Blockchain technology offers an internet of value-where the parties in a transaction can store and exchange value without requiring the presence of traditional intermediaries.
It is interesting to imagine a world where there exists an internet of value-a secure database, platform or ledger where buyers and sellers exchange and store value without requiring the existence of traditional intermediaries. This is the promise that blockchain technology offers to businesses.
Over the course of the last century, business leaders and academics have been forging modern management practices. The primary tenets, behaviors and theories have enabled managers to establish corporations that have for the most part been vertically integrated, insular and hierarchical. Nevertheless, it is thought that the technology underpinning digital currencies like bitcoin technology, typically known as Blockchain, will have far-reaching effects on the nature of businesses – how they are managed and funded, how they make better products and services and how they perform core functions such as accounting, marketing and how they incentivize people. Software may even obviate the need to have a lot of the management functions that exist today.
This may not be as far-fetched as it seems. The internet has greatly enhanced the flow of data between and within organizations, but the impact on how business is conducted has been much less apparent. This is because the internet was designed to transfer information, rather than value, from one person to another. Whenever an individual emails a document, an audio file or a photograph, he or she is only sending a copy, not the original. Anybody can copy and modify it. In many instances, it is both advantageous and legal to share copies.
On the other hand, if one wishes to speed up a business transaction, it is not possible to email money directly to the other party. This is because it is not only illegal to copy money, but one cannot be wholly certain about the identity of the recipient. Consequently, people use intermediaries to create trust and uphold integrity. Governments, banks and sometimes large technology companies are capable of confirming identities-enabling people to transfer assets. These intermediaries keep records and settle transactions.
Generally, the performance of the intermediaries’ is adequate, but there are significant exceptions. One problem is that they utilize servers that are susceptible to hacks, fraud and crashes. Another concern is that they often impose charges, for instance to wire funds overseas. In addition, they collect and monitor data relating to customers’ behavior and they lock out millions of people who do not qualify to hold a bank account. At other times, they can make horrible mistakes, as was attested by the financial crisis in 2008.
In brief, Blockchain technology offers an internet of value-where the parties in a transaction can store and exchange value without requiring the presence of traditional intermediaries.