In the last post, I covered abstract concepts, such as the value of data in relation to blockchain, and the necessity of strong networks. Now, I want to move from the abstract towards the concrete, and discuss how blockchain is maturing, what this means for our business networks, and the questions we must ask as we move towards implementing the blockchain network into everyday business scenarios.
Ginni Rometty, the CEO of IBM, often says that “blockchain will do for transactions what the internet did for information.” Digging deeper into this statement, we realize that the internet does not stop with the exchange of information but extends to analytics, artificial intelligence and cognitive, and the Internet of Things (IoT). In the same fashion, blockchain will not stop with transactional data. As blockchain matures, it will likely follow the same parallels to the early phases of the internet — but at a much quicker pace.
In the early 2000’s, the internet transitioned from Web 1.0 to Web 2.0, which transformed it into a significantly more dynamic, interactive and nonlinear technology. Blockchain has already undergone a similar metamorphosis, but in a much shorter timeframe.
The first generation of blockchain was transactions and payments via cryptocurrency. The second generation was decentralized application and smart contracts that reside atop the blockchain. The third generation, where we are now, is the extensibility of blockchain beyond its protocol — a connection with other systems, services, analytics, and more broadly, the outside world. At IBM, for example, our team has integrated its Watson IoT™ Platform with blockchain, enabling IoT devices to send data to private blockchain ledgers for inclusion in shared transactions and tamper-resistant records. Everledger, a new service built on blockchain, leverages IBM cognitive technology to allow each partner to access and supply data at the proper levels of privacy and permission that helps track a diamond over its lifetime. By building smart contracts on IBM Watson, Everledger can trace the compliance of diamonds across the global supply chain, digitizing the paper-based diamond certification system known as the Kimberly Process Certification Scheme. Blockchain, through IoT, cognitive and other mechanisms, therefore integrates real life into itself and has pushed the technology to exponential growth.
Since blockchain enables the interoperability between previously untethered systems, it makes sense to focus on the extensibility of the platform in addition to the solutions it enables. Essentially, we need to address how the blockchain network is going to work with other technologies in order to solve business problems. The blockchain network needs to integrate and work seamlessly with other emerging and existing technologies, platforms, protocols and services to become the foundation of our future solutions. Envisioning blockchain as an isolated, standalone solution is actually a limiting factor that will prevent the technology from reaching its full potential.
To reiterate on my first post: with blockchain, the focus in no longer on determining how to work with disparate data at each stage, but rather on how to work with a single truth of data in an iterative and interactive fashion. The paramount issue therefore, becomes how we build solutions that span multiple organizations, industries and ecosystems. We need to reexamine the capabilities built to solve problems in the context of a singular, siloed organization and think about how to apply these to an interdependent, multi-organization space — a business network, in other words, that is powered by the blockchain technology.
The whole is greater than the sum of its parts
Given that a solution can take on many different forms, how do we design a single cohesive roadmap that not only enables innovation, but also empowers clear progress in the most viable direction?
This question is especially pivotal when deciding on a direction for the technology when it is implemented differently in closed and open environments. How do business network implementations differ when they are founder-led versus consortium-driven? What is the impact when these implementations are done on closed networks, where only one party decides the direction of the solution, versus on open networks, where all participants get to decide on the direction of the blockchain network?
Blockchain Explorers, or early blockchain adopters, as defined in the Institute of Business Value (IBV) Global C-suite blockchain study, must conceptualize how the technology’s very implementation will cause them to re-examine their approach to business entirely, including how they interact with their business network. They must shift their focus from the issue of how to work with data to the issue of working with a single truth of data in an interactive fashion. As explained in the C-suite study, unlike traditional business models in which organizations aim to “lock out competitors,” a platform-based business model powered by blockchain enables organizations to “shore up” competitors and instead leverage their competitors’ strength to their own advantage. In the blockchain network, therefore, the whole is greater than the sum of its parts. This is why we utilize the Design Thinking methodology at IBM to bring the network participants together at the very beginning of the blockchain journey. I find that emphasizing this interactivity and facilitating this reexamination early on dramatically improves both the implementation and the end solution.
Building a practical blockchain
We must be careful not to become preoccupied by the blockchain technology itself, but instead must devote ourselves to imagining the new business processes and ecosystems that the blockchain network enables. In the same vein, we must understand that building a solution with a democratized data set and redesigned interactivity opens up not only new business processes, but also new challenges. My team is framing these challenges as opportunities to demonstrate our expertise. We are here to help our clients reimagine their processes and to facilitate their journey through the implementation with their networks. And we invite you to join us with blockchain 3.0.
If you have not yet read the first post in this two-part series, Data is the basis for all, I highly recommend you do so. To learn more about data and blockchain, please check out my interview at the IBM Think Conference.
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