Page 19 - July 2018 Disruption Report

With the right strategic approach, companies can start extracting value in the short term. Dominant players who can establish their blockchains as the market solutions should make big bets now.
The nuts and bolts of blockchain
With all the hype around blockchain, it can be hard to nail down the facts (Exhibit 1). Blockchain is a distributed ledger, or database, shared across a public or private
in the net single po mathema
Exhibit 1
to the chain of historical records. Various consensus
protocols are used to validate a new block with other
participants before it can be added to the chain. This
B L O C K C H A I N
prevents fraud or double spending without requiring a
central authority. The ledger can also be programmed with “smart contracts,” a set of conditions recorded on the blockchain, so that transactions automatically trigger when the conditions are met. For example, smart contracts could be used to automate insurance-
J A NJ U U L A Y R Y 2 0 2 1 0 8 1 8
computing network. Each computer node claim payouts.
Assessing these factors with pragmatic skepticism about the scale of impact and speed to
work holds a copy of the ledger, so there is no
market will reveal the correct strategic approach on where and how to compete to enable
int of failure. Every piece of information is Blockchain’s core advantages are decentralization,
companies to start extracting value in the short term. Indeed, those dominant players who
tically encrypted and added as a new “block” cryptographic security, transparency, and
can establish their blockchain as the market solution should be making the moves— and making them now. (Blockchain Beyond the Hype: What Is the Strategic Business Value, June 2018)
Five common blockchain myths create misconceptions about the
FIVE COMMON BLOCKCHAIN MYTHS
advantages and limitations of the technology.
1 2
3
4 5
Myth
Blockchain is Bitcoin
Blockchain is better than traditional databases
Blockchain is immutable or tamper-proof
Blockchain is 100% secure
Blockchain is a “truth machine”
Reality
Bitcoin is just one crypto- currency application of blockchain
Blockchain’s advantages come with significant technical trade-offs that mean traditional databases often still perform better
Blockchain data structure
is append only, so data can’t be removed
Blockchain uses immutable data structures, such as protected cryptography
Blockchain can verify all transactions and data entirely contained on and native to blockchain (eg, Bitcoin)
Blockchain technology can be used and configured for many other applications
Blockchain is particularly
valuable in low-trust environments where participants can’t trade directly or lack an intermediary
Blockchain could be tampered with if >50% of the network- computing power is controlled and all previous transactions are rewritten—which is largely impractical
Overall blockchain system security depends on the adjacent applications—which have been attacked and breached
Blockchain cannot assess
whether an external input is accurate or “truthful”—this applies to all off-chain assets and data digitally represented on blockchain
Blockchain beyond the hype: What is the strategic business value?
3
Gartner, the world’s leading research and advisory firm, conducts a new business value forecast that quantifies the value of technology innovation rather than dollars spent on the technology. “The business value-add of blockchain will grow to slightly more than $176 billion by 2025, and then it will exceed $3.1 trillion by 2030,” wrote Gartner analysts. (Forecast: Blockchain Business Value, Worldwide, 2017-2030, analysts John-David Lovelock, Martin Reynolds, Bianca Francesca Granetto and Rajesh Kandaswamy. 03/02/17)
© 2018 by Canfield Press, LLC. All rights reserved. www.canfieldpress.com 19