Technology |Explainer

The business opportunities of blockchain

The word ‘blockchain’ comes with an undercurrent of hype because it’s associated with the digital currency Bitcoin, which has climbed $1,500 in value in just two weeks – from $6,450 in early November to nearly $8,000 by mid-month. But the technology itself has potential outside of Bitcoin, and can be used in innovative new ways to transform traditional industries. 

Until recently, payments sent over the internet relied on a small number of trusted intermediaries, such as banks and other financial organizations. This changed in 2009 with the arrival of Bitcoin and its underlying technology, blockchain, which transformed online payment and distribution.

Blockchain is a decentralized ledger, a database anyone can access, making it radically transparent. This has huge potential for finance, insurance, publishing and music – markets where trust in transactions is crucial.

Block-rockin’ beats

This month Icelandic musician Björk announced that her new album will integrate blockchain in partnership with the British startup Blockpool, according to Bitcoin.com. Titled Utopia, fans will be able to purchase the album with the digital currencies Bitcoin, Ethereum, Dash and the lesser known Audiocoin. Album buyers choosing Audiocoin will receive 100 Audiocoins as a bonus, which can be converted into dollars. Album sales have been in steady decline and Björk is one of few musicians – alongside Imogen Heap – innovating with blockchain.

From adblock to blockchain

Another industry facing an uncertain digital future is publishing. Much online content is free, so publishers resort to advertisements to stay afloat, a strategy complicated by the rise of ad blockers. Magazine publisher Dennis is looking to improve ad-trading transparency using blockchain. According to Digiday, it wants to create an SSP (single-shared platform) prototype so that publishers and buyers can see where their money is going. It has the backing of several high-profile news outlets, including the Guardian, Financial Times, CNN International and Reuters.

Financial services also find the technology compelling because it dodges the share-taking middleman, with potential to make services more secure and efficient, all of which have long-term cost benefits. As blockchain’s verification is handled using algorithms, human error should be minimized, if not eliminated. According to service firm PWC, nearly every major financial institution experimented with the technology in 2016. Tech company R3 is working with more than 100 financial institutions – including HSBC, Deutsche Bank and Morgan Stanley –  in the research and development of blockchain.

However, the hype currently outpaces the development and its uncertainty is just as high as its potential. It will take years, the Harvard Business Review reported, to transform the global world of business. Blockchain, the report added, is still evolving and will face many challenges, among them security, scalability and regulatory risk.

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Talk (12)

Linh Nguyen

"Thanks Dan, I've taken your suggestio..."

Jaak Geens

"Yes, I agree. By the way we are mak..."

Dan Marsh

"I think it should probably just say "..."

Koen Everaert

"Ah, my bad, you're right, it still do..."

History for Story "The business opportunities of blockchain"

  1. Linh Nguyen changed repeated image
  2. Holly Brockwell Further subbing, adding crossheads
  3. Holly Brockwell Subedits including correct spelling of Björk
  4. Dan Marsh Changed wording as per talk.
  5. Lydia Morrish Removed unwanted spacing at end
  6. Linh Nguyen added source
  7. Jodie DeJonge Edited to tighten
  8. Linh Nguyen fixed formatting
  9. Linh Nguyen added explainer category
  10. Linh Nguyen update
  11. Linh Nguyen update
  12. Cassandra Vinograd
  13. Linh Nguyen
  14. Jaak Geens Trying to give an answer on the new economy around blockchain

The business opportunities of blockchain

Talk about this Story

  1. Rewrite

    This sentence isn’t quite right.

    “Until recently, information sent over the internet relied on trusted intermediaries.”

    It should refer specifically to payment transactions, not information which could be any kind of information.

    Also, I think that blockchain does still rely on trusted intermediaries. For example, Bitcoin miners update and validate the ledger, the miners are the intermediaries. They’re not necessarily operated by trust worthy people, but the design of the blockchain is supposedly secure enough to prevent fraudulent transactions.

    These miners could also be commercial entities, and are effectively being paid transaction fees, in a roundabout way, because they’re rewarded with mined bitcoin.

    1. Rewrite

      I do agree with your remark on the security-risks. Although the blockchain network on which well-known cryptocurrencies reside are quite large, and thus pretty secure, smaller blockchain networks can indeed be ‘compromised’ by large players supplying a majority of the miners, and taking of the “truth” (see my remark about banking institutions: https://newsroom.kbc.com/zeven-europese-banken-plannen-blockchain-platform-voor-kmos).

      However, the sentence in particular seems about right; besides P2P-networks, there’s no easy way to send information across the internet without a third party being involved, if I’m not mistaken. All webpages are stored on privately owned (and controlled) webservers, controlled by these third parties.

      1. Rewrite

        The point is that information sent over the internet does still largely rely on trusted intermediaries.

        Whereas the that sentence is claiming that it no longer does.

        1. Rewrite

          Ah, my bad, you’re right, it still does, even with applications based on blockchain!

          1. Rewrite

            I think it should probably just say “payments” instead of “information”.

            I suggest:

            “Until recently, payments sent over the internet relied on a small number of trusted intermediaries, such as banks and other financial organizations.”

            1. Rewrite

              Thanks Dan, I’ve taken your suggestions on board and have published them.

      2. Rewrite

        Yes, I agree. By the way we are making a combination of a Non Profit Organisation that guarantees P2P in combination with blockchain (the best of two worlds; public for blockchain and private for encrypted cloud.
        As such, you make the users like the owners (shareholders you could say) and value goes back in the ecosystem.

  2. This is exactly what I was hoping to see in the article. I want someone to talk about what blockchain actually provides- a decentralized transaction authority- and what the potential applications and natural limits for that technology might be. As you said, transparency is one major side-effect of a blockchain that I think people aren’t talking about enough, and I’m sure there are others as well. I feel like the article conflates blockchain technology with crypto-currency, and that it doesn’t dig into what either term really means.

  3. The story needs a counter point, it is basically an ad piece at this point. More specifically, there is a lot of hype around the block chain as a technical solution to organizational problems. There is a hidden premise in that organizational problems *can* be solved by technical tools, a premise that has very little evidence behind it. In fact, the body of work on social sciences actually points in a different direction. The technocratic perspective presented by Max Weber is generally accepted to be insufficient to describe our society. But perhaps even more importantly, there is a lot of evidence that organizations that want to break norms do not depend on specific technical solutions to do so, there are extensive materials discussing that topic, perhaps the Temporary Autonomous Zones are an interesting point of reference to be used on that conversation. I think the interesting question that technologies like Ethereum bring to the table is the perspective of radical transparency and what impact that could have in organizations, although the block chain is not a requirement for that.

    1. Rewrite

      Agreed: a counter point is needed, although from a different perspective. Even solemnly as a technology, Blockchain in its current understanding by the masses is too vague, and banking organisations are using it to create a mirage of safety. Right now, multiple European banks are working together in integrating Blockchain(https://newsroom.kbc.com/zeven-europese-banken-plannen-blockchain-platform-voor-kmos) into their networks, but chose to keep the chain stashed on private servers, removing the ‘transparency’ of Blockchain. Perhaps this point of view could be of interest?

  4. Hi Jaak. I’ve made some edits and comments to your piece so please take a look at them when you can and we can take the piece further. I have saved them as pending so you should be able to see them in the backend. Let me know your thoughts.

  5. Hi Jack — is this ready for an edit? WT member Linh said she was working with you on this.

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