The potential of blockchain (and 3 use cases)

Blockchain is essentially like a giant, global spreadsheet that runs on millions and millions of computers. It’s distributed. It’s open source, so anyone can change the underlying code, and they can see what’s going on. It’s truly peer-to-peer; it doesn’t require powerful intermediaries to authenticate or to settle transactions.

It uses state-of-the-art cryptography, and with a global, distributed database recording any number of transactions, it could also record any structured information; not just who paid whom but also who married whom or who owns what land or what light bought power from what power source. In the case of the Internet of Things, a blockchain-settlement system will be needed because intermediaries like banks won’t be able to settle trillions of real-time transactions between things.

“So this is an extraordinary thing. An immutable, unhackable distributed database of digital assets. This is a platform for truth and it’s a platform for trust. The implications are staggering, not just for the financial-services industry but also right across virtually every aspect of society.”

Don Tapscott

For businesses, blockchain offers a route to significantly reduce costs around transactions and, over time, the costs of running a network. However, the real potential for businesses is in how to use blockchain to re-imagine their existing business models and design new ways to deliver value to customers.

3 PRACTICAL USE CASES OF BLOCKCHAIN

SUPPLY CHAIN

Trust is key to all supply chains; between upstream suppliers and downstream producers, and among producers and end-customers. Supply chains now can span over hundreds of companies and locations before finally arriving at the end consumer.

Within such a complex ecosystem, material tracking and tracing is nearly impossible to validate. Blockchain can enable transparency, supply chain auditing, improved transaction speeds (through the decentralised information structure) or smart contracts to improve facilitation and enforcement.

In fact, blockchain is already making waves in the world of supply chains. A company called Everledger has uploaded unique identifying data on a million individual diamonds to a blockchain ledger system to build quality assurances and help jewellers comply with regulations barring “blood diamond” products. Mining giant BHP Billiton is using the technology to track mineral analysis done by outside vendors. Walmart is working with IBM and Tsinghua University, in Beijing, to follow the movement of pork in China with a blockchain.

And a UK startup called Provenance is helping companies share the journey of a product from raw material to the hands of a consumer.

DATA ECONOMY BUSINESS MODELS

It has now become cliché to say that data is the new oil.

Facebook is currently heading towards a market capitalisation of $500 billion, for basically having the biggest person database in the world. And day by day it is pumped full of even more data, information and content, with consumers giving it away for absolutely nothing.

At the moment, Facebook sells this information on users to other companies looking to understand, connect with and sell to their users.

Blockchain offers the opportunity that in the future users themselves could be remunerated if they provide data, of any kind, to a company. Every time they clicked on a link, a small payment could be automatically paid to them. No need for a bank to be involved, no need for third party verification systems. Just blockchain.

If there was a blockchain system that enabled the billions of micro-transactions that would result from every person being able to sell specific data to specific companies then this would fundamentally shift the balance of value in data economy business models such as Facebook.

Consumers would be in the driving seat with their data, and companies that recognise and enable this to happen could create deep, resilient relationships with their customers.

ENERGY

Blockchain could open the door to homes generating and selling their own electricity. Instead of having a central power provider which sends electricity to everyone’s house and workplace, a distributed network built on blockchain’s technology could enable millions of people generate and sell on the network knowing that the identity and product was guaranteed through blockchain. You can’t get screwed over by someone on the blockchain because the evidence is open and immutable.

With the rise in solar panels and high-capacity battery technology, individuals can essentially act as distributed power providers. Secure transactions of power between people who don’t know each other is possible with blockchain.

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This is the third article in a mini-series looking at the potential of blockchain to drive innovation and impact in business models. The other articles are:

1 Blockchain is the engine that will drive Impact Co’s

2 What is blockchain? (A ludicrously simplified example.)

It is drawn from a part of the Futures work we do at Frame Labs where we work with companies that seek to understand, interpret and invent the future.

Other articles will be published in the next few weeks.

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