The term blockchain was first coined by Satoshi Nakamoto in 2008, identifying it as the underlying technology powering the first application of such technology, the Bitcoin. Since then the blockchain has evolved and several blockchains exist today with different characteristics. The most notable case is Ethereum, which paved the way to what are referred as Smart Contracts, a software code with defined business logic and which allows credible, trackable transactions without the involvement of a third party.
The trust machineIn October 2015 the Economist published an article entitled “The Trust Machine” predicting disruption coming to those working in the trust business and concluded that the “real innovation is not the digital coins themselves, but the trust machine that mints them - and which promises much more besides.”1
Since that time, the application of blockchain has moved beyond the use case of Bitcoin as a peer-2-peer network for transfer of value over the internet, to broader adoption in enterprises to create more trustworthy supply chains, immutable documentation of accounts, and fraud prevention. From a technological perspective, several developments have been made towards decentralized data storage, tokenization of assets, micro-finance, decentralised autonomous organizations, and the generalization of the term blockchain into Distributed Ledger Technology.
Applications of blockchain have progressed with targeted cases, solving specific problems in a wide spectrum of sectors including supply chain, logistics, finance, legal, government, and more. The applications of this technology are many: from increasing the efficiency and transparency of business processes, to building new disruptive business models based on the concept of decentralized platforms, to ecosystems that leverage interactions and the data generated and exchanged between participants of the ecosystem.
These examples leverage the transparency and immutability of the blockchain which enables companies to quickly react to risks in their value chain and manage the accountability of their partners. These aspects of blockchain make it also an excellent solution to fight digital counterfeiting and validate the authenticity of documents.
Blockchain is therefore also being used to guarantee authenticity and prevent counterfeit products. This is achieved by the combination of blockchain technology with secure tagging solutions. The tag on the product links the product with its information on the blockchain, therefore providing assurance of the authenticity of the product. This implementation of blockchain is one of the most promising in the short term, and many companies are looking at this use case in both B2C and B2B markets. By linking the product with its digital identity on the blockchain, it is also possible to retrieve the entire history of the product journey in the value chain, including the data that have been uploaded via IoT devices and other applications and enterprise resource planning connected to the blockchain. This offers a new opportunity for companies to attract consumers by being able to demonstrate differentiating characteristics of their products and service.
Incentivizing consumers to buy into blockchainThe possibility afforded by blockchain to reach consumers in new ways also includes the capability of engaging and interacting with them in two-way communication, where purchased products can be linked univocally to the digital wallet of an individual, opening the gates to new forms of ownerships, loyalty schemes, reviews and comments on the quality and use of a product which can in turn be rewarded by companies and other consumers.
The biggest revolution that blockchain is bringing along may be the possibility of building new ecosystems where participants are rewarded by the extent of their participation. Such examples are being developed by companies like the electric car manufacturer BYOD, where the driver of their electric cars is rewarded in carbon credits that can then be exchanged for good or services by other participants of the ecosystem, such as the retailer Bright Food. Similar concepts are being developed by the company Haier, producing home appliances with the idea of building an internet of clothing ecosystems, where owners of Haier washing machines are rewarded by the correct use of the machine. Haier is trying to attract clothing brands into this ecosystem to enable a fully automated service where tagged products are recognized by the machine, which then selects the appropriate detergent and programme. Governments are also looking at this concept, most notably the Republic of San Marino, which is deploying a carbon ecosystem for their citizens that leverages e-mobility, green energy, waste management and more as the means for the users to be rewarded for positive behaviour.
The examples above show the potential of disruption of blockchain technology in different industries, highlighting its role as a fundamental layer of a new Internet economy where blockchain represents a novel protocol for future use cases. The role of a fundamental layer is less evident in B2B markets, but developments are taking places in nearly all industries. Future implementation will see blockchain as the connecting tissue of IoT devices, which will have an identity and be able to interact with the ecosystem autonomously powered by smart contracts, where a machine can make decisions to perform a certain action and be compensated for their “work” by the means of micro-transactions, paving the way for a machine-to-machine economy and the rise of autonomous organizations.
ContributorsMain author: Chris Pelsor
Editor: Tiffany Hildre