Blockchain technology has the potential to fundamentally change the way the world does business. But while people hear plenty of buzz about it, they still haven’t seen the distributed ledger system offer very much real-world benefit to enterprises.
Analysts discuss about blockchain in terms of its many possible applications. But there is little discussion so far about this technology helping companies increase revenue, acquire more customers or boost the bottom line.
Why is this?
The reason is that, for all its promise, blockchain remains disconnected from the real world. Business leaders know that a distributed ledger will make online transactions more secure, but they haven’t seen firsthand yet how this will benefit their business.
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This will change soon. Executives across different industries will see they can boost revenue using this technology. Blockchain will offer enterprises far better access to the most valuable commodity in the business world today: data.
Businesses run on data
Businesses want to get to know their customers, and they want a pipeline for acquiring new customers. For this reason, they pay companies like Amazon and Facebook for information on users. This data, which includes buying patterns, personal tastes and a wealth of other information, is immensely valuable.
Businesses have grown used to spending a certain amount of money to acquire a certain amount of data, and they buy this data only from trusted sources. This is how Amazon, Facebook, Google and others have formed a sort of data oligopoly. They are the trusted sources for business data.
Businesses would love to buy and sell data directly to one another and cut out the middle man. This would have an immediate effect on the bottom line for a range of different companies across various industries.
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However, this has been impossible because businesses have no way of knowing whether they are buying accurate information. The data will be useless unless a business can fully trust the source.
Enter blockchain. The distributed ledger system means that information exchanged online is far more difficult to falsify or change. It can add a layer of trust that did not exist before. Data that is exchanged with blockchain technology is verified data and does not need additional verification from one of the members of the data oligopoly.
This can open a whole new world of value for businesses.
The data marketplace
Businesses have been limited to buying data only from sources that they trust, which limits the field of available data significantly. But if the data itself can be trusted, businesses will no longer be bound by having to know and trust the seller.
This will level the playing field for businesses in a way that’s never been done before. Companies will become more competitive if they shop globally, instead of locally, for business data.
Blockchain will enable the creation of marketplaces where businesses can buy and sell authenticated data directly to one another, instead of paying high prices by acquiring user information from one of the internet giants.
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Businesses have always worked together to reach common goals, but since data has become the lifeblood of business, this collaboration between businesses has been compromised. Facebook, Amazon and others set the prices and call all the shots. But if businesses can do business with one another directly, this collaboration between enterprises can be restored.
Although businesses of all kinds will benefit from data marketplaces, certain types of businesses — for example, social networks — have an immediate need for data they can buy directly from other businesses.
Social networks are always looking to increase their user base, and other social networks are the prime hunting ground for user information that will help achieve that goal. Today, many networks run ads that they hope will increase traffic to their sites.
But if they can obtain user information directly from other social networks, they will be less reliant on ads to build their user base. They will be able to grow their business in a more stable, predictable way.
The same model can also help schools looking for new students, or human resources professionals looking to fill open job positions. More data means more opportunity. It means lower advertising costs and a better means for growth.
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Blockchain in the real world
Businesses have not yet seen blockchain brought together with common, commercial logic. So many people don’t yet understand its value. But blockchain is all about data, and data is what fuels business today.
Marketplaces that enable businesses to buy and sell information directly from one another will be the beginning of the end of the data oligopoly. It will democratise one of the most valuable assets in the business world.
If businesses can acquire the information they need inexpensively, and easily, it will change business models and it will change the fundamentals of global commerce. Blockchain is not just going to be connected to the real world. It’s going to change the world.
Sourced by Andrew Ma is the Founder and CEO of LemoChain