I work with banking, financial services and insurance clients on blockchain. As you can imagine, 2017 was busy! While all these initiatives started with good intentions, some ended up not providing the value I had hoped — many things worked, and many didn’t. Now I want to share with you what I learned in 2017, and my own blockchain resolutions for 2018.
1. Lead with business
Like I tell my clients, “This is not about blockchain!” There is so much hype about bitcoin and blockchain that everyone wants to jump right in. Instead of a technology-led approach, your initiative in 2018 should be about an aspect of your business that would find the most benefit from an investment in blockchain: flight delay insurance or international money movement, for example. Talk the language of the people who will fund your initiative and start formulating how participants will spend or make money on the network. ZhongAn is an insurance company who sold 630 million policies to 150 million customers… in their first year! They did this by leveraging technology extensively! But they led with business.
If you’re like most of my clients, you’re not looking for cryptocurrencies or public anonymous networks. So in the context of permissioned private networks, you have to understand the type of your network. Is it a peer network with your competitors, as in the case of subrogation claims? Is it an ecosystem with your own clients and partners, like a multinational insurance policy? Or is it a marketplace with buyers and sellers? Once you know the type of network, you can determine what your role will be as it evolves.
3. Understand the path to productive use
Moving beyond minimum viable product (MVP) is one of the biggest challenges I faced in 2017. The MVP is the first phase in the blockchain initiative where we build a product to prove our business hypothesis. At this stage, the network is small and we have high success rates. But then, in addition to the build, we need to lay the foundation for what’s next. Who are the participants we need to recruit? What are the industry groups we will work with? What are the legal implications? What is the market pilot and when do we launch? Being able to answer these questions will help you plan for the next steps in your implementation.
4. Know why you are choosing blockchain
“Why can’t I just use a distributed database and a workflow engine?” This is the type of question I usually get during a blockchain discussion. If you can’t explain to your partners why blockchain is needed instead of traditional technologies, your project is not getting off the ground. The answer is… Trust! No one entity on the network should be trusted with managing the business process and data that’s at stake. Blockchain — through its immutable ledger, smart contracts and proof — provides an environment for participants to trust each other. Apply the concept of trust to your use case.
5. Make sure your architecture is ready
With blockchain technology, the architecture for security, scalability, modularity and privacy must be available from the start.
Security: The blockchain ledger is distributed. Can you trust other members to keep their own copy secured?
Scalability: With blockchain we keep both the current state of the ledger and its full historical view, then distribute the ledger to members.
Modularity: Depending on the level of trust, consensus should be pluggable.
Privacy: You need to keep your own data and transactions private and only share minimal data with a minimal set of parties.
That’s it! Now you know my five blockchain resolutions for 2018 and the principles I will follow when engaging in blockchain opportunities. My mentor used to tell me, “It’s not about working more, it is about working smarter!” I believe these principles will make you blockchain-smarter.
Let me know how it goes, and your blockchain resolutions for the coming year.
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