We started writing about Bitcoin and the underlying technology – Blockchain- about two years ago and predicted that Bitcoin would become mainstream very soon. Not only were we wrong but we were dramatically wrong – it happened a lot sooner and with far more impact. The impact of blockchain technology is slowly but surely being recognized and felt and will be as much of a disruptor as the Internet was! And I don’t make that claim lightly. If you think Uber is disrupting business models right now, blockchain technology is well on its way to being a disruptor of Uber – already. Whatever Uber does can be done by blockchain without the need for an application like Uber. And if you think that we in the profession of establishing trading relationships are immune to this , Don Tapscott (author of Wikinomics) has this to say: “Smart contracts (software programs that self-execute complex instructions) on blockchains will plummet the costs of contracting, enforcing contracts, and making payments.” A perfect example of that is recording artists who put out songs and depend on all kinds of intermediaries (record companies) to get their music to consumers and then get paid – at the end and at the least amount. Blockchain technology allows them to embed smart contracts in their songs, eliminate all the intermediaries and get paid directly by the consumer right away. Templar knights performed a similar function for pilgrims to the holy lands who didn’t want to carry money with them – they carried a letter that allowed them access to funds (value) in the holy land because they had deposited funds (value) back in their home country with other knights. Just as the Internet revolutionized our relationship with information, blockchain will do with value – and since we are in the business of facilitating exchange of value between transactors, it will have a huuuuuge impact on our profession.
SKUCHAIN is a major player in bringing this technology to supply chains and actually portends a new kind of commerce – “collaborative commerce” – by bringing significant amounts of trust and transparency to a $40 trillion (yes trillion) Supply Chain market. The much heralded and fabled Internet of Things (IOT) will need a ledger to record everything that is being transacted – and blockchain is exactly that – a big old ledger of everyone’s transactions that are searchable when needed. I don’t need Uber to tell me about a driver – I can look him up and decide whether to transact and so can he. Once the ride is finished (I received my value) the money is automatically transferred to him. No more Letters of Credit to establish artificial trust between global parties to allow them to transact with each other. PROVENANCE is another player who will provide you with details and transparency about what you are buying at the grocery store by just scanning the barcode! WAVE is focused on totally disrupting the entire Bill of Lading conundrum by eliminating the need for them.
After the bold but still unfilled promises of what the Internet would do, blockchain technology looks like it will fundamentally disrupt the way commerce is conducted. Its impact on things like credit card transactions, voting in elections, re-imagining how supply chains are designed and work – all of these have a huge potential impact. All you have to do is to track where the venture capital is going and what they are betting on – they are betting big on this technology. European parliaments, IMF and many other global institutions are all scrambling to figure out their blockchain strategies. I have been invited to contribute to the discussion at the Distributed: Trade Hackathon and Conference at Washington University this month and will report back with more details but I would encourage you to start educating yourself and your leaders as soon as possible.