The customer experience – as your company knows it – is fading. Your organization might not even realize there is a new revolution coming at you – the blockchain revolution.
Blockchain will have enormous impacts on global business and the world economy. This tectonic shift will disrupt your consumers and change their behavior. This change is transformational and will affect everything from the clothes you wear, the food you eat, and even the products you buy. Blockchain technology will be injected into everything.
There is a great divide between the technologist that wants to talk about protocols and argue the benefits of state channels and the business technology executives’ eager to understand how blockchain's technology can be applied to business in practical terms.
Blockchain is more than cryptocurrency and blockchain is not Bitcoin. Blockchain provides a distributed, public, time-stamped, and persistent record of transactions.
1. Distributed – across all the peers, participating in the network. Blockchain is decentralized, and every full node has a copy of the block chain.
2. Public – the actors in a blockchain transactions are hidden, but everyone can see all transactions.
3. Time-stamped – the date and time of all transactions are recorded in plain view.
4. Persistent – because of consensus and the digital record, blockchain transactions can’t catch fire, be misplaced, or get damaged from water. Blockchain records will last over the long haul.
Blockchain is hard to understand, so let's provide a societal example illustrates how blockchain will impact finance and humanity.
Value through the eyes of the CFO
The Chief Financial Officer is pulled by conventional regulations, and curious at the potential of new technologies to impact top-line growth and decrease business risk.
Traditional financial auditing as we knew it has ended. Financial auditing will experience the most extreme business model change since the passage of the Sarbanes-Oxley Act (SOX) in 2002. New financial auditing with blockchain ensures that businesses are fiscally responsible. This business model change will save lives.
On January 10, 2010, a 7.0 magnitude earthquake, within 16 miles from Haiti’s capital, Port-au-Price ripped through the country with more than 52 aftershocks measuring 4.5 magnitudes or greater. Red Cross received $488 million in donations yet somehow according to CNN the Red Cross only built six permanent homes. A year later the death toll was estimated between 160,000 and 300,000. The Red Cross repeatedly declined to disclose how donations were distributed for Haitian relief. It’s safe to say that despite almost $500 million raised, disaster victims did not see all donated funds. Haiti is a classic example of controversy over transparency.
Rubix team takes a swing at fraud
At the 2016 Shanghai Blockchain Hackathon, the Deloitte Rubix Team launched a new solution called PermaRec (permanent record), during this two-day event. Jennifer Qin Yi, an audit partner of Deloitte Beijing and the lead partner responsible for the coordination of Deloitte's investment management industry in Asia Pacific, led the team. Deloitte’s solution allows companies to record transactions in a globally distributed ledger residing on the blockchain. The Deloitte PermaRec solution connects SAP, Oracle, and other financial reporting systems enabling Deloitte to review transactions from both parties ensuring legitimacy and appeasing regulators. While the product is not mature, the thinking is nothing short of visionary.
What if this PermaRec solution was in place for the Red Cross in 2010? It’s more than likely that Haitian lives would have been saved. The business of donations to support disaster relief will dramatically change. When consumers have the decision to donate disaster relief funds to an organization where every transaction is publically available on a blockchain or donate to an organization that doesn’t share donation disbursement details – the decision will be quick. The business of charity has just changed.
Blockchain changes business models
The Association of Certified Fraud Examiners (ACFE) estimates that fraud costs organizations worldwide $3.7 trillion a year or 5 percent of the Gross World Product (GWP). Extending this application we can apply these principles to tackle fraud. In the case of MediCaid, MediCare, and Social Security fraud could be impacted by conducting transactions to beneficiaries and providers serviced from the blockchain.
Blockchains can be used in any situation when a verifiable public record is required, and blockchain benefits from not being under the control of any one entity.
Blockchain technology, when applied to healthcare, has the potential to decrease corruption and fraud – creating entirely new business models.
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