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Why Blockchain is the New Website
For every day that passes, I see more and more analogies between the Internet’s early years and today’s status with the blockchain’s evolution. In 1994, when the web came along, websites were the novelty, and up until about 1998, we kept lists of Fortune 500 companies with or without websites. It took about three years before most companies were on-board. Then, many of these early sites were criticized for being just glorified brochures or information sheets, and we looked to Amazon as one of the few companies that actually conducted business on the Internet.
Fast forward to 2015. The blockchain is the new website. Yes, blockchains are geeky, (and the challenge is to take out that geekiness), but fairly soon, every company will have a blockchain, or be on a blockchain, or several ones, just as organizations are involved in many websites today.
Why is the blockchain like a website, and what’s the novelty that blockchains bring to companies, individuals, society and governance?
If the website was the starting point, let’s remember the key mini-revolutions that the Internet brought us since 1994: Personal Communications, Self-Publishing, E-Commerce and the Social Web. In hindsight, each of these four phases was defined by the functions they disrupted: the post-office, print media, supply chains/physical stores, and the real world.
Technology Eras Evolution
Phase | Goal | Disrupting | Outcome |
|---|---|---|---|
| (c) 2015 William Mougayar | |||
| Communications | Reach anyone in the world | Post office | Personal Communications |
| Publishing | Spread ideas | Print media | Self-publishing |
| Commerce | Trade | Supply chains and physical stores | E-Commerce |
| Social Interactions | Connect with friends | Real world | Social Web |
| Asset Transactions | Manage what you own | Existing custodians | Trust-based Services |
From 2015 onward, we will enter the Blockchain Promise phase, demarcated by the key theme of Decentralization of Trust, unleashing the advent of value flow without intermediaries.
The blockchain is therefore a capability for Exchanging Assets Without Central Intermediaries. With the decentralization of trust, we will be able to exchange anything we own, and challenging existing trusted authorities and custodians that typically held the keys to accessing our assets, or verifying their authenticity.
We can think of Bitcoin as the training ground for what blockchains can enable, because Bitcoin is the most widely used blockchain application, containing all the required elements of a new economic ecosystem with committed participants and a good degree of technological, business process, societal and governance innovation.
Bitcoin, the cryptocurrency, is the quintessential digital asset class that moves efficiently and transparently across a global blockchain that knows no boundaries. Think about other asset classes that you are familiar with that can mimic Bitcoin’s capabilities, and you can start to imagine some of the possibilities. Therefore, if you haven’t used Bitcoin first-hand, you may not get the inherent advantage of a quicker appreciation and understanding of its potential. Seeing assets move swiftly without intermediaries is an eye opening experience, and that is just a starting point. It’s like surfing the web for the first time, which suddenly gives ideas about the possibilities ahead.
The fundamental innovation with the blockchain is that the ownership of the asset is with the owner of the asset, not with a (central) party who owns a database that points to a record that says who is the owner. The current status of accounts and ledgers for money or other assets are really mirrors of some (central) database that determines who owns what. When you initiate a transaction from your own accord, the database reacts by conducting checks and balances, and then makes an update that reflects the changes after the finality of a settlement takes place. If the central authority wanted to lock out user/ownership access, they can.
Instead of requiring each central intermediary to maintain their own database, and burdening them with reconciling it with another recipient database, the blockchain is a record that is shared by multiple parties who have a stake in it, and agree to participate by updating a single version of the database (ledger), each adding their own part of the pie. But this read/write aspect is not the only difference. There is added granularity around access rights by whom, of what, when, and under what conditions, yielding an entire spectrum of programmability and optionality.
Imagine if any real world asset could be mirrored on the blockchain either directly (via transfer or creation), or indirectly (via anchoring), it would create a large inventory of tradeable blockchain assets, and a resulting groundswell of economic activity.
So, the first steps involve finding what is appropriate for the blockchain, starting with your current operations. Just as with your first website when the question was: “what information can we publish on it?”, there are initial questions you can try answering first, to uncover potential blockchain use cases. Namely:
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what types of assets can we transfer or create on the blockchain? (use case example: the Nasdaq Linq private stock exchange initiative)
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what data or processes can we notarize on the blockchain, so we can later enable peer to peer transactions to occur without someone in the middle to check them (use case example: the KPCB Edgecoin project)
Therefore, the blockchain is an asset normalization platform that can enable a new liquidity in transactions, hence creating large networks of usage and value effects, with benefits in speed, cost, quality or outcomes. For example, what if all the loyalty points and rewards you own could be tradeable against a common cryptocurrency that is global and universal, and that would create a new giant marketplace of value exchange.
Moving assets, identities, ownerships, contracts, balances, records or data on the blockchain may be the first phase of getting direct exposure to it, and the equivalent of the electronic brochures depicted by the first websites in the mid-90’s.
How do you initiate steps to get you there?
Scan each area of your operations, and retrace your steps from when you first dipped into the web, and find out if there are analogies worth implementing.
Study how to write smart contracts, which is the basic unit of programming a blockchain for business purposes. It is the equivalent of being taught HTML and Java during the early Internet days. And master how to create assets or tokenize existing ones on a blockchain. Learn how to interact with some of the leading blockchain APIs and become versed in how to program a blockchain. Acquire this knowledge internally, and don’t outsource it, because you would be outsourcing the experience you need to gain from your own direct interactions with the technology. Finally, pair a technical person on your team with a business manager, and let them keep their minds in lockstep until their creativity juices start flowing into these magical moments that happen when business and technology understand each other. Repeat that pairing process across as many departments or business units as needed.
Think of any current process that can be replaced by a decentralization-focused construct that can be governed by blockchain transactions, where value can be created and exchanged.
Similar to the web, you will be able to set-up private blockchains (like a private Intranet). And you will be expected to link your blockchain with other companies’ blockchains, so getting ready internally will make you ready to deal with your partners.
Some people say the word blockchain is obscure and we need a better, friendlier word. But I don’t necessarily agree, unless you’d like to replace it by “exchanging assets without central intermediaries”, or “programmable trust language”, or “distributed ledger”, but each one of these verbose options offers a limited definition. The Blockchain is a good choice of words, and we will soon get used to it, just as we did with the Web, the Internet, http, TCP/IP and other new technological innovations that keep entering our vocabulary.
Like the Internet and the early websites, you need to get on the blockchain first, before you can uncover new and unique use cases where innovation can thrive, and where new services, opportunities and markets will be created.
Place the blockchain on your agenda now; strategically, tactically, operationally and educationally.
The blockchain is on its way. It is destined to become the new website.
Hi William,
Like the early web days this is *not core business* nor will it be for a while. So the incentive to lead is small (and will suddenly toggle into a great rush of FOMO). This implies adoption/adaptation consultancies will spring up but ( unless I am blind to it) I am only seeing technological/platform rather than business “glue” currently.
It would be good if some form of evaluation framework for applicability could be defined, your “starter questions” are thus (for me anyway) a little too abstract
>> what types of assets can we transfer or create on the blockchain?
>> what data or processes can we notarize on the blockchain,
Let me give you a (somewhat detailed) example and ask you a related question (i repeat some of what you know about our work to make this understandble for your readers).
I work in what we could agree to call “energy-efficiency data mining” – so seek to expose “insights” as a “digital asset”.
Access to these replicable assets are valuable to participants (or bidders) in any value chain that (possibly) ends with them being exploited (implemented/recovered) through energy savings action
The market is this “a chance that someone will pay an interested party “to switch the lights off” which starts with someone finding that the lights are on and unneeded”.
More detail here http://iet.jrc.ec.europa.eu/energyefficiency/european-energy-service-companies/energy-performance-contracting for EU industry definition
Multiple parties attempt to recover these same “insights” during bid preparation when creating tender offers – and they are better or worse at this. From the client perspective this is a huge inefficiency (multiple people invest competitively to find out what they could do (physical site surveys etc) – but only one of these investigations bears fruit) – there is also huge bundling inefficiency (you cannot select the best parts from each proposal)
It seems a potential vertical separation exists
a) to define (reach consensus) on what should be done (could be a mutual collaborative effort to uncover ” insights” as assets)
b) for one or more suppliers to act on one or more of these “insights” for best price (buyer and seller share provable recovery in some percentage)
a) is a quality concern for the consumer – I get the right services offered,
b) is a pricing concern – I get a) delvered at the best price (and can select the unbundeled elements I want)
Both a) and b ) can be fully defined digitally using domain languages – it behooves b) to offer only high quality a) as otherwise effort is wasted or less efficient
– so a market means to establish value of a) exists based on motivated expert assessment
This means ( I believe ) that a fully automated unbundling of a complex (well-defined) marketplace is possible and can deliver significant transactional efficiency benefits by sharing complementary work product in the insight identification stage (which happens to be what we excel at ! : )
So – after a long explanation – who do I get (if such people exist) to evaluate this superficial thinking ?
Many thanks for the time investment.
nice piece (love the graphic), and agree completely. I’ve added it to the (growing) list of resources on this topic, which can be found here: http://www.9giantsteps.com/bits-and-blocks-the-blockchain-and-bitcoin-articles/
Thank you.
Thanks for explaining all this. We’re due to talk, so maybe it’s best answered verbally 🙂
Curious where the dev community for blockchain lives.
If a dev for an enterprise wanted to get involved, where is the community?
If someone wanted to recruit a sw lead, any resources?
Off the cuff response requested as this either exists (which obviously it must) or it doesn’t.
Timely for me.
Thanks
Great question. Currently, these live with each platform’s community, eg Ethereum, bitcoin, etc
But there’s something coming-up that will change that.
This is why while I believe quite seriously in the potential of this space, it is honestly so uninviting and self absorbed,
So closed a segment in a very open world.
If I asked a developer (and I have in Bitcoin and some other segments) where are the communities, I will I bet get an answer and can point interested parties to broaden the community .
I ask you my friend and you say WTS 😉
Hi James, William,
James, I am going to assume that by a) you are referring to identifying an available negawatt, and by b) you are referring to a bidding-based negawatts marketplace.
As an energy industry professional with a computer science background, I am intrigued by your questions. My first thought is to model the negawatt as a time-based asset (i.e. valid for a certain period of time) and that inevitably led me to wondering how the blockchain community digitally represents a physical asset. I came across this notion of “colored coins” or “Smart Property” that has been commercialized by a company Chromaway (paper: A Blockchain-based property ownership recording system @ http://chromaway.com/papers/A-blockchain-based-property-registry.pdf). There could be others also – I have not looked yet.
Digitizing an asset requires foolproof identification and authentication. For a physical asset we can associate a digital identifier with it via a tag or a chip but this does not work if said tag can be detached from the asset (or if the asset is not tangible like a negawatt). Hence Chromaway maintains that we cannot avoid a trusted, third-party registry, and provides some discussion on building a distributed registry (to avoid reliance on centralized party and retain trust). I think a) in your post would be part of the registration step i.e. a means to verify that those negawatts actually exist for the stated time period.
Once a negawatt is digitized, we would trade it in a bidding-based digital marketplace, that I think is the b) in your post. The trades would transfer ownership of that negawatt via a distributed ownership-transfer system based on blockchain. And of course, something that is fundamental to the negawatts economy independent of blockchain, a means to verify that the negawatts can be/are redeemed upon request. In my mind, the negawatt has no value upon the expiration of its associated time period.
Of course the question remains regarding what is exchanged for the negawatt? If it is money then we need to connect via the traditional digital monetary infrastructure.
I am not sure what efficiency such an implementation would bring to the current marketplace – possibly lower transaction costs, but its not clear if that would happen if we were to exchange real money for negawatts. I may have totally misunderstood your questions James, so apologies if that is the case.
William, being a novice to blockchains myself, I am sure you can poke many holes in this proposal, or even consider this obvious 🙂 Regardless I would love to hear your thoughts on James’ questions.
Alok
(an eager blockchain debutante)
Hi Alok
You are close – but not spot on.
A traditional negawatt is a power that is not saved – Eg if you use a more efficient lightbulb – *always* – ie it implies eternal step change in behaviour (this cannot be measured or inferred (and is in my view a marketing/PR game).
Contrast the negawatt with power not spent for an explicit period – it can be thought to “generate” power for other participants in the settlement market. This is traded as ‘demand response’ increasingly in some countries and is predicted to be a huge market as prices become more volatile due to inherent volatility of wind and solar generation. It seems to me though has not been confirmed by the cognescenti that this necessarily distributed market (power is distributed and has local variable demand and supply so there are “balancing markets”) is an ideal candidate for blockchain technlogies.
Finally – consider the value of discovery or expertise. This is IP and again can be traded. I am proposing the removal of a market inefficiency that exists through bundling ( of multiple consultants otgether with respective bids for delivery of a set of deliverable “negawatts” that are specific to the operation of some enterprise –
The EU suggests it take €100 billion per year of investments to achieve 2020 goals.
If we assume that a typical performance contract has 5% pre-bid discovery costs and these must be replicated for each of say 5 bidders we see a potential market improvement of €20 billion per year. This is released if discovery is transparently attributed and can be purchased during a bid process.
I wonder what’s William Mougayar opinion on BLOCKCHAIN based platform Publica.io that can help authors to raise funds for book publishing