How DLT could enable business innovation
As much as it illustrates the vast hype surrounding blockchain, Erin Griffith’s recent Wired article, ‘187 Things the Blockchain is Supposed to Fix’, also gives readers more than a hint about the technology’s vast potential (emphasis on “potential”) to upend “business as usual”.
Blockchain’s unique capabilities — the ability to immutably record and verify transactions of many types without the need for third-party intermediaries — create the possibility of innovative new business models across many industries. From gaming to renewable energy, real estate to identity verification, museum collections management to problems related to income inequality, distributed ledger technology could, in theory, enable entirely new ways of working.
Consider some of the possibilities. Online streaming has brought financial pain to many recording artists who aren’t Drake, Cardi B, Ed Sheeran, Imagine Dragons or Taylor Swift. Some people, such as those behind Berklee College of Music’s Open Music Initiative, believe a blockchain-based platform could help performers keep better track of how often their tracks are played anywhere in the world, making it easier to calculate and collect royalties.
“The API, still in beta, is a solid starting point for an industry that rarely shares information,” Irving Wladawsky-Berger, a former IBM VP of technical strategy and innovation wrote in January on the Open Music Initiative blog. “In addition, once the data and APIs are openly available to everyone in the industry, musicians can get more creative with how they sample and produce music, and entrepreneurs can start new companies based on innovative business models.”
Even before the headline-generating cybersecurity breach at Equifax in 2017, credit reporting agencies were regularly the source of consumer complaints, usually about records that were wrong or incomplete. Blockchain could open up new opportunities for verifying consumers’ credit histories without having to rely on the big three (Equifax, Experian and TransUnion in the US).
“There’s no doubt that the blockchain concept, with its power to prevent duplication and divergence from the chain, is highly promising for identity,” Jo Ann Barefoot, a compliance consultant and former deputy comptroller at the US Office of the Comptroller of the Currency, told American Banker. “On a distributed ledger, everybody can trust that what’s in the ledger is there and is the only version of it.”
One startup that’s aiming to enable such innovation is Bloom, a blockchain-based, open-source project looking to transform remittance and disbursement processes. In the same American Banker article, Bloom co-founder Jesse Leimgruber said, “I don’t think we’re going to put Experian or Equifax out of business anytime soon, but we will reduce reliance on their role in identity.”
Beyond this, blockchain-based applications could also pave the way for a true ‘sharing economy’, as opposed to the one controlled today not by individual owners but by platform-dominating giants such as Uber and Airbnb. In a TEDxHamburg talk on ‘Blockchain Disruption: How Bitcoin Technology Creates a Sharing Economy’, journalist Thomas Ramge described the situation like this: “Blockchain is the perfect technical backbone of a sharing economy deserving its name. It’s a technological megatrend… to disrupt the disruptors that have grown to economic superpowers.”
For example, writes Innovation Enterprise senior editor James Ovenden: “In the case of Uber, you can build what is essentially your own competitor to the app on the blockchain. Everyone can get a copy of this app, as they do with Uber, which offers all the same functionality but it has a native payment system built into it, like Bitcoin. This means that you don’t need a centralised intermediary to process payments, and you don’t need Uber to organise capabilities because it’s all done with the distributed application. This gives more power to the driver, who no longer has to abide by Uber’s centralised pricing structure and can charge what they see fit.”
Bill Carmody, founder and CEO of the marketing agency Trepoint, wrote last year in Inc: “For years, entrepreneurs have been approaching problems the same way: banking on their toolkit of ‘centralised models’ of management. Blockchain introduces a completely new way to control access and information, which can, in turn, open a whole array of new opportunity.”
