Rethinking enterprises, ecosystems and economies with blockchains
The long history of human progress has been a steady march against friction. Today, three types of frictions predominate: information, interaction and innovation.
In varying degrees to different industries, they’re a drag on efficiency. A distributed ledger for business networks based on blockchain technology has the potential to eliminate these frictions.
Blockchain networks, by propelling the movement of capital and exchange of value, can change how markets function and expand economic opportunity.
Information, interaction and innovation frictions challenge business efficiency
Participants in a transaction don’t
have access to the same information.
In the age of big data, that can put
them at a disadvantage, potentially
diminishing the value for their full ecosystem.
Too often, information may
also be incorrect or inconsistent,
leading to bad decisions or delays
while reconciling it.
The potential value of abundant data
and information is greatly
constrained by the technical challenges
of storing, processing, sharing
and analyzing it.
As a result, much information is not
collected or remains inaccessible
Technological risks to information,
from hacking to cybercrime and privacy
concerns to identity theft are on
the rise. These incur growing costs,
as well as damage to
The ledger is shared, updated with
every transaction and selectively replicated
among participants in near
real-time. Privacy is maintained via
cryptographic techniques and/or
data partitioning techniques to give
participants selective visibility into the
ledger; both transactions and the
identity of transacting parties can be
masked. Because it is not owned or
controlled by any single organization,
the blockchain platform's continued
existence isn't dependent on any individual
Cryptography authenticates and verifies
transactions and allows participants
to see only the parts of the
ledger that are relevant to them. Once
conditions are agreed to, participants
can’t tamper with a record of the
transaction. Errors can only be reversed
with new transactions.
Because participants in a transaction
have access to the same records,
they can validate transactions, and
verify identities or ownership without
the need for third-party intermediaries.
Transactions are time-stamped
and can be verified in near real-time.
All relevant network participants must
agree that a transaction is valid. This
is achieved by using consensus algorithms.
Blockchains establish the
conditions under which a transaction
or asset exchange can occur.
Because business rules and smart
contracts that execute based on one
or more conditions can be built into
the platform, blockchain business
networks can evolve as they mature
to support end-to-end business processes
and a wide range of activities.
Five attributes of blockchains are key to reducing business frictions
Three ways that enterprises, ecosystems and economies can benefit from blockchains
Highly efficient distributed business
networks will challenge our notions of
traditional enterprise management
Modifications of contracts, compliance
and certifications will redefine
how trust is embodied in business
Efficient and accessible marketplaces
built on the blockchain will accelerate
the exchange of value and flow
First movers and early adopters can
position themselves for quicker returns
competitiveness by leveraging blockchain
efficiencies. Identify the most
compelling use cases, experiment in
discrete areas and consider agile
proofs of concept.
Success in blockchain adoption will
depend not on who has the best
technology or app, but who can build
the strongest network. Recognize the
need for global standards; explore
the role of alliances and consortia in
making blockchains scalable, open
and Interoperable; and play for the
Although implementing new technologies may be
daunting, understand how they can help your business
profit and scale quickly. As business models are disrupted
by blockchains, think through how you can
make money in new ways. Understand how blockchains
will extract further value from other technologies
and Explore how new blockchain-based services
and apps can complement and scale existing revenue
©2017 IBM Corporation