The Blockchain Cometh

Hype-Cycle-GeneralHow Quickly Things Change

In roughly six months, Bitcoin ‘veterans’ have seen our infant industry transition from alleged lunacy to hyper-hype. Undoubtedly, there is a certain ‘I told you so’ satisfaction about the immense potential of blockchain technology finally being recognised. After all, gloating is a well-established human foible.

I don’t want to spoil the party, but rational analysis of the current situation is warranted. The enthusiasm is great, it just needs to be channeled.

No, the blockchain will not cure cancer. Nor will it do everything better just because the data has been placed into a chain of many blocks. Come on folks, we’re just talking about ways to store data.

We need to realise that existing database systems are still a very viable use of technology in many instances. The wheel does not actually need reinvention.

We also need to truly be innovative. Taking the existing business models and converting them to a blockchain seems like a half-way step. It feels a bit like trying to digitise wax seals and parchment.

Maybe ‘modernising’ or ‘blockchaining’ the way things were done hundreds of years ago is not the best way to deploy the tremendous power of blockchain structures. It just may be time for new trade, payment and business models to be developed – time for some new thinking.

We shouldn’t forget Kodak, and their abject failure to embrace digital photography. Oops… is it too soon to be making light of the demise of a once much-loved corporate institution?

Kodak completely owned their industry. We all captured our ‘Kodak moments’. Not many of them, granted, because it was so darn expensive to process the shots and to buy new film.  I’m sure I am not the only one with very few childhood pictures because it was a rare family expense to shoot of roll of film. It was usually reserved for special events.

Kodak so dominated the public psyche that they had even trademarked the tone of gold used on their packaging. That wasn’t such an audacious move – we all did recognise it as their colour.

Disruption isn’t always just about a new technology comet killing off a dinosaur industry. It is also about re-imagining the way the same business can be done.

This is the challenge confronting the army of blockchain converts from big business. And, it won’t easy. The transport industry did not launch Uber. The hotel industry did not introduce Airbnb. No telco company was happy to see Skype arrive. Remember when international phone calls were once $1 a minute. Suddenly, the same call was free.  Or, if there was a charge, it was 1-2 cents a minute.

Someone out there will soon come up with a new way to run a bank or an insurance company or many of the other ledger-based processes that fill those canyons of office towers.

Will industry rush to adopt a genuinely new idea? Will they hold a board meeting and agree to turn their insular universe on its head? Maybe…

I always wonder what it would have been like to sit in Nokia’s boardroom the day someone suggested that they turn their rubber, paper pulp and aluminium conglomerate into the world’s leading mobile phone manufacturer.

Equally, there must have been some pivotal discussions when they decided to remain a mobile phone company instead of a smart phone company.

These lessons should be the subject of hot debate in boardrooms today.

Huge opportunities are about to be unearthed. Will any of the major players be agile enough to seize the opportunity? Especially, when the market disruption they unleash could decimate their existing business.

Time will tell.

 

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About Mark Toohey

Mark Toohey is an experienced commercial lawyer who has worked with both major law firms and as general counsel in the media, telecommunications, software and IT industries. He has been a lawyer, company director, marketing director, company secretary and entrepreneur. Mark's commercial experience extends way beyond the theoretical. He has helped launch a number of start-up businesses and his hands on experience was gained from negotiating and documenting deals for a wide variety of business initiatives.