The survival of any organization depends on its ability to outperform competitors and marketplaces in attracting and rewarding talent, ideas and capital. As communication and transaction costs have drastically declined because of the internet, new platforms have emerged, delivering goods and services at a speed and efficiency previously unimaginable. These new digital players took advantage of the changes in the underlying technology to challenge established business models and rethink pre-existing value chains. The ones that succeeded did so because they achieved a level of efficiency that their brick and mortar counterparts had trouble replicating. Through online reputation and feedback systems, digital players were able to create global marketplaces where individuals, products and services could be matched more effectively than ever before. By providing curation and ensuring the safety of transactions, these new types of intermediaries were able to reap the returns of this first wave of digitization.
A similar transformation is about to happen as blockchain technology and cryptocurrencies mature and mainstream applications emerge. Under this new wave of technological change, intermediaries will still be able to add value to transactions, but the nature of intermediation will fundamentally change. Whereas some established players will be able to use this opportunity to further scale their operations, others will be challenged by new entrants proposing entirely new approaches to value creation and value capture.
Furthermore, rising complexity and interdependency between organizations, combined with the increased specialization needed to advance the technological frontier, have made human abilities a key bottleneck in the generation, processing and diffusion of real time information. To counterbalance this trend, we developed better technology, governance, and contracts to simplify decision making, and ultimately allow organizations to scale across different markets.
On the technology side, artificial intelligence holds the promise to dramatically reduce the cost of prediction, leaving human judgment as the last barrier before full automation Except, we already have the technology to harness, select and reward decision making at scale because of cryptocurrencies.
Apparently, to understand the transformation brought by blockchain technology, it is useful to start from its largest implementation to date: Bitcoin. Although often criticized for its inability to match the performance of existing payments networks or the requirements of the financial system and governments, Bitcoin is extremely successful at solving the problem it was designed for allowing a global network to securely transact and exchange value without the need of a costly intermediary. Through a clever mix of game theory and cryptography, the Bitcoin network is able to reach consensus about the true state of its distributed ledger at regular intervals. While the energy and computational waste associated with this approach is often criticized, it is exactly the sunk computational cost (proof-of-work) that secures the Bitcoin ledger from an attack. By throwing cheap hardware at the problem, Bitcoin replicates the financial system’s ability to transfer value without many of the tasks and costs typically involved in running and securing traditional transactions. Furthermore, it does so while minimizing the degree of trust parties have to place in each other when transacting, mimicking digitally many of the features – including the privacy ones – of cash.
Crypto-tokens and blockchain are associated with a reduction in two key costs: the cost of verifying the transaction attributes that can be recorded on a blockchain, and the cost of networking For a market to function, key attributes of the individuals, firms, goods and services involved need to be verified and audited before and after transactions take place. Whereas this process is often labor-intensive or requires a third-party to ensure market safety, it can be cheaply implemented on a distributed ledger. But the time-stamping ability and immutable nature of a blockchain are not what make the technology a radical innovation. In fact, these two features fit well into incumbents’ value chains as they allow for reductions in costs through cheaper forms of settlement and reconciliation.
The architectural change brought by cryptocurrencies is tied instead to their use of a native token to incentivize the growth, operations, and securing of a platform. Like in Bitcoin, the token can bootstrap the development of an entire innovation ecosystem where anyone can build novel applications on top of the underlying protocol without requiring permission from a network operator or intermediary. Combined with the right incentives, participants can use a cryptocurrency to reach consensus – on a global scale – about the allocation of scarce resources. This drastically changes the scale and scope of what an online community or platform can achieve
Conclusively,blockchain can also provide help in streamlining many different methods, together with vehicle leasing alongside executing clever contracts through cloud computing. On top of it, the blockchain era has additionally made it possible for businesses including Kodak to give cryptocurrency payments for their employees.