There is a role for all of these companies, but it isn’t where they are looking today. And the opportunities will not exist until the first few of those 100 blockchain projects is up and running.
Blockchain networks are inherently non-profit in nature. No single enterprise sits in the middle playing the roll of toll maser and dictator. Network participants both add and extract value in equal measure. The costs of running the blockchain are shared across the network. Decisions are made through a well-defined governance process which ensures that both large and small players have a voice and that fairness and transparency are maintained.
Another reason why there is no money in selling blockchain projects: Everything is open source. All of the significant blockchain software is open source and freely available. This open-source nature of the software is part of the spirit of collaboration which is part of all successful projects. It’s tough to charge for free software.
Yes. Linux is open source, and yet many companies have succeeded in building services on top of Linux. But remember, Linux is beneficial to enterprises on its own. A blockchain software like Hyperledger Fabric isn’t worth anything by itself. The value of the blockchain comes from the data stored in the blockchain. The software has value, but the network and the data in the network are where the real value exists.
Some huge enterprises will deploy distributed ledger technology and try to force this on their supply chains and partners. Most will retain a central point of control and will opt to forego immutability. These companies will benefit from standardisation across their closed private network. Without being decentralised or immutable, these are not blockchain projects and will only ever have limited scope for value creation.
There is no money to be made selling a blockchain to an enterprise.
I’ll repeat it. There is no money to be made selling a blockchain to an enterprise. Enterprises do not “buy blockchain”. Enterprises “join” blockchain networks as part of a transformation of their businesses and their industries.
For the consultancies and integrators, not all hope is lost.
So where is the opportunity? There are 3:
- Strategic planning and non-profit governance expertise will be in high demand as new networks are created, merged, decommissioned and connected. Companies will need strategic help in identifying new business models for growth (or survival and rebirth)
- Integrating existing enterprise systems into blockchain networks. Each enterprise will need to complete a business transformation project to allow them to shift from communicating with intermediaries to reading and writing crucial information to shared ledgers.
- Developing software to automate transfers of value. You might have heard of smart contracts or chain code. There will be significant demand for skilled software teams who can write smart contracts, test them and deploy them.
Early adopters who have vision, courage and leadership will benefit the most.
Early adopters who have vision, courage and leadership and can see the value in creating large scale networks with many participants and no central point of control will benefit the most. The ones who start now are best positioned to define the foundation for networks to be built in the coming years and to be the first to reap the benefits from making the investment not only of time but of both financial and reputational capital.
Followers – or late adopters – will join networks when they reach a critical mass. And at that point, it will be too late to influence the structure and purpose of the blockchain. They will be stuck connecting to someone else’s vision.
In 1982 Milton Friedman famously wrote,
Only a crisis-actual or perceived-produces real change. When the crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.
Now is the time for business leaders to pause look for opportunities to collaborate and cooperate within and across their industries rather than to compete. It is a chance to spot opportunities where transparency and accountability can add value to entire industries and not just to single enterprise bottom lines.
It’s a chance to decide to start one of the 100 blockchains that will be the foundation for global industries in the future. Or be resigned to being a follower.
Troy Norcross, Co-Founder Blockchain Rookies