Whether you are an up-and-coming entrepreneur or part of a large international company with overseas stakeholders, blockchain implementation may seem more than tempting. The term has become synonymous with ease of access and streamlined data management, especially in the fintech industry.
According to Expanded Ramblings, 69% of banking companies actively experiment with blockchain integration, with the projected value of the blockchain market expected to exceed $20bn by 2024.
There is a clear and unsurprising interest in blockchain among numerous industries and their niches. However, implementing any type of new technology into existing business models can be risky. With that in mind, let us take a look at the biggest risks companies face in light of blockchain integration, as well as how to overcome them.
What blockchain represents
Blockchain started its life as a way of keeping track of cryptocurrency exchanges, which were anonymous and untraceable at the time.
The digital ledger system introduced by blockchain enabled internet users to trade cryptocurrency coins of various origins amongst each other more quickly and easily. According to The Global Blockchain Council, 5% of US citizens hold cryptocurrencies in their name, with 47% of US businesses open to its use for their products and services.
As we have previously mentioned, there is a clear interest in blockchain implementation, whether for cryptocurrency tracking or general data management. Blockchain has evolved from its rudimentary use as a digital exchange ledger and became more viable for everyday data tracking and management, which is where we come across the risks of implementing it.
Lack of technological clarity
The worst mistake a company can make is to implement a trending piece of tech into their business without a second thought. While blockchain can indeed help your internal management and inter-department data flow, it can also cause severe issues for your employees. This is especially true if you have less tech-savvy personnel on your payroll and ask them to use new tools without proper training.
The first order of business in terms of gauging blockchain tech's viability in your company is to inform yourself and the upper management. What does blockchain stand for and what can it do for your specific business model? Do not compare your company's product or service portfolio with others on the market. Reflect on your own workflow, values and existing data infrastructure before making the call to implement blockchain.
Type of information stored
Blockchain allows for different types of information to be stored on a centralized digital ledger. As with any publicly available data repository, the type of information you store there should not be damaging to your company. You should pay close attention to the type of data you store in terms of client information, project outlines and important documentation altogether. Do not risk data breach or information leaks just because blockchain is the more comfortable route to take in terms of storing data in the long term.
It is good practice to use platforms such as TrustMyPaper and Evernote to edit and format your project files before placing them into the data repository. That way, you will always be able to make sure that your stored data does not divulge any B2B or B2C data if a potential breach does happen down the line.
You can also categorize your data in a way that the blockchain data server only serves to point an interested employee to an offline storage unit via a reference number. Do not take blockchain for granted as a go-to place for storing all of your important company data and the technology will serve you well indefinitely.
The rule of majority
Internal company strife is not an everyday occurrence; however, it is a possibility even in today's modern world. Blockchain technology is a digital data management system first and foremost and as such, it allows employees to access company information on an everyday basis.
Each employee is assigned a key with which they can access the company's data ledger but any modification of existing information will require higher authorization. That is, until a majority of employees (51% to be exact) attempt to change blockchain information concurrently. This is where potential risks come into play, as "the rule of majority" can cause severe consequences for a company, especially in startup and small-scale environment.
Employees who band together their keys and attempt to modify, change, swap or altogether delete existing blockchain data will be able to do so with a 51% majority. In order to avoid this, social engineering, healthy HR management and blockchain educational seminars should be organized. This is not a game-changing risk – however, it should be kept in mind since it represents a small yet quite real possibility.
Security breach concerns
The way you treat the security of your information will speak volumes about the level of care and trust stakeholders can place in your company's care. It should be noted that technologies which are capable of breaching blockchain security are years away from presenting a real threat. However, quantum computing technologies are developing at a rapid pace and hacker groups, as well as malware and spyware creators, take advantage of them.
The pre-emptive solution to quantum computing security breach attempts is to implement quantum-safe cryptographic solutions. These can be acquired from prolific antivirus and digital data protection companies which specialize in blockchain security. Blockchain is no more or less safe than other means of storing digital data.
Inevitable third-party access
Depending on the scale at which your business operates, your blockchain data ledger may have to become available to outside third parties. These third parties often include retail storefronts, e-commerce stores, fintech companies working with your business and other important stakeholders.
Over time, you will be required to allow access to your data repositories in terms of inventory for things such as retail or finance for fintech. The way you share your data with third-party stakeholders may become a security risk in itself over time if not monitored correctly. This is because you ca not monitor all of the stakeholders with access to your data 24/7, especially in terms of their infrastructure, computing power and digital security measurements.
In order to amend this, you should task your IT department with keeping track of each blockchain access point outside of your company's premises. Allocate specialized access keys to each third-party stakeholder in order to have a clear idea of who is attempting access, from where and at what point in time. This is the best way to minimize the risk of unnecessary outside access to your blockchain data ledgers.
The benefits of what it has to offer far outweigh the potential risks blockchain implementation brings with it initially. Make sure to plan your integration strategy carefully and do not rush just to get early results. Once blockchain settles into your business model, you will be able to take full advantage of its innovative data management.