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The Blockchain Process

Transaction
1

A block is created which The transaction block is “broadcast”
George wants to buy something from Sue.
represents the transaction. to everybody in the network.

Transaction Transaction Transaction
1 2 3

The purchase goes through. The verified block is date stamped and Everybody in the network
George gets the product linked to the other blocks in the chain. verifies the transaction.
from Sue, and Sue receives
payment for the product.
SOURCE: National Academy of Sciences

so far are ones where companies want to integrate their pro- As useful as that might be, loyalty points are also an
curement systems with partners. Simple things like getting interesting example of why companies should think through
a volume discount are easy to do at the individual company the full strategic implications of blockchain technology before
level but are very hard to do as a group, often because nobody adoption. As a back-end tool for integrating across multiple
can keep track of how much volume has been purchased systems, a blockchain could be very useful.
across the group and what the right If you went further and cre-
discount should be. BLOCKCHAIN IS ALREADY ated a “skiing coin,” for example,
Other applications include the benefits might not be so clear.
account management and loyalty STARTING TO SHOW UP IN If you paid people skiing coins for
programs that span across multiple SOME INDUSTRIES. FROM every dollar they spent on skiing,
companies. You could, for exam- and those coins could be traded
ple, issue tickets that are valid across SOFTWARE LICENSING online through a blockchain, you’d
multiple ski resorts and then track TO TRUCKING TO FOOD very quickly end up with a skiing
usage easily, even when the resorts coin to US$ exchange rate. And
are run by different companies. PRODUCTION, EARLY ADOPTER once you created a highly trans-
Buying an “All Colorado Season COMPANIES ARE EMPLOYING parent, open, and public system
Pass” or offering discounts based on for users, you may discover that
how much you spend in a particu- THIS TECHNOLOGY THIS YEAR. instead of having created a long-
lar region are all possible with this term loyalty system, you inadver-
shared ledger system. tently created a short-term cash-back program instead.
Managing the integration of loyalty programs is another How quickly is this future going to arrive? It’s already
area where blockchains are very useful. Loyalty programs today starting to show up in some industries. From software licens-
need to track user activity across multiple organizations (say, ing to trucking to food production, early adopter companies
different mountains and resorts) that often have different sys- are deploying this technology this year. We anticipate that
tems. A distributed, shared ledger makes that easy. Smart con- as we go into 2019, we will see this technology spread from
tracts can be used to apply rules to how people redeem points the earliest adopters into broader industry groups, perhaps
or earn status. including the ski business.

SUMMER 2018 | NSAA JOURNAL | 11