Blockchain

Blockchain is a potent and versatile emerging technology that is only starting to live up to its billing. Best known for its use in cryptocurrency, blockchain—a distributed database that fosters trust and lowers transaction costs—has the potential to change how organizations operate. Already, the technology is used in a variety of business- and public-sector applications, such as tracking and tracing items in supply chains, automating customs clearances, and facilitating financial transactions. And many more applications await development.

The challenge for organizations is threefold: understanding the technology, determining how blockchain can be molded to create value, and developing an approach that captures value early on, in order to fund the journey.

By removing intermediaries, automating processes, and creating trust and transparency when it comes to shared data, blockchain unlocks value. Capturing that value requires business model innovation, operational efficiency, risk management, and social impact. The possibilities are boundless—but before organizations can seize them, they need to answer some key questions:

• Should we create our own blockchain solution or work with existing solutions or players?
• If we build our own solution, will it require an ecosystem of other participants to succeed? If so, how do we ensure that enough value is shared to make the journey self-funding for everyone?
• How do we build and launch our solution? Specifically: What technology stack is needed? What features are critical to creating scale? How do we go to market?

These are not easy questions, especially when the technology itself is complex—and unfamiliar ground for many leaders in business and the public sector.

BCG and its specialty businesses, BCG Platinion and BCG Digital Ventures, not only help organizations answer these questions but support them through the full journey. We do so by distilling that journey into a unique and proven four-step process:

Our Blockchain Consulting Work with Clients

BCG has helped a wide variety of organizations embrace—and harness—the power of blockchain. We’ve served governments as well as industries including aerospace, financial services, energy, transportation and logistics, and food and beverage. Here are a few examples of our work:

• Tracr. The diamond industry’s value chain is highly complex, with many players and processing steps but little transparency. We worked with De Beers Group to develop a blockchain-based solution—called Tracr—that attaches a digital fingerprint to every diamond and records that identifier on the blockchain, from mine to point of sale. Other diamond producers and retailers have joined the effort, with the goal of implementing Tracr as an industrywide standard.
• United Nations World Food Programme (WFP). BCG worked with WFP to build a blockchain-based platform, known as Building Blocks, that transformed the way the agency provides vital cash transfers to refugees. The platform allows WFP to authenticate a beneficiary’s identity rapidly and to record the transaction in-house, rather than relying on third parties. It stores all payment details in a transparent, tamper-proof, and easy-to-audit fashion, and—by eliminating intermediaries—it has reduced transaction fees by 98%. Since its launch in 2017, Building Blocks has improved the handling of millions of cash transfers, ensuring that needy populations have food security.