This is the first of a three-part series where I’ll examine blockchain, why I don’t believe it is good for EVERY industry, the hurdles that I’m expecting it to face, and the industries (read: the government) that I believe should adopt it, like, yesterday.
To say that there has been a rise in public interest in BlockChain-based products over the past few years would be like saying Hurricane Florence made things a little damp in North Carolina. Or that Apple isn’t going to have a hard time getting people to pronounce the iPhone Xs correct (what, it’s prounced Ten s…like the sport?)
What’s that you say? You haven’t noticed it? First off, liar. Secondly, thanks for humoring me. If you perform a search on Amazon for Blockchain, you’ll get 6,000 results returned. If you do that same search on Google, you get 135 MILLION!
Then, there are experts such as Bernard Marr, who in a article published Forbes.com exclaims that “[t]he potential for blockchain technology to disrupt nearly every industry in some way cannot be dismissed even though there are still several hurdles to overcome before we see its full transformative impact.”
To Mr. Marr’s point, blockchain is an intriguing technology. It makes data (safely and) publicly available and verifiable. It allows anyone to see how the state of the information changes over time. And it has the ability to greatly reduce both the speed and cost of many searches and purchases.
It is so intriguing that there are many companies attempting to apply it across a variety of sectors. Including, but not limited to, our Financial Sector, Healthcare, Insurance, and perhaps the one area where I see the most benefit, in National Elections.
However, Ever Evolving is currently not one of those companies. And I am not sure if we will ever be! Let me explain…
Why I Am Not Sold on Blockchain
While I admit that in a utopian environment, blockchain is a very intriguing concept. The issue I have is that we don’t live in a utopian world. We live in a world where businesses need to build defensible positions.
“In the real world outside of economic theory, every business is successful exactly to the extent that it does something others cannot.”
– Peter Thiel, Zero to One
When we work with our clients, we talk to them about how Innovation isn’t just about whether something can be built. It’s about whether something should be built. It isn’t about how interesting or new a technology is, but whether their organization can benefit from it. And with blockchain, there are two major obstacles that I see are still in its path of global domination.
The first is, I haven’t seen what the product is. Companies are talking about blockchain the technology like it is the final product. But, here’s the thing, calling blockchain a product is like calling email a product. You don’t buy email. You buy a phone or a computer so you can send and receive email. So, with blockchain, what’s the product? And what capabilities is this product going to provide me that makes my life easier, that I don’t already have today?
Which leads to my second point. Who wants to build a business around a product or a service that they can’t defend? Peter Thiel, in his book Zero to One, said that “every business is successful exactly to the extent that it does something others can’t.” Yet with the blockchain and its open-ledger approach to record keeping, the company would be giving up its competitive advantage.
How do you build and defend a market share that you are constantly giving away because of your technological foundation? And if you go with a private blockchain, then you are giving away the very thing that makes this technology so intriguing. Namely, secure, verifiable, and publicly available data!
Data is Money!
Facebook makes money because it is a treasure-trove of data that you have to work with them to access. They make the data available for people to use, but you have to play by their rules. Google does the same thing. Coca-Cola has famously never filed a patent claim on their recipe because they didn’t want people to be able to rip off their product in 20 years when the patent expired.
All 3 of those are examples of companies building defensible positions based on the data they own. They then leverage these positions to create value for their partners and turn a profit. With blockchain, you’d be giving away your secret sauce from Day 1.
Which again, would be great in a utpoian world. One where resources are shared equally and everyone does equal work. But that’s just not the world we live in. Therefore, it does nothing for the profit-minded business leader.
Continue reading Part 2 where we examine what it would take from a market share perspective to make a blockchain solution work, and the chaos that would entail.