Every now and then, I wonder about the adoption curves of technology. I remember chairing a panel at an AR/VR conference in Dublin in 2018. And how disappointed I was with the technology. As an avid gamer, I keep on waiting for the killer application, which (in my mind) still has not arrived. And we have been waiting for 20 years now.
“Blockchain Competitive Advantage: Whether you are an entrepreneur, investor, or established company, learn how to win the battle for blockchain competitive advantage”
The same applies to blockchain. At the moment, there is quite a lot of action with Bitcoin, but the applications that enable full transparency in value and data chains, not so much. So I decided to pick up “Blockchain Competitive Advantage: Whether you are an entrepreneur, investor, or established company, learn how to win the battle for blockchain competitive advantage” to find out what I was missing.
Why Blockchain
The book begins with a bit of history, starting with virtual trading in games. And if you believe “Our Next Reality: How the AI-powered Metaverse Will Reshape the World“, that type of trading will become a serious economic factor in the (near?) future. Exactly the reason they invented Bitcoin and the blockchain, the allowance for the secure and instantaneous exchange of value or assets. The first global electronic money protocol without a state sponsor. With the blockchain protocol came other innovations—foremost among them is the creation of crypto assets and tokenisation as well as the funding innovation of initial coin offerings (ICOs). Like with the internet (another protocol), our most fundamental understanding of how things work is turned upside down.
Innovation strategy and entrepreneurship
The book moves into classic corporate innovation strategy and entrepreneurship. Asking questions about time horizons, innovation metrics, incremental vs new ideas, and future back thinking https://www.ronimmink.com/leadership-is-about-predicting-the-future/, understanding key success factors, creating the right to play and win, vision, capacity building, partner development, dealing with VCs, culture, networking, finding the fringes, understand the enabling innovations and technologies, go-to-market, customer engagement, setting up incubators, etc. Comes close to “The start up way“.
The importance of purpose
The book also highlights the realisation that governments are beginning to look at measures such as citizen happiness or well-being indices, and ¡investors, such as Blackrock, State Street, Schroeders, and many others, are beginning to ask companies these two questions: what useful important purpose do you serve to society? Can you create sustainable value or profit that doesn’t create external costs on society—like stressful jobs, toxic products, large carbon footprints, or damage to local communities? For that, you need impact measurement, data reliability, traceability, transparency and thus blockchain.
Lessons from the internet
Because the internet is also a protocol, it is good to study the internet. The first websites, the early challenges of navigating the web, the invention of search, the plethora of communication protocols and now fragmentation, security, identity, trust, congestion, and concentration of control are fundamental shortcomings of today’s internet. However, the biggest shortcoming is that today’s internet is built upon communications protocols that do not easily support digital commerce.
Transaction management
Blockchains are open, distributed ledgers that can record transactions between two parties efficiently and in a verifiable and permanent way. Once written to the blockchain, each block cannot be modified without changing the entire chain that follows it, ensuring its integrity. This makes the protocol ideal for use in a broadly distributed network in which many people participate, in which many transactions are taking place, and which, over time, may need to be revisited for whatever reason. The blockchain only allows each bitcoin to be produced once—unlike most software that can be infinitely copied.
Traceability
It also allows for each bitcoin to be traced to who holds it today, and the provenance of who has ever held it since its inception is recorded and can be seen in plain view by examining the blockchain. That means that it is very good at recording title rights. However, it is also very bad at maintaining anonymity. Indeed, law enforcement agencies have, by this time, learned to track down Bitcoin holders to their real identities when necessary.
Our current systems
The Bitcoin blockchain was the first, and it is supported by a truly distributed, public, and immutable ledger. Knowing this, look at the current banking system. Issuer banks, issuer processors, merchant accounts, acquiring banks, merchant payment processors, payment gateways, card associations, payment credit approval players, and fraud players are all taking a slice of the pie. It is costly, complex, and inefficient.
Ancient?
Most of the world’s real estate is not traded electronically. The deadweight loss of the complex, manual, often paper-based ways in which we track and trade real-world assets is enormous. Most private equities have not begun to enter the realm of our digital world. This poses a challenge because every country in the world believes that small businesses, especially the start-up innovation ecosystems, are the drivers of jobs and gross domestic product.
The need for innovation
I can go on. The financial system could do with some innovation (and transparency). Ever try to get a loan from a bank, a mortgage, raise funds, manage a cap table, etc. etc. Digital assets can take the form of monies, commodities, collectables, securities (equities or debt), revenue shares, profit participations, or any combination of these. Managed by smart contracts. With full transparency and traceability.
New value propositions
Artificial intelligence, the sensor revolution, distributed manufacturing, augmented reality, and so on can all be combined with digital payments and assets to combine new value propositions. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. It’s also inevitable that security tokens will transform equity just as Bitcoin has transformed currencies.
Imagine
Imagine the applications are art, medical records, consent management, identity, supply chain management, publishing, retail, climate change, shipping, etc. Basically, anything related to data management (which is everything, particularly now with AI as the accelerator).
The lack of adoption
The lack of adoption is the same as with any other new technology. Lack of standardisation, lack of interoperability, legacy systems, (it is not in the interest of lots of industries to make their value chains transparent and traceable) and regulatory uncertainty.
The question
Is this if or when? If it is when (I think it is), you need to start looking at blockchain and the impact of complete transparency and traceability on your (future) business model. That is before we combine blockchain with AI, IoT, mixed reality, 3D-printing, etc. Watch this:
