How Blockchain Will Transform The Economy

Blockchain is essentially a digital ledger where transactions are recorded. Each party has full access to this “ledger” and its history of transactions however, none of the parties control the data. These “parties” are uniquely identified by 30+ alpha numeric addresses called nodes. Transactions happen between these “nodes” and they have access to all transactions within the database. When a transaction occurs, its record can not be altered because it is linked to all transactions prior - hence ‘chain’. “Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network” (The Harvard Business Review).

Blockchain In Action

Given these facts, blockchain will eventually provide a new foundation for our economic and social systems. Using blockchain for everything from encoding contracts to tracking products in complex supply chains (which is already being done by some companies) will be the norm eventually. Nowadays, a typical stock transaction takes up to a week. With blockchain, a stock transfer would occur within seconds. In day-to-day operations, businesses are required to keep records of all transactions. Right now, those records are being distributed across functions instead of being centrally located in one master ledger. Imagine how much time will be saved when those transactions are in one central location and no longer need to be reconciled between private ledgers.

Four Essential Stages of Transformation

Blockchain technology will take years to become a technological infrastructure yet, it will happen. This “transformation” is taking place in four stages:

1. Single Use
   Think of how even in its infancy, bitcoin supplied value to users as an alternative payment method.

2. Localization
   As network technologies previously evolved business, blockchain innovations will build on single-use applications with the creation of local private networks where organizations are connected through a distributed ledger.

3. Substitution
   Applications that build on localization and single-use involving high levels of coordination and increasingly broad and public uses.

4. Transformation
   Coordination of activity on every level requiring institutional adoption of standards and processes.

The question is not whether but, when will blockchain make this transformation. Inevitably, it will affect all aspects of business. The question is, how will it affect you?

Want some guidance on how blockchain will affect your business? Give us a call 508-864-7758.