Blockchain: a new economy based on trust
By the time of generalized “trust crisis” (institutions, media, banking service,…) Blockchain brings a new answer to the fundamental question of trust by ensuring security and transparence of the information, without resorting to an authority or a third party.
Trust, transactions’ cornerstone
In order to understand Blockchain and its interest, we have to beforehand understand the essential role of trust. trust is indeed at the core of exchanges relationships (that could be between individuals or professionals) and is totally part of any transaction between two or several stakeholders. Generally inside a network of actors that do not know each other, this trust is possible thanks to intermediaries that work as “trusted third parties”. It is historically banks’ roles to guarantee validity of transactions between two parties or again notary’s one who ensure acts’ authenticity.
Trust results in a set of determinants : security and reputation.
Usually, into centralized systems, security is guaranteed by the authentication of stakeholders; and reputation is ensured by mechanisms of feedback, a credit system based on community’s members recommendations, like e-trade platforms which are using feedback’s systems as a trust vector into their networks.
E-trade giants such as Amazon or eBay has developed these last years veritable “trust strategies” as the stake is big to ensure security, transparence and trust into the service to clients. In that case, the intermediary materializes itself as a digital platform of services and it get paid per se (like banks or notary do it). With the development of social networks, reputation has become an asset and a market, and can influence (upwards or downwards) on companies’ revenues. It is also a characteristic of trust : it has a price, and value.
With the globalization and the increasing volume of transactions, the use of trusted third parties has become more costly, like it has become longer and less efficient due to the difficulty to draw the complicated chain of operations and of different actors into the modern logistical and financial circuits. This system has also demonstrated its limits such as during the financial crisis of 2008’s period which trusted third parties (banks, grading agencies…) were not inspiring trust anymore. It was also during this time that Bitcoin was born (first public manifestation of Blockchain) in response to this generalized loss of trust towards a system based on “fallible” intermediaries.
Blockchain : a technology guarantor of trust between peers
Unlike centralized systems, designed around intermediaries, Blockchain creates a new basis for trust that ensures security and transparency of transactions in a disintermediated way. Trust is not born from the relationship between parties or from the intervention of a third person, but from Blockchain’s technology, which itself permits to safely save and share valued information that can be consulted by network’s members and whose modifications or new entries are validated and saved throughout a “consensus protocol” which guarantees validity. It permits for example to conform a person’s identity, a good’s property or a file’s or contract’s authenticity.
Transactions that are saved into the Blockchain are highly crypted into a “block”, which extend itself as new transactions in order to form a “blockchain”. There are many copies of blockchain, each member of the network (or “peer”) has its own copy in a logic of decentralization. Technical nesting of blocks guarantees that information stays reliable, and its distribution to all the network guarantees that all content can be consulted anytime. Thus, if a modification is entered into a block, all network’s computers verify blockchain in order to certify that transaction is valid. By combining information’s encryption, chaining in a block from and decentralization, this system ensures a maximal security level and changes “trust” to an asset that can be encapsulated in each transaction.
Towards a new economy based on trust
By deleting intermediaries (financial, institutions…) as part of a contractual relationship, blockchain’s technology re-draws commercial relationships and paves the way to new configurations of market. This new economy represents an outstanding transfer of power towards the entire ecosystem, as it is not an authority that governs relationships anymore, but a network of actors which acquires a governance for regulating its interactions, in an auto-manage logical.
It still remains possible via Blockchain to privatize exchange relationships by sharing with a selective way information with only some actors without making public those transactions (it is for example what a “canal” in one Blockchain, such as Hyperledger one, permits). Some blockchains even form themselves from the initiative and profit of one actor, generally leader on market and with an enough impact for onboarding all its ecosystem (it is for example the case of Carrefour for drawing the product’s feed chain). However, one of the most important asset of Blockchain in the definition of a business strategy, it is the change of paradigm in the manner of positioning inside its ecosystem. Companies consortiums can be created around a governance charter in order to collaborate in a more efficient way and to generate more shared value. As an example, “MOBI”, a consortium composed by big car manufacturers, who are ordinary competitors and who associated themselves in order to develop new automotive services throughout Blockchain (supply chain, payment methods, connected vehicles datum…)
By ensuring trust, Blockchain promotes collaboration while preserving organizations’ independency. It announces tomorrow’s world which is the open ecosystem one, in which competition and cooperation are two facets of a same value strategy for the company.
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