Kathmandu University School of Management (KUSoM)

Pichhe Tole, Gwarko, Lalitpur

A Term Paper on the topic

Blockchain

Submitted to

Mr. Sanjay Pudasaini

Faculty, (KUSOM)

In partial fulfillment of the requirements for the

Management Information System (MAS 502)

Submitted by:

Kabir Krish Jindal (21117)

Ritu Maharjan (21124)

MBA Fall 2021

May 2, 2022
Table of Contents
Introduction ..................................................................................................................................... 1

Reasons for selecting the topic: ...................................................................................................... 3

Business Benefits ............................................................................................................................ 3

Use Cases ........................................................................................................................................ 5

Challenges / Limitations of topic: ................................................................................................... 6

Management, organizational concerns of the topic ........................................................................ 8

Nepalese Scenario ........................................................................................................................... 8

Conclusion .................................................................................................................................... 10

References:
Introduction

Blockchain was first introduced in 1991 as a way to store and secure digital data. Since
then, the emergence of blockchain technology is evolving at the rate as the Internet.
Blockchain was initially used for cryptocurrency, however the technology discovered its
potential to transform entire industries including supply chain management, IT services,
and financial services. In simple words, blockchain is a distributed database with entries
that must be verified and encrypted by peer-to-peer networks. The distributed ledger
technology of blockchain is one of the most significant innovations today.

Blockchain functions as an electronic ledger in the same way that a relational database
does. It can be shared freely between private and public users. Blockchain produces an
immutable transaction record. Each transaction in the thread is saved as a digital record
and referred to as a block that is associated with a specific user. Blockchain helps in the
verification and traceability of multistep transactions needing verification and traceability
and can provide secure transactions, reduce compliance costs, and speed up data transfer
processing. The technology can help contract management and audit the origin of a
product. It also can be used in voting platforms and managing titles and deeds. In addition,
blockchain technology is decentralized by nature which allows businesses to connect a
broad supply chain network

Blockchain has spread across a wide area of industries and gained much popularity due to
its key characteristics. They are:

● Immutability
● Decentralized
● Enhanced Security
● Distributed Ledgers
● Consensus

1
Immutability:
Immutability by definition, means unchanged. This is one of the top blockchain features
that help to ensure that the technology will remain as it is i.e., a permanent, unalterable
network.

Decentralized:
Block chain technology ensures its features through a collection of blocks. These blocks
are spread across the network i.e., decentralized. Each block consists of a copy of the digital
ledger (data) which cannot be modified. Decentralization is one of the key characteristics
of block chain technology assisting immutability.

Enhanced security:
Because block chain technology is decentralized, the power of access is also distributed
and hence, no single entity has complete authority. Furthermore, it is protected via
cryptography. Every information is hashed via cryptography that provides immense
security.

Distributed Ledgers:
All other users on the system contribute to the network ledger. To achieve a better result,
the computational power was divided throughout the computers. This characteristic of
blockchain provides support to other functionalities of the technology as well.

2
Consensus
Consensus is a decision-making process for the group of blocks active on the network.
Consensus algorithms are the one that help the network make decisions.

Along with these characteristics, many practical applications for the technology have been
explored and implemented. Hence, blockchain technology is and will continue to be a part
of the future.

Reasons for selecting the topic:

The global block chain market is expected to increase at a rate of 56.3% from $7.18 billion
in 2022 to $163.83 billion in 2029, with a forecast period of 2022-2029. Blockchain
technology could have revolutionary implications for the future of business operations.

The banking, financial services, and insurance industry (BFSI) is predicted to have a
substantial market share due to rising use of digital ledger solutions and services by banks
and other financial institutions to streamline company processes and reduce operating
expenses. In addition, blockchain is evolving into many industries such as banking and
financial institutions, businesses, government and other industries namely cybersecurity,
Big Data, Internet of Things (IOT) more which make the technology even more versatile
and interesting. Many industries have the potential to be transformed by blockchain. It can
validate and track transactions as a stand-alone solution. It can speed up transactions when
used in conjunction with the Internet of Things and smart contracts.

Business Benefits

Block chain can be used in various business activities such as:

1) ERP
2) SCM
3) Smart Contracts
4) Incorporating Regulators
5) Payment

3
1. ERP
An Enterprise Resource Planning (ERP) system is a software used by organizations to
manage their business activities such as accounting, procurement, project management,
risk management and compliance, and supply chain operations. ERP systems need to store
a huge amount of data and must be able to process them reliably and transparently. This is
where Blockchain comes into play.

All the departments in an organization can upload their data for other departments to
access. This would streamline a lot of processes in the organization by saving time. It adds
transparency and auditability to an organization’s records as it is impossible for one person
to change the records on their own. It also helps in detecting suspicious attempts of
unauthorized access and other security threats in real-time.

2. SCM
Supply chains are the organizational and logistical systems by which goods are transported
from a factory, extractor, or grower to the consumer. Supply chains are the organizational
and logistical systems by which goods are transported from a factory, extractor, or grower
to the consumer.

Most of these activities have independent databases owned by different people tasked with
the specific activity. These databases are not as useful as they could be in sync. It would
be easier for the person tasked with supply chain management if he could access and verify
data from all the databases in real time. Blockchain can provide exemplary services in this
area.

Blockchain on a supply chain could log the information by everyone tasked with different
activities into the ledger so that everyone can see that data and make their decisions
accordingly.

This increases transparency as information is updated at every point making tracking

fraudulent / damaged products easier. This could save a lot of lives and help hold the right
people accountable.

4
3. Smart Contracts
It optimizes the business process through smart contracts. Companies can use this in SCM
to automate transactions that should be fulfilled when certain conditions are met through
smart contracts. This is a shielded process as no single party can change the terms or force
the contract to get executed.

4. Incorporating Regulators
Instead of keeping physical files that can be fraudulently altered, lost, or damaged,
companies can store all the financial information on the blockchain so as to give regulators
access to a record of financial transactions to verify that fees are being paid, the proper
signatures are collected, and operations are generally being conducted above-board.

5. Payment
Businesses can use block chain based cryptocurrency like Bitcoin, Ripple to make
transactions as they can be done in a matter of minutes and the funds are available to use
instantly. The transaction costs are lower than the usual wire transfer as well making it cost
effective.

Use Cases

1. Walmart
Walmart is employing Block chain technology to add transparency to the food supply chain
by digitizing the entire food supply chain to make the process transparent, traceable, and
reliable. Employees can track products for its origin, and it takes less than a minute to scan
products to know where they came from and where it is stored at present. Technology helps
Walmart employees in tracking the origin of food instantly. Moreover, it reduces paper
waste, automates the entire process, and accelerates supply chain transparency.

2. R3
R3 is a leader in distributed software and enterprise technology for capital markets,
financial services and other regulated industries. It uses blockchain technology to
incorporate regulators for more transparency into their financials making the audit process
hassle free.

5
3. Microsoft
Microsoft became an early adopter of Bitcoin in 2014 when it began accepting the
cryptocurrency as payment for games, apps and other digital content for platforms like
Windows Phone and Xbox. It accepted Bitcoin even when the world didn't know what it
was and rumors of it being unreliable were flying around.

4. BurstIQ
BurstIQ’s big data blockchain contracts help patients and doctors securely share sensitive
medical information about the patients increasing the chance of correct diagnosis. Smart
contracts establish the parameters of what data can be shared, solving the issue of privacy
to some extent as well.

5. Propy Inc
Propy Inc is a global real estate marketplace with a decentralized title registry system for
instant title issuance and allowing people to purchase property with crypto.

Challenges / Limitations of topic:

Blockchain is one of the most important developing technologies, with the potential to
change many sectors of business and society. However, it has a number of severe
technological, social, legal, environmental, and ethical implications that make it difficult
to utilize in the public sector. Some of the major challenges for the adoption of blockchain
technology are:

1. Privacy
2. Scalability
3. High Energy Consumption
4. Speed
5. Lack of universal standards

Privacy
Block chain was created with the intention of being widely distributed which means that
everyone may see the information stored on the blockchain. This lack of privacy has not

6
been adored by many industries and hence have created a challenge for the adoption for
the technology.

Scalability
The block chains work accurately with a limited number of users, however a long
blockchain can produce challenges for an organization as it runs into trouble with
scalability. To begin, each machine on the network that is responsible for confirming
transactions and maintaining correct blockchain records must hold data from the genesis
block to the most recent block. These computers, known as nodes, must be able to store
that information. The redundancy makes the system safer, but it also makes it wasteful as
the network and block chain expand.

High Energy Consumption

The cost of businesses can increase vastly due to the increasing energy consumption by
technology. Energy consumption is another blockchain adoption challenge. The
blockchain technology uses a model where nodes compete to solve a complex equation
fastest which requires computational power, also known as mining. Miners currently
consume 0.2% of total electricity which if continues to rise, miners will need more power
than the world can supply. As a result, it has now become one of the network's key
challenges.

Speed
Updating, verification can be time consuming as the number of users grow. The blockchain
is complex and requires much more time to process transactions. In addition, the encryption
of the system adds to the problem. Blockchain transactions are relatively fast for account-
to-account transfers, but the decentralized nature of the technology has made it a poor tool
for everyday transactions. Hence, the slow speed of high data transactions has resulted in
failure of adoption of the technology.

Lack of universal standards

Each implementation of block chain is unique which creates challenges for the adoption of
the technology. The interoperability features are highly affected by this as data cannot be
shared freely between one or more companies and additional tools must be developed to

7
flow data between blockchains. The lack of universal standards of blockchain provide a
major hurdle for the developer’s community for the advancement of the technology as
redundant work is required for the same feature across various blockchain platforms.

Management, organizational concerns of the topic

1) Privacy might be the most talked about drawback for businesses. Not all people
need access to all the info in the organization. But since we cannot restrict people
from accessing the information, we can upload only the information that is not
sensitive and can be shared with all. This is better than not having access to any
information at all. This will also reduce the amount of time for upload as only
necessary information is being uploaded.

2) Maintaining this system can be expensive for businesses who have a huge number
of users as it will consume a lot of resources which are costly. To tackle this ,
management can make one person from each department a part of the blockchain,
so that sharing information becomes faster on the inter-departmental level, then the
information can be shared within the department easily. This will reduce the amount
of resources required.

3) Integration is an issue if blockchain is to be integrated with multiple ERP software’s

being used in the same company. The only solution to this is to use a single ERP
system all over the company to make the integration process seamless.

All these solutions are not permanent solutions but can be taken up on an institutional level.
The technology is still a child as it is only a decade old and must improve in the future to
tackle all these issues.

Nepalese Scenario

Block chain is an advanced and expensive technology for the entire world at this point, let
alone Nepal. Only the big corporations are implementing and reaping the benefits of this
technology while the others are following their lead. In the context of Nepal, Nepalese
Businesses can definitely take advantage of blockchain technology to increase the

8
transparency and speed in the businesses, but the cost and expertise required to run this is
far ahead of the general capabilities of the country.

If it were not for the ban on crypto, the minimum transaction cost of crypto would be an
immense help for Nepalese Businesses and would encourage online payment and reduce
the overall cost of business. Currently, Nepal is facing increasingly depleting forex reserves
making it hard for the government to meet demands of the public. If we could make
transactions in cryptocurrency, it would eliminate the need for forex reserves to an extent
helping Nepal recover and businesses continue with their operations.

The Nepalese agricultural industry could benefit immensely from this as all the financial
details between the farmer and the consumer are kept by the intermediaries raising cost for
the consumer or decreasing the amount the farmer could receive for their product. If all the
data is held within blockchain, no details could be altered, and fraudulent activities could
be reduced.

Nepal ranks 117 among 180 in the corruption index. Blockchain could be a huge help in
this context as well. When the records of operations are held by one body or one
organization, an authority figure can easily tamper the data, if they want to. But if all the
data is uploaded on blockchain, the data is tamper proof, making corruption less viable and
making businesses much more efficient.

Blockchain can be implemented in various other fields as well. For example, medical
institutes can use the concept of Blockchain to store all medical records securely. Banks
and other financial institutes can perform and verify KYC in Blockchain. Governments can
use it to keep and manage records of National ID, registry of land and other properties.

However, Companies have recently transitioned into using computers and are still used to
keeping physical databases, it would take them years to accept and adopt blockchain. Since
crypto can also be used for illegal activities, the government is unlikely to make crypto
legal anytime soon.

9
Conclusion

Blockchain’s benefits in ERP, SCM are unparalleled given its features. The operation
efficiency could increase by a longshot due to the transparency and time saving. It’s also a
revolution in the finance sector due the convenience and cost-effective method it provides
the wealthy nations can afford to implement this while Nepal seems to struggle with the
basics itself. The laws aren’t clear yet and are still under debate.

Blockchain’s features such as immutability is a big advancement and is very much required
for transparency while decentralized also adds to enhanced security promised by the
technology. While the benefits seem attractive, Immutability can also be a drawback if the
data needs to be corrected or altered by the authorized personnel. The verification process
though secure is time consuming and goes on to increase as the amount of data increases
and seems like an overkill. The solutions to the drawbacks are still being researched and
no universal methods are approved.

Blockchain holds a lot of potential but the drawbacks that come with it cannot be ignored
as well. It is only going to grow in the fields of business, finance, law, medicine, and real
estate. The worldwide blockchain market is forecasted to grow more than hundred times
as compared to the data of 2018 by the year 2027. This shows the growing pattern of the
technology. However, the growth of the technology in Nepal and developing countries
seem quite concerning. The problems of digital divide, slow pace with the industrial
revolutions and discouraging government policies further contribute to the failure of
adaptation of the technology in the country.

Nepal needs to improve the technology state of the country by upskilling the people and
incorporating blockchain in the syllabus so that the new generation grows up learning the
tech like the old generation grew up learning how to use the computer. Businesses Houses
in Nepal may still look towards going through with this but including the small businesses
is a big task within itself.

10
To conclude, Blockchain is the next big thing and is going to be very crucial in the future.
It is still developing, and countries should look towards learning it and growing together
with it. Its uses are diverse and can be the reason for the exponential growth of businesses.

11
References

(n.d.).5 Applications for Blockchain in the Business World. (n.d.). From Balticassist.com.

Beyond the hype: Blockchains in capital markets. (2015, December 1). From McKinsey
& Company: https://www.mckinsey.com/industries/financial-services/our-
insights/beyond-the-hype-blockchains-in-capital-markets

Dabadi, S. (2021, December 6). Cryptocurrency and Blockchain dynamics in Nepal.

From brandguff.com.

Daley, S. (2021, December 16). 34 Blockchain Applications and Real-World Use Cases
Disrupting the Status Qu. From builtin.com.

Iredale, G. (2021). 6 Key Blockchain Features You Need To Know Now. 101
Blockchains .

Rojas, L. D. (2019, October 31). Why Integrating ERP Systems into Blockchain Is a
Great Idea? From medium.com.

Why integrating Blockchain and ERP is a Great Idea? (n.d.). Tech Blogger.

(2021). Blockchain market size, share & COVID-19 Impact Analysis.

Elias, G. (2021). What is blockchain and what does it mean for your business?

Levy, A. (2022, 02 28). 5 Problems With Blockchain Technology. From Fool.

Afreen, S. (2022). Why is Blockchain Important and Why Does it Matters.

12