Blockchain vs. Utility Enterprise (vs. SAP)
The simplest blockchain definition? “A reliable, difficult-to-hack record of transactions – and of who owns what” – SAP.
Later, the immense potential of the underlying technology, known as the blockchain, was discovered. The multiple uses of blockchain have now been discovered. It can be used for smart contracts, and recording other transactions on a peer-to-peer network, etc. What are smart contracts? The self-executing agreements based on blockchain technology – automatically trigger actions or payments once conditions are met.
- Fewer intermediaries, e.g. banks, lawyers and brokers;
- ROI improvement – leaner and faster processes;
- Security – difficult to hack;
- Transparency – information is viewable by all participants and cannot be altered;
- Automation, e.g. smart contracts.
SAP has launched an experimental service – Blockchain-as-a-service (Baas). It is embedded in the SAP Cloud Platform. It requires minimum investment and thus the risk is quite low. Since it uses blockchain, it also guarantees safety. It allows businesses to create customised blockchain applications as well as smart contracts. They can first create a prototype, then test it and if that works, they can make a full version of the same.
How is SAP adopting Blockchain?
SAP is the founding member of the Blockchain Research Institute. It is also a prime member of the Hyperledger project. It is also pioneering in the utility industry. Blockchain can even be used in the energy sector. Multiple devices are used and a lot of transactions are carried out. Using blockchain, these can be decentralized. Also, as cryptographic algorithms are used to encrypt the transactions, they can neither be altered nor hacked, thus making them the safest it can be. This makes the communication between devices easier. The blockchain technology also uses consensus mechanism. This means every device in the chain should agree. The blocks of transactions are immutable.
However, despite the multiple advantages, there are certain drawbacks of the blockchain technology. The utility sector is so wide-spread that the blockchain technology might not be mature enough to manage all the transactions without any human intervention. The transactions take far more time than feasible. Although secure, smaller transactions would not be possible or rather, they would have to be avoided as it would take a lot of time.
Another problem would be the difficulty in adopting it for the wide-scale. Common standards and rules would have to be established by the utility sector. The reason for this is two of the important trademarks of blockchain technology are that the participants remain anonymous and the blockchain is freely accessibly. The utility industry has currently the choice to wait or actively engage in the development of standards and the regulatory framework.
However, due to the nature of the energy sector, it is required for the participants to be known by everyone. Thus, SAP is making tremendous efforts to bring blockchain in the utility sector and change how businesses are done.
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Roman Kucak, CEO