Together with independent blockchain consultant Tim Myers, Belatrix has just published a new whitepaper examining the impact of blockchain. This distributed ledger technology has been the subject of much debate in technology circles over the past couple of years. Its ability to enable a global, open, system of record for every transaction we make while providing us with unparalleled control, will fundamentally change our lives in the coming years.
The core argument of our report is that blockchain represents a major change to business as usual. Blockchain will upend existing business models, and what will be required is for executives to re-conceptualize their businesses. This is because a blockchain-based business is one that is based on peer-to-peer exchange, based on a blockchain network. This is fundamentally different from today’s businesses (and even today’s so-called disruptors such as Uber and AirBnB) which are still based on centralized networks.
In our research for the report we came across a lot of advice for businesses, on how to get started. What should they do, where should they invest? One of the key articles we came across was in the Harvard Business Review, and I think it’s worth examining in more detail, as we take a contrary perspective.
Why we disagree with the Harvard Business Review
Much has been written about blockchain, and how organizations should consider approaching the technology. The typical advice for executives who are starting to look at blockchain, is to start with one application. Indeed, this is exactly what the Harvard Business Review article earlier this year argues organizations should do: “For most, the easiest place to start is single-use applications, which minimize risk because they aren’t new and involve little coordination with third parties. One strategy is to add bitcoin as a payment mechanism.”
However the core challenge with this approach is that it fails to take into consideration the fact that there are foundational differences in business design between “traditional” and blockchain businesses. Your organization needs to be prepared to operate in a world where services are delivered in a peer-to-peer environment. As Belatrix’s report points out, we advise executives to first “understand the capabilities enabled by blockchain, design a business model that exploits those capabilities, and then build that new business model which wires itself into the market taking full advantage of what a blockchain business has to offer”. That way you won’t be hamstrung by legacy, centralized business design.
This challenge is highlighted by the numerous POCs we see being built, for example by nearly every single major bank from Barclays to Santander. However so far, none of these POCs have arguably made any significant difference to the banks’ operations.
I invite you to read the report here. What are your thoughts? Please feel free to leave a comment below or message me directly if you want to discuss further.