Everybody is talking about Blockchain but very few are understanding what it actually is. In essence, a Blockchain is a register. Correct, but a lot more than that.
What about taking as a starting point the following question: how can you leverage on the possibility to instantaneously perform any kind of transaction on a decentralized, secure, immutable register? Easier said than done.
Conceptually, it may take a while to fully grasp the concept, the risks and opportunities associated with it. Reading different articles or videos providing each a diverse perspective is really helpful.
To understand Blockchain, you have to understand it at first as a new way of thinking. The technological questions are for later.
Knowing that if you have difficulties explaining it, probably the concept is not clear enough for you. Einstein said: “if you can’t explain it simply, you do not understand it well enough”.
Generally, the main opportunities are related to transparency, traceability, trust and cost-reduction. But the opportunities can significantly change depending on the business model it is applied to.
Knowing that a Blockchain can be public or private depending on whom you decide to include in it. A bit like differentiating between Internet and Intranet. The parallel with this technology can be used for a different perspective: Internet connects information whereas Blockchain connects transactions.
A starting point
The following questions can be useful for you to ask about your company once you understand conceptually a Blockchain:
- How could a Blockchain impact the business model of your company or industry? Payment methods based on Blockchain and not requiring an intermediary (e.g. banks) already have widespread use
- What are your problems that could be solved with this technology? Walmart managed to trace in a Blockchain pilot the origin of the mango available in the supermarket in 2.2 seconds against a standard of approximately 7 days. Imagine the potential for cost-reduction in the supply chain.
- Would you be prepared to run your business in full transparency and traceability? In this sense, the choice between a public or private Blockchain is crucial.
- Is Blockchain the best technology for your business model? In many occasions, a better use of the existing technologies (e.g. Internet) is more than sufficient
Blockchain and the society
The analysis of the possible impacts of the Blockchain clarifies, as well, the possible negative consequences on the society at large. As with every technology, the positive impact of the technology is depending on the use it is done of it. The Blockchain could change the world. For good or for bad? It has still to be defined.
Frequently the focus is only on the positive consequences associated with the introduction of an innovating technology. Again, the similarity with the Internet can be helpful. What are the negative consequences of the introduction of the Internet? Are we more connected or more disconnected? Which consequences could be avoided if considered in the implementation phase of a Blockchain? The magnitude of the impacts of a widespread use of the Blockchain could be similar to the ones we are now living with the Internet.
The way forward
The potential impact of the Blockchain is immense, as the uncertainties related to the effective implementation of it. The underlying technology is new, complex and continually evolving. So much that it will be difficult to predict which form it will take or if it will eventually work on a large scale. Still, it is important for companies to understand how their business model could be disrupted by it and explore opportunities associated with the technology.
Without starting technical discussions, the possibility to understand how your business could be working with a Blockchain is very relevant and does not necessarily requires considerable time and monetary investments. An introductory presentation followed by a workshop on envisioning a Blockchain business model for your business can do a lot. To start generating internal awareness and helping in choosing whether to continue investigating or not.
Michele Soavi is an independent consultant supporting companies in creating value and innovating from a financial, social and environmental perspective by leveraging on the analysis of their business model, financial information and data.