When you think about blockchain for business use cases, many first think of how it can help multiple counterparties efficiently interact with each other, or they think of decentralized applications (dApps), where applications and blockchain work together, as a dApp uses blockchain to retrieve information or execute transactions known as “smart contracts”. Others might even think of blockchain as a replacement for databases. I would argue that while all of these applications of blockchain are incredibly valuable, the most basic and inherent benefit of blockchain is that it acts as an accountability layer, or a data integrity layer for existing data structures.
Since the advent of computers in business, we have created immense amounts of data that are relied upon for decision making. For example, most companies use multiple systems to track and report on data that is eventually used to create financial statements and reports. Investors, regulators, managers and many others rely on this data, and great efforts are made to make sure the data is accurate. However, nearly every software system and database can be altered without any record of that alteration taking place. Whether an alteration to data is intentional or unintentional, fraudulent or not, no record can be relied upon to explain exactly what happened to that data at any point in time. That is until blockchain came along.
According to a study performed by McKinsey & Company, one of the main factors that contribute to the challenge of fraud prevention is poor or incomplete data and the lack of information sharing among institutions.*
Blockchain is a mechanism for having an immutable, write only, independently verified record of your data. Once you have this in place, the integrity of your data improves drastically. A data infrastructure augmented by blockchain allows for a complete record of data that can be used for internal and external audits, forensics, regulatory compliance, document management and much more, but perhaps most important, it creates trust with your stakeholders.
While blockchain and dApps will alter the way in which we do business in many ways, the fundamental value of blockchain is trust.