: Often used for financial transactions, Ripple can handle a high volume of transactions quickly.
• Corda: Designed specifically for businesses, Corda offers interoperability, security, and privacy.
• Quorum: A platform designed for financial services, Quorum is a fork of Ethereum with added privacy and performance improvements.

#5. Developing a Proof of Concept

Before diving headfirst into building a full-blown blockchain solution, it’s wise to create a basic prototype, also called a Proof of Concept (PoC). This is like a test run to see if your blockchain idea can actually work in the real world. Here’s why it’s important:

1. Feasibility: A PoC lets you see if your blockchain idea is actually doable before investing a lot of time and money. It allows you to test the concept in a controlled environment before investing more resources into full-scale development.
2. Risk Mitigation: By testing things out early, you can identify any potential issues and fix them before they become bigger problems later, saving you money in the long run.
3. Stakeholder Buy-In: A successful PoC can convince people who matter (stakeholders) that your blockchain project is a good idea by showing them real-world results.

Now, let’s look at the steps to develop a PoC:

1. Define the Problem: Clearly define the problem that the blockchain solution is intended to solve.
2. Design the Solution: Outline how the blockchain solution will address the problem. This includes defining the blockchain structure, consensus mechanism, and smart contracts if needed.
3. Develop the PoC: Develop a simplified version of the solution. This should include the minimum functionality needed to test the concept.
4. Test the PoC: Test the PoC under controlled conditions. This should include testing for functionality, performance, and security.
5. Evaluate Results: Evaluate the results of the test. Did the PoC solve the problem as intended? Were there any issues or challenges?
6. Refine the Solution: Based on the results of the test, refine the solution. This may involve making changes to the design or addressing issues identified during testing.

Staying updated with the latest trends in blockchain technology is crucial for businesses looking to implement a blockchain strategy:

1. Innovation: Blockchain technology is rapidly evolving, with new innovations and improvements being introduced regularly. By following the latest trends, businesses can take advantage of new features and stay ahead of the competition.
2. Competitive Advantage: Businesses that understand the latest trends can use them to their advantage, giving them an edge over competitors who aren’t paying attention.
3. Strategy Alignment: Knowing what’s coming in the future of blockchain allows businesses to adjust their strategies to fit the direction the technology is taking.

Here are some current and upcoming trends in blockchain technology that businesses should be aware of:

• Interoperability: As more blockchain networks are developed, the ability for different blockchains to interact with each other is becoming increasingly important. This will open doors for new uses of blockchain technology and make things more efficient.
• Privacy Enhancements: While blockchain networks are known for their transparency, there’s a growing trend towards enhancing privacy features to meet the needs of businesses and users. This will make blockchain more attractive to businesses and users who need to keep some things confidential.
• Decentralized Finance (DeFi): DeFi is a rapidly growing trend that uses blockchain technology to recreate traditional financial systems in a decentralized manner. This is a rapidly growing trend with the potential to offer businesses new financial products and services.
• Enterprise Blockchain: More and more businesses are exploring the use of blockchain technology for enterprise applications, leading to the development of enterprise-grade blockchain solutions. This is leading to the development of blockchain solutions specifically designed for enterprise use.
• Regulation and Standardization: As blockchain technology matures, expect to see more regulation and standardization, which can provide more certainty for businesses. This will provide more certainty and stability for businesses looking to use blockchain technology.

Conclusion

In conclusion, asking the right questions before implementing blockchain technology into your business is crucial. It helps you understand the technology, identify the right use cases, build a competent team, choose the right platform, develop a proof of concept, and successfully implement the solution. Each of these steps plays a vital role in ensuring that your blockchain project is successful and adds value to your business.

If you’re considering bringing blockchain technology into your business and need expert guidance, don’t hesitate to contact Vinova. With our deep expertise in blockchain technology, we can help you successfully implement a blockchain solution tailored to your business needs. Reach out to us today to start your blockchain business, just a click away!