Blockchain Asset Management
From IBM Developer ‘Adopting blockchain for enterprise asset management (EAM)’
For those reading this article, the combination of the phrases ‘blockchain’ and ‘asset management’ might strike as unfamiliar – peculiar, even. However, the applications of blockchain technology are far from being limited to the realms of introducing cryptocurrencies. After reading this article, you will realise how great the potential for blockchain technology is not only for the digital industry but also for the material industry and connecting the two industries. In essence, blockchain asset management facilitates this through establishing a secure, decentralised network that can nonetheless be easily monitored by firms.
Chain 0: What is the process of blockchain asset management?
Blockchain asset management is an asset management technique that uses blockchain technology to improve the asset management process and tracking of supply chains. It is an innovative method of managing a firm’s assets aimed to increase efficiency, reduce costs, enhance security and create better transparency. To do so, firms initially register all of their deployable assets onto their blockchain network. During this process, because blockchain technology operates under the distributed ledger system (DLS), any entry that is logged onto the network cannot be changed or altered. Once the network includes a complete overview of the deployable resources and assets, the decentralised nature of blockchain allows the data to be spread out among various locations, known as network nodes. In cases of managing the firm’s supply chains, this means that blockchain technology enables the firm to keep track of each stage of the supply chain.
Chain 1: Popularity of blockchain asset management.
Despite its potentials, blockchain asset management is yet to be the industry’s norm. According to BDO’s 2020 Financial Services Digital Transformation Survey, only one-third of asset management executives have implemented the method in their firms. For others, only 48% of the remaining population is considering making the transition. This is because firms and executives see the transition to be a complicated task that involves significant reforms such as having to register all assets, introduce new tracing methods for given assets and much more.
Chain 2: Examples of blockchain asset management.
One example of blockchain asset management being used by industries in the status quo is the use of blockchain in the quality control of a firm’s products. Blockchain technology allows firms to monitor if certain products are meeting the minimum quality standards more easily because each item that is produced by the firm can be validated one by one as every product is stored in a unique, individual block. In contrast, the conventional method of quality control by firms is done in a much more arbitrary manner, where a random sample of products produced by the firm is selected and an estimate of the overall products’ quality is used to evaluate the quality of the product.
Moreover, supply chains can benefit from implementing blockchain asset management. This is because blockchain technology allows contracted firms to become part of one unified chain and easily communicate with connected firms rather than engaging in transactions with only one firm in the supply chain since details of the transaction are dispersed across the entire network in a blockchain asset management structure.
Blockchain asset management can also be useful in validating digital transactions and contracts. Once the parties engaging in the transaction are confirmed to be a part of the network, the blockchain can independently initiate contracts that request the details of the transaction, e.g. requests for the approval of terms and conditions, signing of necessary documentation and the confirmation of the deal. This is a more efficient process than the conventional method of validating a transaction which involves the existence of an intermediary party that approves each step of the transaction.
Chain 3 Caveats of blockchain asset management.
However, as of now, it may be too early to postulate that blockchain asset management will reduce any intermediaries during the B2B and B2C transaction process. That is to say, the changes that blockchain asset management can bring to the necessity of intermediaries are limited. This is because blockchain does not allow for integration with the external ecosystem beyond the defined network. Hence, with or without blockchain, when tracking or monitoring assets outside of the network, there will still be a need for an intermediary which will be able to connect the interior network to the exterior network. Nevertheless, with the blockchain asset management method, firms can manage their resources more effectively by streamlining their transactions and monitoring processes.
Conclusion
Managing assets using blockchain technology is a cutting-edge method that is yet to be popularised and widely implemented across industries. The process involves keeping a meticulous record of possessed assets so that each transaction of assets is closely monitored by the blockchain system. Implementing such ways of managing assets in industries where their ways of managing assets are still not largely different from the past will help solve the inefficiencies and redundancies that exist within the status quo.
References
https://radiantrfid.com/blog/tracking-assets-enables-the-circular-economy/
https://securities.cib.bnpparibas/how-blockchain-and-tokenisation-are-changing-asset-management/
https://developer.ibm.com/tutorials/cl-adopting-blockchain-for-enterprise-asset-management-eam/
https://www.snclavalin.com/en/beyond-engineering/blockchain-will-revolutionize-asset-management
https://online.stanford.edu/how-does-blockchain-work
https://www.uschamber.com/co/start/strategy/b2b-vs-b2c
https://developer.ibm.com/tutorials/cl-adopting-blockchain-for-enterprise-asset-management-eam/
