The arrival of an important new technology is generally met with loud choruses of hype and skepticism. Some see the next big thing, while others say it’s all overblown. This is certainly the case with blockchain.
So how to filter out the noise? One way is to take a tip from betting markets: don’t focus on what people say, but where they put their money. Let me explain: the mainstream thinks blockchain is going mainstream.
I think one of the most significant, yet overlooked, developments in the blockchain world is the entry of mainstream high-tech firms and consultancies. IBM and Microsoft have unveiled large-scale blockchain offerings, and the likes of Deloitte, Accenture, PWC, KPMG and CapGemini are setting up or considering blockchain businesses.
This isn’t to say established players will automatically be successful, but it clearly indicates growing mainstream consensus on the blockchain’s potential, and that’s significant. Blockchain is the biggest disrupter to industries since the introduction of the internet, but it will not happen overnight.
My discussions with industry leaders bear this out. People tell me time and again that we are at an inflection point similar to what we experienced 20 years ago when the internet arrived. I agree. Just consider the breadth of some of the offerings. IBM, for instance, is targeting the whole enterprise stack – meaning hardware, software and services. We can assume others are looking to do the same: Bletchley is Microsoft’s architectural approach to building an Enterprise Consortium Blockchain Ecosystem. To be clear, this isn’t a new blockchain stack. It’s Microsoft’s approach to bring distributed ledger (blockchain) platforms into the enterprise to build real solutions addressing real business problems while keeping the platform open.
Areas of major disruption
This means that, just as in the early days of the internet, the whole stack is now in play. What can we expect from this? I see major disruption among other things in the following areas in the enterprise stack:
- Hardware. The distributed ledger will spark a dramatic shift to distributed computing environments. This will be the basis of the coming “value web”, as people’s assets migrate onto blockchains. This favours hardware providers who best understand the needs of this new tech.
- Network. The value web will be a massive peer-to-peer network. As we connect millions upon millions of nodes and carry out thousands of transactions and consensus checks per second, scale and volumes will explode. Network hardware providers who can meet this demand will have an advantage.
- Security. Security will be an extremely important concern on the value web: if all our assets are encrypted in distributed ledgers, then encryption and key management is (pardon the pun) key. This can be handled via software or hardware (for example through chip-level encryption). I personally think providers such as Intel who can find ways to bake security into a blockchain network will have a leg up on competition.
- Software. Distributed ledger technology will disrupt the software business. There are new processes to build, for example decentralised consensus mechanisms. Since blockchains are a powerful new way to do databases – marrying record keeping with business logic – they will disrupt the traditional database business too. A big opportunity for new entrants?
- Services. Microsoft is offering blockchain-as-a-service on Azure. It offers a “sandbox” environment where people can try out the tech, and hopes to scale up into a “certified blockchain marketplace” by this summer. This is a powerful model, as it allows companies to exploit blockchain’s benefits in a cost-effective and efficient manner. We are likely to see more offerings along these lines.
- Enterprise IT strategy. As businesses begin to see the potential in blockchain, they will start adjusting their business models or even develop new ones. That will also affect how they approach IT. Here, the opportunity is with providers who can best understand the blockchain use cases in various industries, and deliver the right products and services to meet those needs.
All along the enterprise stack
The fact that so many established players see such potential for disruption up and down the stack reaffirms my belief that broad-based transformation is coming.
So the next time someone asks you if blockchain is for real, just tell them to follow the cash. When people start putting their money where their mouths are, you can be sure that something significant is going on.
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo: NPFire, Shutterstock.com