My goal following this MOOC was to understand the Blockchain technology and its impacts on businesses and the world.
Provided by the INSEAD business school, the instructors are Don Tapscott and Alex Tapscott. Interviews with various people involved in the Blockchain ecosystem complete the course.
Introduction to Blockchain Technologies
This first course is an overview of the Blockchain technology and its potential impact.
It looks at the limitations of the Internet for business and economic activity, as it was conceived to carry data/information and not value. The Blockchain is presented as a possible alternative with lots of opportunities.
The course then focuses on the steps of a blockchain transaction. We see the concepts of hash, nonce, proof-of-work, and public-key cryptography. I already knew all of this.
The 7 principles of the Blockchain Revolution
The course describes the 7 principles of the Blockchain Revolution:
- Networked integrity
- Distributed power
- Value as an incentive
- Rights preserved
Types of blockchains
Three types of blockchains are detailed:
Stakeholders & stewardship
The course then focuses on the various stakeholders in the blockchain ecosystem and their roles in blockchain stewardship at three levels:
- the platform level
- the application level
- the ecosystem level
Then we identify 10 types of implementation challenges to overcome and also on how we might overcome them together:
- The technology is not ready for Prime Time
- The Energy Consumed is Unsustainable
- Governments Will Stifle or Twist It
- Powerful Incumbents of the Old Paradigm Will Usurp It
- The Incentives are Inadequate
- Blockchain is a Job Killer
- Governing the protocols
- Distributed Autonomous Agents
- Criminals will use it
Transacting on the Blockchain
The first part of the second course is to identify the different types of crypto-assets and their potential impact on various industries:
- Protocol tokens
- Utility tokens
- Security tokens
- Natural asset tokens
- Crypto-fiat currencies and stablecoins
The focus is then on smart contracts, how they operate, and how they can be employed.
- Reduce transaction costs by eliminating the need for intermediaries
- Improve the security and privacy of the parties involved
- Help to enforce the terms of the agreement
Some of the application areas of smart contracts:
- smart money/payment
- reducing the worries of a contractual negotiation
Identity & Identifiers
Blockchain can allow us to get back control of our identity and our data.
Problems with identifiers:
- The need for an overarching identifier (e.g. a birth certificate)
- Government identifiers are system-centric, system-controlled and vulnerable to cancellation, forgery, and theft
- All personal data we create with each identifier is stored in somebody else's central database
- This identifier-centric system is extremely user-unfriendly
- Whenever a central database is hacked, we're left to clean up the mess
An Identity Commons:
- Must be free of any corporate or government or other third-party
- Must outlive us, users, so we can transfer our assets to our heirs
- Must enforce their right to be forgotten
- Must be inclusive
The identity management through blockchain is still not ready, but lots of activity is already taking place backed by startups and established players (IBM, Microsoft...).
Rethinking financial services
Inefficiencies in financial services
- Risk management
- Value innovation
The Golden Eight
Core functions of the financial industry:
- Authenticating identity and value
- Moving value
- Storing value
- Exchanging value
- Funding and investing
- Ensuring value and managing risk
- Accounting and auditing
All these core functions can be disrupted by blockchain technologies.
New frameworks for accounting
Problems with modern accounting
- Human error
- Traditional accounting methods cannot handle new business models (e.g. microtransactions)
The World Wide Ledger
- Streamlines compliance and reduces risks for banks
- Real-time access for regulators
- Bakes integrity into the financial system
- Audit business itself is overdue for a shake-up
Impact of Blockchain
The blockchain can be used for all of the Golden Eight functions with better transparency, speed, and lower costs.
Blockchain and Business: Applications and Implications
Decentralizing the enterprise
The first example of a decentralized company studied in the course is ConsenSys. This company strives to be as decentralized as possible, with most of its operations relying on the Ethereum network.
Transaction costs in the economy, according to Nobel Prize-winning economist Ronald Coase:
We see nowadays a tendency to create monopolies and concentration of power in the hands of a few companies.
We have an opportunity to turn hierarchies into collaborative networks.
Opportunities for the blockchain
- Proven track records of individuals and companies
- Transactions history
- Tamperproof and permanent records (e.g. annual reports, reports to governments or donors)
Smart contracts will allow establishing peer-to-peer contracts without the need to have a firm. The firms themselves would become obsolete because they exist mostly to handle contracts. It would make it easier for companies to use external contractors.
Nobel Laureate Oliver Williamson explains that there are 2 significant coordinating systems:
- The market: price system for decentralized allocation of records
- The hierarchy: organizing principle of traditional firms where a centralized authority allocates resources
Decentralization, networking, and empowerment are all on the rise and can be leveraged through the use of the blockchain.
What's exciting to me about blockchain technology is that it can enable people to function together, with the persistence and stability of an organization, but without the hierarchy.- Yochai Benkler, Harvard University law professor
Blockchain helps ensure integrity and trust in transactions between peers, it also helps achieve transparency a critical factor in trust.
The boundaries of firms are becoming more and more porous.
Blockchain opens up new opportunities for networking and therefore innovation.
Questions to assess the opportunities to change company boundaries:
- Are there partners who could do certain activities better?
- What are the new economics of corporate boundaries in any situation?
- How much of your business relies on technological interdependence, and how much is modular?
- How good is your firm at managing this external or outsourced work?
- Is there a risk a partner might invade fundamental parts of your business?
- Are there legal, regulatory, or political obstacles to change and to networking more?
- Will working with partners help you improve your overall competitive advantage, your ability to create differentiated value?
- Is there a danger of losing control of something fundamental, say a product or a network architecture?
- Can you rapidly expand your market or value proposition while at the same time shutting out a competitor by vertically integrating, by moving in the other direction at least temporarily?
Distributed business entities
- Little or no traditional managers
- Smart contracts could enforce the rules of the business
- Organizations, suppliers, partners, and customers could form a network
- Complex autonomous agents could perform most of the business operations
- Challenges: mechanisms to reach consensus, legal liability
A cautionary tale: DAO
Effective blockchain governance requires both on-chain and off-chain mechanisms.
New business models
Distributed models will disrupt centralized ones.
- Blockchain cooperatives
- Creators of intellectual property
- Peer-to-peer production
- The metering economy
- The platform builders
- Animating the physical world
- Enterprise collaborators
A distributed application (DApp) runs across many computing devices, not a single server.
Networks like Ethereum make the possibilities for DApps almost unlimited.
Strategic approaches to intellectual property
Blockchain solutions need to balance essential IP (competitive advantage) and open/freely available parts of the technology to improve network effect.
Blockchain can change the management of property rights:
Blockchain technology distributes ownership, supporting new forms of collaboration, and free of centralized control.
Blockchain revolution in the C-suite
Chief Executive Officer (CEO)
Give the vision and prepare the company for the future.
Leading the transformation
- Acknowledging market readiness and good financial results
- Effective marketing and communications
- Avoid setting unrealistic expectations
Chief Operating Officer (COO)
Supply chain disruption should be anticipated at the COO level.
In particular, the impacts could be better transparency and cost/time savings.
Chief Legal Officer (CLO)
With smart contracts: code is the law.
- Automatization of terms, payments
CLOs will need to learn how to audit smart contracts to make sure they support what the parties intended.
- Stick with well-tested methods
- Make sure you have someone on staff who can audit software code
Keeping up with regulations regarding blockchain will become a critical activity.
Chief Financial Officer (CFO)
- Triple-entry bookkeeping
- Signed and shared receipts
- Real-time shared ledger
Chief Marketing Officer (CMO)
Four P's of Marketing:
The development of customers controlling their data will change the future of advertising (e.g. Brave BAT token).
Brands will have to deliver verifiable proofs of their claims.
Chief Information Officer (CIO) & Chief Technology Officer (CTO)
Transforming IT architecture for the Fourth Industrial Revolution will be a challenge.
CIOs and CTOs will need to:
- Effectively communicate their bold visions of the future
- Orchestrate innovation across the enterprise
- Cultivate the necessary skills, talent, and relationships in-house or in the network
- Keep an eye on quantum computing
Chief Human Resources Officer (CHRO)
HR professionals will need to reimagine their function and transform with the technology.
- Some jobs may be eliminated.
- Some HR processes may be automated, and others will be managed by algorithms.
- Activities like payroll, corporate learning, training and development, recruiting, performance reviews, and benefits may be outsourced or cut out altogether.
- New jobs though will also be created, and these will require innovation to fill.
CHROs should focus on finding platforms for self-organizing teams. These would need to quantify and predict team performance. CHROs also need to safeguard talent systems so they remain effective, fair, and inclusive.
Goal: protecting the public while promoting innovation.
Global consensus and coordination among regulators will be critical.
The regulation will be challenging but is mandatory for the proper adoption of the technology.
- Endogeneous rules
- Exogeneous rules
- On-chain governance
- Off-chain governance
Conditions for success
- An environment supportive of entrepreneurship
- A community of corporate leadership
- Proximity to educational institutions
- A strong investment climate
- Government support
- A fair regulatory environment
- A diverse community of talents
The current social contract is breaking
- Growing economies and declining middle class
- Growing wealth creation and declining prosperity
Digital technologies can contribute to a new social contract.
Drivers for change
- The Fourth Industrial Revolution
- Demographic upheaval
- Climate change
Pillars of society
- The State
- The private sector
- The civil society
- The individual
Everyone has a role in defining a new social contract.
Blueprint for a new social contract
- Rethinking work
- A guaranteed job backep up by a Universal Basic Income (UBI)
- A portable safety net
- Pre-distribution of wealth
- Providing universal, high-speed, broadband Internet access
- Personal ownership of personal information
- Distributed power
- Collaborative institutions
Blockchain Opportunity Analysis
The goal of this ultimate course is to write a Blockchain Opportunity Analysis for a specific industry.
The course is guiding us through the process step-by-step.
Its leverages the use of a Blockchain Case Commons. This is a shared database of blockchain examples created and updated by all the students in the course. This database is a huge resource to discover various use cases of blockchain.
Challenges of the blockchain technology
- Transaction costs
- Regulatory uncertainty
- Energy consumption
Unique features of blockchain
- Do we need to rebuild trust?
- Do we need to conduct multiparty transactions without a costly middleman?
- Do we have a reason to distribute computational power?
- Do we need an application to run with no downtime or risk of censorship?
- Do we need to protect identity and privacy?
If we answer yes to all five questions, then blockchain is the only solution.
The most significant part of the ultimate module is to elaborate a business plan (using the business model canvas model) and a pitch around a possible blockchain usage.
This part of the course provide lots of tools and resources on how to prepare a business model and identify a value proposition for a business idea.
I enjoyed attending this course. It combines lots of content about the blockchain itself with tools and technics that can serve evaluating business ideas in any field.