What Makes Blockchains Different
understand what “distributed business” means and how blockchain technology will
help to create a world in which that model predominates, you have to appreciate
what makes blockchain-based networks fundamentally different from traditional
types of networks.
networks have two key distinguishing features:
on a blockchain network is often motivated by token generation. Tokens
determine who has the right to participate in the network and carry out
transactions. Tokens incentivize more people to join the network, while at
the same time adding value to the network. In effect, tokens serve as a
commercial bootstrapping mechanism for blockchain networks, eliminating
the need for significant capital investment by an external party in order
to infuse value into a network.
- There is
an inverse relationship between network size and transaction costs. The
larger the network, the lower the transaction cost. When enough nodes are
added to a network, marginal costs approach zero. For this reason, there
is no need for a central authority to oversee the network and manage
marginal costs. The network is self-organizing and intrinsically creates
properties are true in almost any kind of major blockchain-based network —
whether its purpose is to trade cryptocurrency (as in the case of Bitcoin),
manage property (as Smart Tenancy Contracts do, to cite one example), manage advertising or anything else.
From Conventional Business to Distributed Business
properties enable a radical transformation in the way businesses are started,
organized and run.
blockchain-based network does not require capital investment in order to launch
itself or grow and also does not require centralized oversight, blockchain
technology can enable networks to function as distributed businesses.
distributed business, as Wanxiang defines it, is based on a distributed,
virtual, open-source organizational form. Everyone can participate in whichever
role they choose — as an investor, user, developer or operator — and can serve
in multiple roles simultaneously if desired.
business is the antithesis of conventional business architectures, which are
oriented around centralized control and closed organizational structures.
Conventional businesses also rely on capital investment — usually from a small
group of investors who control the company in a centralized fashion — in order
to start and grow.
Optimizing Distributed Business Models
blockchain technology serves as the foundation for distributed business,
leveraging a distributed business model in an efficient way requires more work
than simply setting up a blockchain network.
and organizations that seek to take advantage of blockchain technology need to
understand the various strengths (such as the elimination of “friction” costs
that exist in traditional business), weaknesses (such as lack of stability in
current blockchain technology), opportunities (such as the ability to create new
forms of efficiency) and threats (such as regulatory challenges) that condition
the future of distributed business.