{"id":3867,"date":"2017-02-21T18:01:00","date_gmt":"2017-02-21T18:01:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/overcoming-blockchains-obstacles-to-adoption_022117\/"},"modified":"2017-02-21T18:01:00","modified_gmt":"2017-02-21T18:01:00","slug":"overcoming-blockchains-obstacles-to-adoption_022117","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/overcoming-blockchains-obstacles-to-adoption_022117\/","title":{"rendered":"Overcoming Blockchain\u2019s Obstacles to Adoption"},"content":{"rendered":"<p>Industry adoption is the biggest obstacle to blockchain becoming important in banking, according to 78% of participants in a study. Wait, what? It\u2019s an odd data point to me, because adoption happens (or doesn\u2019t) because of obstacles like cost and complexity. Slow or late adoption is a symptom of a challenge, not the challenge itself. So let\u2019s take a quick look at what might slow or stall adoption, and what to do about it.<\/p>\n<p><strong>Blockchain is an element of \u201cthe platform revolution\u201d that\u2019s based on user economies of scale<\/strong><\/p>\n<p>Recently I had the chance to speak with Marshall Van Alstyne, co-author of <em>The Platform Revolution <\/em>and a professor at Boston University. He discussed the network and platform model of many new digital businesses like Airbnb. Airbnb is successful because it can exist and profit from <u>user<\/u> economies of scale instead of <u>company-based<\/u> economies of scale, according to Professor Van Alstyne. Essentially, this type of platform business allows users to create and share value themselves instead of relying on a company to create the value. The role of the business is to provide the infrastructure and support. While Airbnb doesn\u2019t use blockchain as its base technology, the concept applies because firms can use blockchain as the basis of new platform-based business models.<\/p>\n<p>Blockchain, with its design point of peer-based approvals for transactions and distributed ledger data storage, is a great example of a platform technology. It\u2019s the enabler of a business that needs users to help define how it will scale.<\/p>\n<p><strong><img decoding=\"async\" src=\"\/storage\/app\/media\/CFR\/Blockchain.jpg\" \/><\/strong><\/p>\n<p><strong>What to consider in using blockchain as a platform for business<\/strong><\/p>\n<p>If blockchain can help companies build a platform business, what might slow or stall adoption? Professor Van Alstyne mentions a few:<\/p>\n<ul>\n<li><strong>Network ownership<\/strong> \u2013 who manages the network and gets to decide the rules? Is that owner in a position to run the network effectively?<\/li>\n<li><strong>Cost\/transaction friction<\/strong> \u2013 how much does it cost to join or participate? And do you have to pay before you get value out? Can you design the network so participants pay only after they\u2019ve gotten value to reduce the transaction friction?<\/li>\n<li><strong>Monetary policy (for financial transactions)<\/strong> \u2013 who or what agency is going to ensure the network isn\u2019t too volatile? Who will ensure that there are guardrails to give users comfort that the system will have some inherent stability?<\/li>\n<li><strong>Standards<\/strong> \u2013 can players on different blockchain implementations work together rather having to agree on the same implementation? Who creates and manages those standards to ensure adoption isn\u2019t hindered by interoperability problems? A good example of how standards can help is to solve issues like block sizes and reducing network consensus time, both of which significantly hinder the speed with which transactions can be completed.<\/li>\n<\/ul>\n<p><strong>The end user is at the center of the platform-based business<\/strong><\/p>\n<p>Customer-focused businesses need to exist in an environment where user economies of scale have become the norm. That means\u00a0the business needs to understand the user and the users\u2019 needs\u2014doing so, will help identify and drive scale. And understanding the users and what they value, and how that then fits into a business model (addressing compliance, for example) can help drive the answers to the questions above. Rather than trying to scale internal operations like manufacturing, firms that adopt this customer-centric \u201cDigital OneOffice\u201d need to focus on user value and associated data. As Professor Van Alstyne points out, platform businesses can scale indefinitely because they don\u2019t require internal company investment (beyond some compute power.) Instead, platform businesses that use technology like blockchain can scale as quickly as user adoption grows because there are no marginal costs of that growth.<\/p>\n<p>Going back to that study I saw \u2013 blockchain may not get adopted, but if it doesn\u2019t, it\u2019s because companies didn\u2019t take advantage of user economies of scale and learn lessons from <a href=\"http:\/\/www.horsesforsources.com\/blog\/christine-ferrusi-ross\/the-interoperability-problems-blockchain-brings_120616\" target=\"_blank\" rel=\"noopener\">older network-based businesses like eMarketplaces<\/a>.<\/p>\n<p><span style=\"font-size: 14pt; font-weight: bold; color: #ff6600;\"><strong>Bottom line: Focus on solving the obstacles to adoption, not adoption itself \u2013 especially transaction friction and interoperability standards \u2013 if you want your blockchain implementation to succeed and move you forward in your digital transformation.<\/strong><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Industry adoption is the biggest obstacle to blockchain becoming important in banking, according to 78% of participants in a study&#8230;.<\/p>\n","protected":false},"author":1,"featured_media":3868,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[855],"tags":[],"organization":[],"ppma_author":[896],"class_list":["post-3867","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.4 - 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