It’s clear blockchain will change the world because of three key issues it addresses: Decentralisation, security, and incentives aligned with outcomes. Below, I explain how these issues will be instrumental in changing the world, and how blockchain could help you overcome them.
How blockchain can help you address 3 big issues
Issue 1: Decentralisation
There is a growing concern in society related to the dominance and influence of central big business. Across many industries, people are warming to the idea that a decentralised governance and delivery model may be a better option. It’s seen as more inclusive, transparent, fair, and inherently aligned with stakeholder interests.
For the last decade, you’ve seen the rise and dominance of the likes of Facebook, Amazon and Google. As just one example, the media industry has been thrown into disarray with the control wielded by these companies, and people are starting to recognise and question the degree of influence these tech titans are having on their lives through targeting media based on prior usage and your profile.
There’s also the issues related to fraud and censorship, which arise as a result of centralised governance and control. In its January 2018 edition, The Economist refers to Google, Facebook and Amazon as ‘BAADD’ — big, anti-competitive, addictive, and destructive to democracy. The takeaway is that the value of data, the impact of network effects, and the dominance of platform-based business models, are being questioned. A decentralised approach to either replace or augment a central and proprietary data store is needed for us to regain control over our data that fuels these incumbents, and to ensure our data is being used to benefit our lives and our community.
Issue 2: Security
You’ve probably heard of the growing challenges companies face in relation to data security, ownership and privacy. (Perhaps your company is struggling with these very issues.) On a global scale, it only gets harder as governments adopt varying positions on these topics, and compliance costs compound. Already in Europe, interesting movements are underway as the market reacts to the General Data Protection Regulation (GDPR), which kicks off on May 25. The GDPR will replace the Data Protection Directive as the primary law regulating how companies protect European Union citizens’ personal data.
For any business, protecting customer data is paramount. And, as our world becomes more connected, we need robust systems to manage ownership of physical or digital assets over time. These systems should be aligned with taxation requirements, payments, trade, commerce, law, and the fabric of nearly all societies globally.
The internet was a fundamental shift in communication and the distribution of information, but it reframed our concept of ownership. We need a new way to manage data. In business, most of what we do involves multiple parties transacting with one another, with these transactions dictated by a series of rules and regulations. Lawyers have employed contracts for decades to try and manage these arrangements, along with the evidence that is needed when things change. This is all managed via bits of paper, or their digital equivalents, PowerPoint slides and email. The static and hands-on nature of this is expensive and inherently inefficient. If only there was a way to manage these rules and let data flow in an automated, distributed and trusted way! That would be a game changer, right?
Issue 3: Incentives
Finally, we are all human, and our desire for incentives, rewards, and a stake in anything we do is a powerful force. In our society, companies are valued on their ability to bring people together, invest, and benefit from an increase in the company value or a share of the company’s profit.
There’s typically a demarcation, however, between the incentives and benefits gained by the shareholders, and the customers of the business. It’s a common problem — aligning incentives with benefits and utility across diverse stakeholder groups. If you can create that link, the opportunity for growth to more organically accelerate is huge.
Addressing these challenges outside of blockchain
Blockchain aside, many businesses have already taken strides to address these challenges. As a way to tackle central control and censorship, shareholders have demanded greater levels of transparency and accountability of boards. The last decade has seen the emergence of crowdfunding and crowdsourced models, designed to better engage and align the ‘masses’ with key decisions, value, or product and service delivery goals. Companies have made significant strides with regard to pay incentives for their executives.
In the context of ownership, immutability, privacy and security, multiple stakeholders — including regulators, technologists, lawyers and risk professionals — are coming together to continually improve the status quo. However, each of these groups are managing broadly within the current set of constraints, but technology is starting to open up new ways of doing business.
How you could be part of a new future state
The distributed nature of blockchain, its evolved approach to security, ownership and data privacy, and the inherent efficiency of its networked computing model appeal to those who are looking forward to a completely new future state.
The diagram below illustrates how this all comes together.
The three core characteristics of blockchain present a huge opportunity for you to change the world and reshape how you live and work.
The pundits out there currently talk about the blockchain being in a valley of despair. I must admit that I, too, have been hunting for ‘the pitch’. What is it that we all need to buy into in order for this technology to take hold? The thing is, I think we all have bought in, but we haven’t yet joined the dots. What’s been missing has been the connection to a broader agenda and answering ‘why’. Hopefully, this article helps.
For the blockchain benefits to kick in, you first need to think about how you can use it to make things easier, more affordable and more accessible. The technology will have to further a fundamental shift in business and the quality of people life and confidence in the systems that make things easier day-to-day. That’s a big ask, but the potential is huge. The internet changed the world, but it took awhile for the building blocks to fall into place, and for business models and our way of life to change. Blockchain will be much the same.
The blockchain impact will be even bigger if you take some strides to sort out major challenges and points of friction in the world today. Some issues are on track to be addressed, while others need an intervention — a sudden and more deliberate change in tack.
Embrace the chase.