Professor in Management Sciences
Specialized in Information Systems
IAE Lyon School of Management
Jean-Moulin Lyon 3 University
Faculty member of the Business Science Institute.
Article originally published on The Conversation France.
This text summarizes the intervention made during the International Governance Conference CIG 2016 at the University of Montpellier: Governance and governmentality in the age of big data: what are the challenges for companies?
The concept of blockchain (BC) appeared in 2008 and was created by the enigmatic Satoshi Nakamoto. It initially consisted of an original combination of cryptographic mechanisms and peer-to-peer (P2P) architecture dedicated to the implementation of a virtual currency: bitcoin.
Bitcoin and blockchain
For a long time, the terms bitcoin and blockchain have been synonymous. Thus, the CB is the accounting ledger that records all transactions in bitcoin. It also grows at the same time as the exchanges and the creation of money through mining operations.
We can therefore define the concept of a CB as a reliable and resilient system for recording transactions. Reliability is based on cryptography and resilience comes from the P2P architecture. Thus, CB is not a solution in itself, but rather the underpinning of new solutions.
Starting in 2014, initiatives began to sprout up extending the spectrum of CB use to all sectors that need to record transactions or contracts. This is referred to as PO 2.0, or even 3.0.
Other possible chains
The first CB concerned Bitcoin, but since then, the mechanism at the heart of the CB has been implemented in other chains. Thus a new chain called Ethereum was born. Ethereum is a system based on the CB but open to many applications. For example, Slock.it is a startup whose idea is to integrate the mechanism of the CB via the Ethereum chain into physical devices: a virtual/real marriage.
Among the application ideas, it is possible to consider a door handle which, when turned, records the transaction via Etherum and allows to create a smart contract between the owner of the apartment and the one who enters it. In short, it becomes conceivable to create an even more efficient and secure Airbnb. It is a new mode of organization linking customers and owners that is emerging. The term DAO (decentralized autonomous organizations) has been put forward. The very notion of organization as Henry Mintzberg defined it for us is finally taking into account the digital world.
Note that on June 17, 2016, an attack against the platform hosting the DAO project was launched and resulted in the theft of a third of the funds deposited... This attack highlights both the weakness of a nascent system, but also the interest it generates. However, it is the platform that was attacked and not the Blockchain.
What if the company was based on blockchain?
If we take the reasoning further, we can imagine that the company seen from the "contract node" angle is thus based on a CB mechanism. The way in which all transactions on property titles are recorded would then be completely renewed. The property titles can be represented by the units of a virtual currency.
Indeed, Bitcoin, for example, is designed to have a maximum of 21 million bitcoins in circulation. One can then imagine the creation of a currency with a certain number of units and each unit represents a share of the company. This would be a completely new mechanism for managing ownership and valuing assets. This is what a platform like swarm proposes. A new solution requires a new acronym, and swarm proposes DCO (Decentralized Collaborative Organization).
The institutionalization of the blockchain system
Admittedly, some might think that this DCO thing is just a flash in the pan for geeks and that it's not serious. Yet, on February 16, 2016, NASQAD initiated a project to record shareholder voting on the Tallinn Stock Exchange using BC. On April 13, 2016, the president and COO of the same NASDAQ even stated, "Blockchain technology can lead to quicker, more efficient trade settlements."
On March 16, 2016, the first plenary intervention of the Medef Digital University was proposed by the Blockchain France team. Finally, on May 1, 2016, the State of Delaware officially announced that BC was a technology that would allow them to replace their paperwork.
So blockchain is no longer a weak signal... but a movement potentially as strong as the web itself or social media.
Which actors and what other advances?
So let's answer two questions: which major players are likely to be impacted by CB? And what other technological advances can synergize with CB to help transform our environment?
From my point of view, there are three major actors that can be impacted by CB.
The first actor is all the organizations that play the role of trusted third party. Indeed, the trust aspect can be entirely based on the CB mechanism. Of course, these players will be able to continue to offer advice, but they will then be competing with all the existing consulting companies.
The second actor whose business may be challenged is the state institutions. For example, the maintenance of national registers (civil status or land registry) can be managed at a global and totally decentralized level by a dedicated CB.
Finally, the last actor is made up of all the organizations that will be able to find new forms of financing and governance by using this mechanism to manage their capital shares. From the point of view of management sciences, the theories of control in particular will be revived.
To answer the second question, I believe that three other major concepts may resonate with CB to trigger disruptive innovations of the same intensity as the advent of the Internet.
The first concept is crowdsourcing. This mode of outsourcing allows a large number of people, most of them anonymous, to perform an activity. We can then see crowdsourcing as a way to have the crowd create value and thus take full advantage of the potentialities offered by the interactivity of Internet-based applications.
The second concept is 3D printing. Being able to democratize the manufacture of products while liberalizing the design model of this product is in itself a breakthrough in production and logistics.
Finally, the third element is the continued dissemination of connected devices. In forty years, we have gone from a few large mainframe computers, to a PC in everyone's home, then to a smartphone in every pocket and now to dozens of devices of all sizes in homes and on us. This Internet of things (IoT), some of which can be manufactured locally (3D printing), contributes to increase the capacity to create value by the crowd that we are (crowdsourcing). Add to this the potential of the blockchain that we have mentioned, and a new universe of possibilities opens up to all: those who will be able to take advantage of it and those who risk being subjected to it.
Article translated from French with https://www.deepl.com/translator
Read also...
Jean-Fabrice Lebraty's articles on The Conversation France.
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