TeqAtlas talked to Dave McKay, Head of Global Solutions at MLG Blockchain - one of the leading blockchain development and consulting companies in Canada. Dave shared the most disruptive cases of blockchain integration in businesses, the challenges that blockchain implementation can bring and ways to increase revenue by adopting high-end technologies.
1. What Blockchain solutions obtained the greatest number of use cases among small & medium businesses in your opinion?
We are seeing a lot of effort across many small and medium businesses to accept crypto-currency payments and to participate in supply chain blockchains. Both of these are ways to increase revenue and that is always a strong motivator for technology adoption.
2. What business operations are the most applicable for Distributed Ledger?
Distributed Ledgers are best suited for work that happens between companies. If you have business processes that cross corporate boundaries, you may want to look at blockchain. For example, industry sectors like real estate or insurance have multiple parties that are involved with every transaction. Keeping track of all of that data, making sure none of it is modified or falsified during the process and to make the entire process transparent to all parties is what DLT can bring to the table. Supply chains are another obvious candidate for DLT. As an item moves around in the supply chain, data can be stored on the history of who has taken possession, the conditions it was stored in, how long it was stored and any customs or other documentation can be tracked. That kind of information can tell you if your shipment of bananas might be going bad or if your designer bags are authentic.
3. What do businesses need to be aware of and what challenges can they face while implementing an emerging technology like Blockchain?
Every few years we see new emerging technology. Smartphones, the internet and even personal computers were once emerging technologies. The lessons we learned from those are that in the early stages there are rapid advancements in the technology before the sector matures. The sweet spot is to get in on the early majority. That allows you to quickly take advantage of the leg up this gives you over competitors while not having to do as much work as the early adopters. Blockchain is rapidly entering the early majority phase of adoption.
4. What would say is the most disruptive and revolutionary use case using Distributed Ledger you have seen?
The tokenization of assets is the big disrupter. Putting currency and securities changes how a lot of financial businesses will work. Currently, there is a lot of work around the settlement of payments and securities transfers. Most of this goes away when the assets you are settling are represented completely on the blockchain. The ability to represent these assets with smart contracts bound to them allows you to set conditions on how they are transferred. This can be used to enforce commercial contracts, comply with government securities regulations and to create whole new financial vehicles we have never been able to imagine before. The ability to transfer currency without a middle man and with a very low fixed few will cause huge changes to the payments industry. Retail banking is going to be affected by people taking control over their own accounts using wallets. They will be able to accept and make payments without having to use checks, credit cards, EFT or any other methods that have required a bank. Look to banks to focus on higher-margin financial services and happily get out of retail banking altogether.
5. Have you seen a project that implemented several emerging technologies (Blockchain, AI, IoT) at once?
It is always tempting to mash together the latest buzz words to see if there is some sort of synergy. The only useful use case that I have seen that combines blockchain and AI is to store the internal learning state and training data of something like a neural network in a blockchain. You can then use the versioning and immutability properties of blockchain to defend why an AI made a decision at a certain point in time based on the data it was looking at. This may be important for insurance claims on things like autonomous vehicles or portfolio trading systems.
6. What do businesses need to take into consideration before making a decision to start a project?
When looking to adopt blockchain technology into your business you need to consider a few things. Firstly, is this required? This is new technology and people are just learning how to use it. Make sure that you have taken the time to understand the benefits and properties of blockchain and how they fit in with your business problem. The second thing is to look at all of the systems that this will affect. This may have touchpoints in your ERP, accounting, planning, budgeting and IT systems. Finally, you have to assess how your business processes will be affected. Is this a new addition, will it replace an existing system or is this a whole new way of doing business. The answers to these calls for different approaches. Most companies are opting to start with pilot or proof of concept projects to get a better understanding of how they can adopt blockchain.
7. What are the most unique and interesting projects you have encountered?
The interesting projects have been in how companies are uniquely identifying assets to tokenize. In the diamond industry, you can inscribe a serial number on it with a laser or you can shine light through it and analyze the resulting spectrographic information to fingerprint your diamond. For animal products, you can track the DNA. With luxury goods, you can place a near field communication device inside the good. With all of these, you can uniquely track the provenance of the goods throughout the supply chain. Are these conflict-free diamonds? Should this meat be recalled or not? Is this a genuine designer bag?
8. What are the main barriers to blockchain adoption among small & medium businesses?
Like any new technology adoption, people already have too much work on their plates. Adopting a new technology takes time, effort and money. The real barrier here is overcoming the inertia of existing processes. Those who can invest those resources to change will be rewarded. Those that wait too long may end up out of business. A limiting factor is the number of people and companies that have expertise in this technology. Over time this will grow to match the demand.
9. What kind of intermediaries do you think will be extinct in the next 5 years due to smart contracts adoption?
Based on where this technology is being used, these are the services and professions most likely to undergo change or become extinct:
- Trade clearing and settlement
- Retail banking
- Credit cards
- Fraudulent luxury goods sales
- Forensic auditors
- Insurance brokers
- Real estate agents
- Collections agencies
- Rare item auction houses
- Subscription services
- Video games
- Gambling/prediction markets
Blockchain will create new liquid markets for many alternative classes of assets and will automate a lot of inter-company processes. Anyone who has a job in the field of creating financial transactions or dealing with assets will be affected by blockchain.