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by Christopher Tozzi, Dec 04, 2017

Wanxiang Blockchain and the Future of Distributed Business


Wanxiang White Paper

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.

Based on intense study of blockchain architectures and use cases, a new white paper from Wanxiang Blockchain explains how the technology will usher in the age of “distributed business.”

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: 

  • Participation 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 efficiency. 

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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