Is this just a fad or a signal of change?
Blockchain has become such a hot buzz word that companies adding the word “blockchain” to their company name are seeing a surge in their stock price. In December, Bloomberg News reported that the Long Island Ice Tea Corp shares rose 289 percent after it rebranded itself Long Blockchain Corp (https://bloom.bg/2BsDCLg). In January, it was announced that Kodak, emerging from the shadows of its 2012 bankruptcy, loaned its name to a new digital currency called KodakCoin which will help photographers manage their digital rights. Kodak’s stock rose more than 200 percent following the announcement. KodakCoin will have an initial coin offering sometime in the coming weeks (http://bit.ly/2GgdukC ). If you are not familiar with an initial coin offering, it’s similar to raising money for a start-up company, which requires that investors are qualified investors (i.e. a net worth greater than one-million dollars and/or annual revenue greater than two-hundred thousand dollars). The currency is worth whatever those buying and selling it determine it to be, much like a start-up valuation by venture capitalists. Many new cryptocurrencies are forming using blockchain technology and preparing their own “initial coin offerings.”
Despite continued skepticism by many, blockchain will evolve from being a bitcoin centric, cryptocurrency phenomenon, to legitimately transforming businesses in the years ahead. I became aware of blockchain early in 2017 as the term emerged at conferences on a wide range of subjects. I immediately realized the potential blockchain could have if it could do what the advocates suggest. In my quest to understand blockchain, I found that most articles try to explain how it technically works at the outset, which is just confusing. It took days, weeks and now months of research to finally understand not just what it is, but the real potential beyond the headline grabbing bitcoin. If you, too, are trying to grasp what blockchain is, let me start by staying don’t try to understand how it works. That’s like trying to explain how to code a website or build a phone. You don’t need to fully understand how blockchain works to recognize its potential. Stay focused on what it can do, the challenges the technology faces and what your business should be doing to evaluate its potential.
I’m in the final phase of editing my new book, “Blockchain in the Boardroom” where I consolidate my research into a layman’s terms explanation of blockchain and then focus on understanding marketplace indicators. In short, blockchain is a really advanced database with capabilities of replacing legacy systems in a way that reduces time and costs of transactions and enhances security to avoid cyber attacks like the ones we have seen in recent times (think Equifax). I go into more detail in the book, but if you really want to understand blockchain, that’s a simplified description of what it is.
I’ve researched the companies developing blockchain based products or services and specifically looked at what patents are being filed to protect this emerging technology. Some won’t come as a shock to you you such as IBM, Oracle, Intel and Microsoft, but some are surprisingly way ahead of the curve like Wal-Mart, Visa, Mastercard, Bank of America, Salesforce, Thompson Reuters and others. I summarize these marketplace indicators so you can determine for yourself if it’s time for your company to invest in research and development of the blockchain database potential.
I have also looked closely at other paradigm shifts to have some bearing on how long it will take for blockchain to transform not just finance, but manufacturing, government, media, healthcare, and food supply, along with the legal and accounting professions. I looked carefully at how IBM and Oracle changed our world with the relational database (it took over a decade for the SQL language to become a standard in computing) . I looked at how Java evolved over more than a decade from a proprietary code into open source code that powers nearly everything we do digitally today and how Bluetooth emerged from a small group of tech companies in Europe to a standard for connecting devices all over the world. Finally, I carefully detail how the world wide web changed everything, including the two decade journey from when the governance and structure of the internet was formed in 1998 to the present. In looking closely at the history of blockchain (first introduced by Satoshi Nakamoto around October of 2008 and released in January of 2009 as bitcoin), it becomes clear by comparison that we are in the early days of technological development and just now beginning to see early adoption and development. Like the wild west of the internet in the 1990s, we are once again at a precipice of opportunity. Many will fail, much like the dot com bust, but others will succeed. Who is the next Amazon or Google that will emerge in the battle to standardize blockchain? What needs to be done for blockchain to be integrated into existing operations? What new products and services that we don’t even know we need yet will be invented because of blockchain? I close out the book with a summary of what technical and societal governance and standards will be required for blockchain to be the next internet transformation and summarize best practices in the boardroom, including a new methodology for strategic planning around blockchain: Blockchain Mapping™. A few quick takeaways on what you should be doing:
- Your digital or technology committee should be fully briefed on blockchain and its potential to your company and your industry. Don’t get too technical, focus on high level possibilities and understand the challenges and roadblocks that blockchain will have to overcome.
- Ask your senior management to develop a set of assumptions and a clear company-wide point of view about the future of blockchain and potential impact to your business. It’s important that you have a holistic perspective so ask for this to be considered from not just a technical perspective, but also from marketing, legal, and operations. From this set of assumptions, you can determine if more is needed to be prepared for a potentially disruptive technology.
- Consider these questions:
- Will you be a leader in the space, a fast-follower, or simply wait-and-see? If the answer is wait-and-see, be sure to have some check points to re-evaluate what’s happening so you are not too late in adoption.
- Does your company provide a product or service that could be useful in a new blockchain age? Are there opportunities to consider that could create new sources of revenue or recurring revenue for you? Will it transform how you transact business with your customers?
- If blockchain became the new norm, how would you replace existing systems? How long would that take? How much planning time would be required?
- Would you ever consider accepting new forms of currency? What if your customers demanded it? How would you mitigate that risk?
- Do you track products through a supply chain? How does this impact you if it is now on a blockchain?
- Do you manage digital rights in music, video, photographs or other content? What if blockchain changes the way content is distributed?
- Consider these questions:
These are just a few of the many questions to be considered in Blockchain in the Boardroom. In researching the book, it became clear to me that bitcoin could certainly be a fad that fades away, but blockchain is a fundamental new technology. If you could go back to 1994 and know what you know now about how the internet would change everything, what would you do differently? We are that same point with blockchain. In the next ten years, blockchain could revolutionize our world. How will you be prepared? If you’d like more information about educating your board on blockchain or considering possible future scenarios, contact me at firstname.lastname@example.org. I’ll keep you all posted on when the new book is out on Amazon.