The Real Business of Blockchain by David Furlonger

Author:David Furlonger [Furlonger, David; Uzureau, Christophe]
Language: eng
Format: epub
ISBN: 9781633698055
Publisher: Harvard Business Review Press
Published: 2019-08-27T16:00:00+00:00

THE FATE OF CENTRALIZED SOLUTIONS

As the technology matures to enable blockchain-complete solutions and as organizations experiment with decentralized decision making, processes, and business models, the value proposition of blockchain-inspired solutions and other centralized approaches will change. There are a number of scenarios that could emerge in the market.

Some of the blockchain-inspired solutions that go live into the mid-2020s will gain acceptance and survive to become standard, even as organizations embrace more decentralized models. For example, a consortia of investment bankers could develop a blockchain for IPOs even as the decentralized ICO environment evolves, with each model serving different levels, sectors, or sensibilities of the financing market.

Blockchain-complete solutions will affect existing blockchain-inspired solutions differently, depending on the archetype of the inspired solutions. Because few FOMO solutions will become operational or will survive long, by the time blockchain-complete solutions are possible, few if any of this archetype will exist. In contrast, opportunistic solutions designed to automate an in-house or industry process will still be relevant as long as the process is. For example, solutions like the new trading platform that the Australian stock exchange is developing to replace CHESS will probably come from the opportunistic archetype (see chapter 2). These solutions will not stay static, however. Opportunistic solutions built by consortia or designed to enable cross-organizational use could veer toward centralization if they are successful, attract users, and begin to consolidate data relevant to the business process. They could, alternatively, become more decentralized as the decisions managed by the solution are captured in and executed by a smart contract. Blockchain-inspired solutions built to be evolutionary or native will have the highest likelihood of staying relevant and coexisting with decentralized blockchain solutions, as long as the business models or digital assets they promote continue to generate long-term interest.

What about other centralized digital environments? Will Amazon, Facebook, Google, Tencent, Alibaba, Airbnb, and Uber still hold as much power when there are blockchain-complete alternatives? As digitalization accelerates, digital platforms will no doubt continue to capture large volumes of data to feed their algorithms and develop new products. The tokenization of personal data in many blockchain-complete solutions will allow customers to keep their data private in digital environments, but whether customers will give up the convenience and speed they get from using digital platforms in exchange for short-term pain is an open question. A strong value proposition coupled with incentives in the form of tokens will be necessary to shift customer activity from digital platforms to alternatives running on a blockchain.

There is a balancing act along the decentralization continuum. Whenever one company has significant control over an industry’s business currencies (data, access, contracts, and technology)—notably by mobilizing digital platforms, AI, and IoT—decentralization provides a defense mechanism. Decentralization prevents one company from amassing enough data that it can make correlations, identify patterns, and control business outcomes. A slew of businesses with blockchain-complete ambitions are developing solutions that allow individual stakeholders to maintain control over their information and their share of the value proposition.

One sector engaged in rapid experimentation is travel.

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