Blockchain: What it is and why it matters to IT and business leaders

Blockchain is data structure that makes it possible to create secure distributed digital ledger of transactions between two or more parties without the need for a central clearinghouse. Blockchain originally rose to prominence as Bitcoin’s digital ledger, recording transaction for the cryptocurrency. Its ability to store data publicly and anonymously is what gives Bitcoin its security and immense flexibility. By distributing data across a large infrastructure, it is possible to attain highly accurate, secure records. When transactions or other data are added or edited, the other nodes (parties) must evaluate the transaction and compare it to their own records, eliminating the need for central data storage or verification. Illegitimate additions are automatically identified by the system and rejected.

Why blockchain matters for business

Although blockchains were first popularized by Bitcoin, they have applications far beyond cryptocurrency. The technology’s ability to allow two or more parties to have complete confidence in transactions without the need for a centralized third party has obvious benefits in the world of business. Today, so called blockchain 2.0 technologies are being developed that will allow two parties to create sophisticated automated contracts that allow for profits to be automatically divided or payments to be automatically made after certain events. This reduces the need for escrow services and clearing houses while expediting transactions and settlements. Blockchain technology may also provide a more secure platform for transactions than traditional means, reducing fraud and necessary security infrastructure.

Some real life examples include Nasdaq, an early adopter of blockchain, is using the technology to allow private companies to issue stock and stockholders of public companies to vote their shares. Everledger is using it to create a registry of diamonds to suppress trade in “blood diamonds” from conflict zones.

Blockchain challenges

Despite its significant advantages over centralized data structures, blockchains are not without their challenges. Distributing data across a wide range of nodes may provide a larger attack surface for bad actors than traditional data storage method. Although this isn’t a problem in blockchain’s original implementation, bitcoin, where all data is public and anonymous, it could be a problem in other implementations where keeping record details private is critical.

As reported by the news media, the story of Ethereum blockchain, an online ledger that records transactions and lets users trade ether, the second-most popular cryptocurrency, behind bitcoin was hacked. A key part of Ethereum allows people to put smart contracts which are written in computer code and run on Ethereum’s network. On June 17, 2016 the DAI (Decentralized Autonomous Organization) announced it was hacked using the Ethereum network. It was reported the hackers exploited a feature of DAO’s smart contracts to siphon off roughly $50 million of its members’ contributions to the fund.

Blockchain in its current form may also be challenging to implement. Because it is an open source project, it has many competing variations and standards. This may make it difficult for companies to create a single production ready solution that meets their needs. It is only in recent years that certain groups are trying to make the technology feasible for enterprise applications.

Ultimately, it’s critical that IT and business leaders stay aware of blockchain technology and investigate how it could impact their business. Its ability to store data accurately and securely without the need for a centralized service has many applications that may provide increased security and efficiency for the enterprise. Blockchains may not be perfect yet, and need further safeguards, but they undoubtedly provide a glimpse into the future of data structures and transactional records.


Our team is a blend of high-quality talent from all levels who can tackle your most complex issues with a fresh approach. With a globally connected network of 4,000 employees, Wavestone is designed to help you get results. All our consultants thrive on complex challenges, enjoy blazing new trails, and are committed to your organization’s success.

Laying the Foundations: The 4 Core Competencies of Effective Cloud Solutions Security

Sep 21, 2023

Implementing effective cloud solutions security is complex. Solution security architectures must be initially done with minimal mandated standards, then built progressively, with additional layers of security built on foundational capabilities. In this first of a 3-part series on safeguarding cloud solutions, we examine the 4 foundational capabilities of effective solutions security and best practices to implement them.

Wavestone Named to Forbes World’s Best Management Consulting Firms 2023 List

Sep 19, 2023

Forbes has once again recognized Wavestone in its annual “World’s Best Management Consulting Firms 2023” list. Read our blog for more information about the ranking and Wavestone’s award-winning business and technology consulting services.

Have a Question? Just Ask

Whether you're looking for practical advice or just plain curious, our experienced principals are here to help. Check back weekly as we publish the most interesting questions and answers right here.

Ask Wavestone