After years of dialogue and planning, enterprise blockchain is now becoming a reality across industries as diverse as insurance, healthcare, gold, oil and gas, finance and more. But it’s worth taking a step back and reflecting on the explanations why.
Have you ever stopped to believe the difference between the way businesses function and therefore the way the markets during which these businesses operate function?
Most businesses are centralized, with the quality corporate structure of a CEO, a board of directors and every one the departments necessary so as to run effectively; yet most markets are decentralized, with no centrosome responsible . As a result, these two inextricably linked entities function in entirely opposite ways.
When the IT revolution began many decades ago, it had been natural for companies and other centralized organizations to be early adopters of the technology: there was a competitive advantage to be gained by optimizing a firm’s operations, and a command-and-control mechanism was required to urge the technology adopted and dealing practices changed.
As a result, it’s no surprise that if we now reminisce on the achievements of the IT industry over recent decades we see that technology platforms have mostly been deployed within firms and have mostly been wont to optimize those firms alone.
However, once you raise your attention to the extent of industries and markets, you see a completely different scenario. It’s really quite remarkable how little has changed in numerous markets. International trade today would be easily understandable by a merchant from 300 years ago. The mechanics of how a posh reinsurance contract is negotiated would look little different from a century ago. The list goes on.
Costs of centralization
In fact, it’s only markets have introduced centralization, like with the creation of highly regulated centralized infrastructure within the financial markets, that we’ve seen a transformational change at the extent of a whole industry.
The results have often been spectacular. But they need come at the value of latest intermediaries, greater risk concentration and a resulting regulatory got to ensure these new institutions don’t become rent-seekers or stifle innovation once established.
Until recently, we simply haven’t had the technology that might allow us to form such changes without introducing new points of centralization and control. The deepest assumptions of most of the software that exists today are that it’ll be deployed within a firm, that it’ll be controlled by that firm, and that, because it’s travel by or for that firm, its outputs are often trusted by people therein firm.
And so we discover ourselves in today’s world, where each company during a market has an insanely complex IT estate with hundreds or thousands of corporate applications, many of which do an equivalent thing as their competitors. Except the truth is, in fact, worse.
Not only can we have a mass of duplicated systems, none of them are ever in sync. They constantly need to be reconciled and checked to form sure that each party to a deal or contract is in sync with one another .
However, the arrival of bitcoin taught us something very interesting – it had been possible to create systems that are deployed between multiple entities, who don’t fully trust one another but desire to transact with one another , and to try to to so without introducing a replacement centralized party they need to all trust.
It might be a massively powerful breakthrough to use an equivalent logic to other areas like legal contracts and healthcare records, or reinsurance policies and sophisticated loans. It might be the grail for optimizing entire markets without forcing these markets to reshape themselves to evolve to the badly-fitting centralized models that today’s software would demand. it might be the simplest of both worlds and will unleash a productivity revolution.
This is what we at R3 believe is that the potential of the appliance of blockchain technology to business. Used correctly, it offers the power for anybody to transact directly with anybody else on an open network, with total assurance that “what I see is what you see,” with guaranteed privacy and scalability.
Now, because of enterprise blockchain technology, entire markets are within the process of being transformed and it’s happening without forcing new intermediaries into the combination or driving these riotously decentralized markets into inappropriate centralized models.
Blockchain is decentralized software for today’s markets, and over subsequent decade, it’ll become the new normal in industries across the world .