We help companies identify real blockchain disruption opportunities and work with them towards successful implementation.
How can companies determine if there is strategic value in blockchain that justifies major investment? The following three insights help companies better understand blockchain’s overall strategic value and how to capture it.
Blockchain does not have to be a disintermediator to generate value, a fact that encourages permissioned commercial applications.
Blockchain’s short-term value will be predominantly in reducing cost before creating transformative business models
Blockchain is still three to five years away from feasibility at scale, primarily because of the difficulty of resolving the “coopetition” paradox to establish common standards.
What is Blockchain?
With all the hype around blockchain, it can be hard to nail down the facts. Blockchain is a distributed ledger, or database, shared across a public or private computing network. Each computer node in the network holds a copy of the ledger, so there is no single point of failure. Every piece of information is mathematically encrypted and added as a new block to the chain of historical records. Various consensus protocols are used to validate a new block with other participants before it can be added to the chain. This prevents fraud or double spending without requiring a central authority. The ledger can also be programmed with smart contracts, a set of conditions recorded on the blockchain, so that transactions automatically trigger when the conditions are met.
Types of Blockchain
The economic incentives to capture value opportunities are driving incumbents to harness blockchain rather than be overtaken by it.
What strategic approach should companies take?
Focus on specific promising use cases
There is a plethora of use cases for blockchain; companies face a difficult task when deciding which opportunities to pursue. However, they can narrow their options by taking a structured approach through a lens of pragmatic skepticism. The first step involves determining whether there is sufficient accessible value at stake for a given use case. Companies can only avoid the trap of developing a solution without a problem by rigorously investigating true pain points — the frictions for customers that blockchain could eliminate.
Optimize Blockchain strategy based on market position
Once companies have identified promising use cases, they must develop their strategies based on consideration of their market positions relative to their target use cases. Many of the feasibility factors already discussed are within a business’s sphere of influence; even technology and asset constraints can be managed through trade-offs and a series of design choices to shape a viable solution. Therefore, a company’s optimal strategic approach to blockchain will fundamentally be defined by the following two market factors, which are those they can least affect: market dominance — the ability of a player to influence the key parties of a use case. Standardization and regulatory barriers — the requirement for regulatory approvals or coordination on standards.
This consideration of a company’s market position will inform which of four distinct strategic approaches to blockchain should be deployed and, in fact, further refine which type of use cases to focus on first.
Leaders should act now to maintain their market positions and take advantage of the opportunity to set industry standards. As dominant players pursuing use cases with fewer requirements for coordination and regulatory approval, they can establish market solutions.
Conveners need to be driving the conversations and consortiums that are shaping the new standards that will disrupt their current businesses. Despite being dominant players, they cannot single handedly direct blockchain adoption as they face greater regulatory and standardization barriers. Instead, they can position themselves to shape and capture the value of new blockchain standards.
Followers should also carefully consider and implement an appropriate blockchain strategy. Most companies do not have the capability to influence all necessary parties, especially when applications of blockchain require high standardization or regulatory approval.
Attackers are often new market entrants without an existing market share to protect, so they need to seek disruptive or transformative business models and blockchain solutions.
Data Access Control Solutions
Decentralized and secure data access mechanisms for streamlined data harmonization
Decentralized data transfer and value transactions
Infrastructure Design & Deployment
Create an infrastructure in Hyperledger or a private Ethereum consortium network
Smart Contract Development
Ethereum & Hyperledger smart contract development
Smart Contract Auditing
Identify and categorize security vulnerabilities and functional issues in smart contracts
Identify application opportunities and provide technological, regulatory and strategic guidance
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