PORTLAND • Vendors of mining giant BHP Billiton typically keep track of rock and fluid samples and analyses with e-mail and spreadsheets. A lost file can cause major and expensive headaches since the samples help the company decide where to drill new oil wells.
BHP's solution: Early next year, it will start using the blockchain, a new, shared database technology that cannot easily be changed or erased. No more lost samples or frantic messages.
BHP is one of many large businesses putting the blockchain to use. For several years after it emerged in 2008, the technology behind the digital currency bitcoin held court on the fringes, attracting attention mostly from start-ups.
Then in the past year or so, several large companies, including Nasdaq and Standard Chartered, began testing it. Now comes the next phase: actual deployment of the blockchain in their operations, with the first major wave expected next year.
Financial institutions have been in the vanguard of the technology's adoption. ASX, the Australian stock exchange, expects to have a commercial blockchain platform within 18 months, deputy chief executive officer Peter Hiom said on a call with investors in August.
Mr Fredrik Voss, a vice-president at the bourse operator, said Nasdaq's blockchain-based technology for voting in shareholder meetings, as well as a technology that enables private company stock issuance, will be deployed next year.
Seen as revolutionary in the world of finance, the blockchain's software code can let banks, investors and others in the market transfer and record assets and exchange information without an intermediary.
One security feature is that entries to the blockchain cannot be erased or changed, typically unless the parties using it agree.
While it has the potential to reshape the way industries operate by reducing third-party costs, increasing transparency and dramatically speeding up transactions, implementation can be slow amid regulatory challenges and as companies overhaul their processes.
Much like the advent of smartphones and social media, "the promise of the technology is great, but it takes time for solutions to be developed based on the technology", said Wedbush Securities' analyst Gil Luria.
Several non-financial companies have already started blockchain- based systems: IBM is using it to help some of its 4,000 vendors resolve disputes.
Start-up Everledger, a fraud-detection system for the diamond industry, is using the blockchain to track 1.4 million polished gemstones for certificate houses, insurance firms and brokers globally.
Like other non-financial companies, Everledger has advantages that have helped it deploy the blockchain faster: It is not as heavily regulated, and does not have decades- old processes and technologies in place to overhaul.
Still, the challenges for all companies in moving the blockchain from testing to production often are not related to the technology or regulations. Getting users up to speed takes time, as does integrating it into existing systems, such as accounting and inventory management, Mr Voss said.
Mr Chris Burniske, an analyst at ARK Invest, said: "The hard part with the blockchain technology is creating new business models."
Essentially, companies deploying the blockchain often have to scrap their existing business processes and start again from scratch, he said.
BLOOMBERG
