Blockchain As Blockbuster: Still Too Soon To Tell, But Get Ready
In a recent interview for CNBC, Deepak Krishnamurthy, chief strategy officer for SAP, stated that SAP is adopting blockchain in a serious way for its supply chain management offerings. “We have the largest supply chain product in the enterprise software industry, so having blockchain supply chains connect with SAP supply chains is going to be value-creating for our customers," Krishnamurthy said. SAP, with its Blockchain-as-a-Service solution, is betting on this new mode of conducting and storing transactions.
Blockchain offers trust through transparency
We are only in the earliest of early stages of this new approach. As Kevin Werbach, professor at the Wharton School of the University of Pennsylvania, reminds us, we are only at “2” or “3” on a 1-to-100 timescale. In a recent interview at Knowledge@Wharton, he observes that most people – even the most tech-savvy still don’t understand the technology behind blockchain. For example, many government agencies throughout the world have been closely tracking the growth and applications of Bitcoin, the virtual currency that is supported by blockchain. “Do most of these people understand the technology of Bitcoin?” he asks “No.” Likewise, among financial services giants such as Goldman Sacks that are diving into crypotcurrency as a service, there is little or no understanding of the fundamentals of underlying blockchain technology. Even people at the most technology-savvy organizations, such as Microsoft and Google, don’t have a fundamental grasp of the blockchain model.
Still, is deep understanding of blockchain technology essential to building new business models and services on top of it? Not at all, Werbach continues. “How many people that use money really understand the theory of finance? And what money is? To use bitcoin as a currency, you don’t really need to understand the technology.” The exceptions occur when due diligence is required, such as making major investments in which knowledge of the workings of the technology are needed, he adds.
The current state of blockchain may be comparable to the state of the Internet and World Wide Web in the mid-1990s, when “we all understood it was going to change the world. There were maybe five, 10, 15 million using the Internet, versus the two billion today. That’s where we are with blockchain.”
As with the Internet 20 years ago, there is plenty of experimentation and high hopes among blockchain proponents. “Were seeing now a whole set of pilot projects among top-tier financial firms, global retailers, and transportation logistics companies, Werbach relates. “It’s a new broad approach to network-based infrastructure that can be applied to just about anything.”
A recent survey of 3,000 executives by IBM confirms the groundswell of interest in the blockchain model. One-third say they are using or considering blockchain in their business. Eight in ten of those exploring blockchain are investing either in response to financial shifts in their industry or for the opportunity to develop entirely new business models.
“This is much more than the financial services industry,” write Don Tapscott and Alex Tapscott, authors of Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World, in a recent white paper published by the the World Economic Forum. “Innovators are programming this new digital ledger to record anything of value to humankind – birth and death certificates, marriage licenses, deeds and titles of ownership, rights to intellectual property, educational degrees, financial accounts, medical history, insurance claims, citizenship and voting privileges, location of portable assets, provenance of food and diamonds, job recommendations and performance ratings, charitable donations tied to specific outcomes, employment contracts, managerial decision rights and anything else that we can express in code.”
Source: FORBES by Joe McKendrick