Blockchain: The Next Innovation Platform
Innovation platforms destroy existing industries -- and jumpstart new ones. As such, they are the most dynamic force in today’s economy. One has only to look at cloud computing to recognize the disruption and innovation it has unleashed on the information technology sector.
I’ve written a couple of pieces on cloud computing for geek.ly. As I said in the second one:
“That’s the important thing to understand about cloud computing. Its impact won’t be on doing the same old IT stuff a bit faster and a bit cheaper. Its impact will be seen in entirely new products and services created by users who assemble new offerings or tinker with existing offerings to deliver something better, made possible by cloud computing’s agility, low cost, and innovative computing services.”
Cloud Computing: The IT Innovation Platform
The following image depicts the role of cloud computing as an innovation platform and illustrates how innovation platforms simultaneously kill incumbents of a previous industry while enabling new industries to be born.
The three companies at the bottom of the figure are clearly being hurt by cloud computing -- each has reported revenue drops in their most recent quarters (and in IBM’s case, the revenue damage has been going on for five years).
But the three companies at the top, well, they’ve built incredible businesses on top of the cloud innovation platform. Snapchat just went public at a valuation of $31B. Netflix carries a market cap of $59B. And Airbnb’s most recent financing valuation pegged it at $30B. And each has fundamentally transformed the way we live -- in communication, hospitality, and entertainment.
Innovation platforms damage incumbents and foster innovators. That’s their nature.
Blockchain: The Business Innovation Platform
When I left my most recent cloud software company after its acquisition, I decided, after nearly a decade of working in the cloud space, to find the next innovation platform. What would be the next technology poised to destroy large, powerful, wealthy industries while giving birth to a new generation of
After looking at a number of interesting and high-potential technologies, I came to blockchain. It gave me the same visceral reaction that I had when I first saw cloud computing: this is the next innovation platform.
A blockchain version of the innovation platform diagram looks like this:
It’s obvious that the financial industry incumbents are aching for disruption. It’s an industry rife with opaque practices, high prices for me-too offerings, and customer hatred. Very few will shed a tear as the large banks, payment services, and money transfer agents find their cozy niches under attack by new blockchain-based offerings.
But what of the innovation part of the diagram? It’s early in the life of blockchain, and one of the characteristics of emerging innovation platforms is that it’s nearly impossible to predict how entrepreneurs will take advantage of their capabilities. After all, who would have predicted that AWS would extra bedrooms into a new travel industry?
Blockchain Innovation Ahead
But here are three areas that are ripe for blockchain innovation:
- Identity and Records:
Today, much of the world’s population doesn’t exist -- officially, that is. In the places they live, government records are poor to nonexistent. In the rest of the world, identities are often tied to institutions rather than individuals -- one has a driver’s license issued by the state motor vehicle department, for example. So people carry twenty or thirty different identities, which is inconvenient and often causes problems when two different institutional identities are inconsistent or contradictory. Placing identity on a single, immutable place promises to make life much easier for everyone.
And identity is the foundation of records -- evidence of data or transactions. Today important records are strewn among institutions that do not communicate. This can cause challenges when, say, a person whose primary healthcare takes place with a west coast provider needs to seek medical attention somewhere on the east coast. The east coast provider has no way to look at the person’s health records and this may lead to poor or even dangerous outcomes. Medical records are just one example. Think property deeds, auto loan payments, and wills. And, with blockchain’s more democratic access, identity will be tied to the individual instead of an institution.
- Unbanked Individuals:
Millions of people in the US, and billions around the world, are cut off from the mainstream financial system. They can’t open a bank account, qualify for credit, or make transactions without cash. Blockchain will allow anyone to maintain a record of financial state and transact with individuals and institutions without requiring cash or a bank account. In turn, this will allow them to create a financial history and qualify for credit. The potential for allowing billions of people to build better lives -- and increase the global economy -- promises to be a huge opportunity for blockchain.
Putting computer smarts into devices is happening all around us. Soon every device will send or receive data regarding state, and many will interact with their environment to cause actions. Today, payment systems work fine for high-value financial transactions, but IoT promises to create trillions of small events that cannot justify current payment system costs. So-called microtransactions that charge fractions of a cent to execute are perfect for the a blockchain-based financial transaction system.
Blockchain Adoption Dynamics
These kinds of opportunities are examples of what’s possible when a new innovation platform comes onto the scene. Just as cloud computing enabled an entire ecosystem of innovation, so too will blockchain -- but with a difference. Blockchain innovation ecosystem will be much, much larger. Noted technology visionary Don Tapscott puts it this way:
Tapscott’s statement make clear the obvious: value outweighs information. Put another way, identity, finance, and transactions are much bigger than pure technology. So the innovation blockchain unleashes will dwarf that of cloud computing.
Another difference between blockchain and cloud computing is how fast the blockchain revolution will arrive. Gartner places blockchain near the very peak of its most recent technology hype cycle, with a prediction that mainstream adoption is five to ten years away:
Gartner is wrong -- in part because cloud computing has accelerated the pace of technology adoption. In fact, mainstream blockchain adoption will occur so soon that the biggest problem most organizations will face is how move fast enough. Simply put, the ability to learn how to apply blockchain capabilities to a given organization’s domain will be the critical difference between future success and failure.
Blockchain Knowledge: The Adoption Barrier
Organizations need to get their staff up to speed on blockchain. Unlike cloud computing, the education won’t be confined to IT staff -- because blockchain will affect every part of the business. Every department in every company will need to understand how to modify its practices to encompass the technology. The education requirements for blockchain will be massive; literally millions of people will need to get trained.
It’s for that reason that I founded the Emerging Tech Academy and created the online Blockchain and Beyond course. The old way of training -- instructor-led and rigidly scheduled -- just won’t cut it for the pace and scale of blockchain adoption we will see. Only an online approach is scalable and cost-effective enough for the coming blockchain education need.
There’s no need to register for anything beyond providing your email address, and no need for any payment. It’s all free, and I encourage you to learn more about the blockchain revolution via the Blockchain and Beyond introductory training. Your future may depend on it.