Making blockchain real requires a simple way to think about opportunities
It’s clear that blockchain can transform the way business processes are executed, allowing us to move away from inefficient, message-based business models. How and where to apply blockchain to achieve maximum value in the short- and long-term, however, isn’t always apparent. Two critical steps can help to reshape your strategy.Digital objects are applicable across industries, including healthcare, supply chain, transportation, music, voting, identity, payments and trading.
Rethink Data Ownership
"Message-based business models" have been virtually unchanged for decades. Commerce continues to become increasingly sophisticated, global, with real-time demands, yet businesses continue to manage and maintain their own data infrastructure. To get anything done, messages must be sent back and forth between parties and then reconciled to arrive at a consistent view of the world.
Businesses need to transform long-held beliefs on data and systems ownership, stop trying to make the messaging-based business model faster and more automated and completely rethink their business processes. We know blockchain offers a better way.
Identify Digital Objects
Breaking down complex ecosystems and processes into “digital objects” is the key to unlocking blockchain’s potential. The Bitcoin blockchain provided a giant leap forward for transacting business with digital objects. It created an elegant solution to solve what’s known as the double "spend" problem. Think about it this way: Before Bitcoin, if I told you that I was going to e-mail you a dollar, you’d be right to think I was kidding—that the email, which could have been copied, pasted and sent to multiple people, would have no value. The Internet enabled us to share information widely, but we can really only share the status of something, not the thing itself.
The Bitcoin blockchain applied cryptography as a means to prove that its digital coin could only exist once—that I hold it and you don’t. Every transaction could be tracked and traced back to its point of origin and anyone with the appropriate access / authority could prove that the data hadn’t been tampered with. You could trust that the information was accurate and that the Bitcoin had value.
The math that is at the core of blockchain proved that something digital could take on the characteristics of a physical thing. This has opened up the true transformational power of blockchain. "Double spend" was just the beginning.
We are bringing the “digital object” concept to life with our clients across industries and use cases. For example, we are looking at the potential impact of blockchain on the ecosystem surrounding the development and distribution of music. Currently, it is a complex web of messaging between writers, performers, consumers, record companies, distributors, performance rights organizations, payments, and more. From initial idea through to the ultimate payment of royalties and beyond, there is a complex ecosystem of fragmented data, with hundreds of messages sent back and forth between the players. It’s a process that still requires musicians to go through an “archaic system of intermediaries developed before the advent of the internet, where the artists lose up to 86% of the proceeds from their music.” But what if we stripped away all that messaging? What if every participant in the music supply chain could simply share access to the same information? What remains? Just five digital objects. A writer(s), a song, a performer, a distributor and a royalty are at the core of all the messages and information cycling between the players involved. If these five digital objects exist only once, allow appropriate parties to share access to the data they need on a blockchain-based data system, the process becomes more transparent, efficient and secure as "messaging" is eliminated.
The key is determining how a digital object is created, takes on the characteristics of a physical object, and offers proof of its:
Uniqueness: It exists only once
Ownership: Who holds it now
Previous Ownership: Who held it
History: What has happened to it (an improvement on physical objects)
End of Life: When it ceases to exist
Having a single source of information about a digital object saves us countless hours tracing its history and sending messages back and forth to determine its state. This concept also provides a roadmap to determining where blockchain implementations can unlock the most value, who is involved, and how it should be structured and deployed. Focusing on when each digital object is first created and by whom helps us to identity where the platform for that digital object should be built.
Rethinking data ownership and breaking down business ecosystems into core digital objects has brought us one step closer to making blockchain a reality for our clients.
Are you ready to make blockchain a reality for your business?