By now, blockchain technology has become a well-known industry disruptor. Yet few grasp just how truly revolutionary the blockchain can be. Many know it as the architecture behind cryptocurrencies such as Bitcoin but have yet to appreciate how blockchain technology is poised to enact radical change across industries — and to change the way businesses everywhere operate.
What Makes Blockchains Different
To 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.
Blockchain networks have two key distinguishing features:
These 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
These two properties enable a radical transformation in the way businesses are started, organized and run.
Because a 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.
A 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.
Distributed 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
While 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.
Individuals 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.
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