May 1, 2017
Blockchain: 7 Questions This Disruptive Technology Has Us Asking
by William J. Rowe, Ph.D
Photos courtesy of Pexels
What started as a way to securely trade the digital currency Bitcoin online has led to a major technological advance called blockchain.
This disruptive technology is promising to change the way we share information and exchange value.
How so?
The Internet allows for a rapid transfer of information but a lack of trust has been an ongoing concern (see the rising threat of hacking and identity theft).
But along comes blockchain offering to solve the vexing trust issue in our virtual world.
How blockchain works is admittedly complicated. Essentially, a blockchain is an online record of exchanges between parties.
Here are the basics…
First, each exchange (for example, a transaction between a buyer and seller) is verified and recorded as an entry on a “block” (think of this as a ledger).
- Next, each block of entries is secured so the entries cannot be altered later.
- Then, each secure block is linked (or “chained”) to all other blocks on the blockchain.
The end result is a complete, fully-transparent, tamper-proof, up-to-date record of all exchanges visible to all members of the blockchain.
Voila! Trust is established through transparency.
In addition to providing trust between parties, blockchain increases the speed of transactions, improves existing methods of managing customer relationships, and dramatically reduces the overhead cost of common business activities like shipping products and managing contracts.
Who Is Jumping In The Lead On Blockchain?
In December 2016, Susan Reda with the National Retail Federation called out blockchain technology in an article titled “What’s Next” predicting where businesses will focus their energy in the near future.
Since then, The New York Times reports that IBM has around 650 employees working on blockchain technology with 400 clients including Wal-Mart and shipping giant Maersk.
In addition, a group of 30 companies, including Microsoft and JPMorgan Chase, have announced a joint effort to further develop blockchain technology.
At this point, it is a matter of when (not if) blockchain is going to affect your world.
How Will Blockchain Impact Business?
While blockchain comes with many potential advantages, it also introduces important questions that need to be answered. Specifically.
- Which businesses and industries will be most impacted by the coming blockchain wave?
- How soon will the impact of blockchain be felt by businesses (especially smaller businesses and entrepreneurs)?
- How rapidly and effectively will small and mid-size businesses understand the benefits of blockchain and adopt the technology?
- How is the rate of adoption by smaller businesses likely to impact their ability to sell to larger retailers and dealers who are already working with blockchain technology?
- How can small to mid-size businesses use blockchain to gain a competitive advantage?
- What are the start-up and recurring costs of using blockchain?
- What resources are available to help small business owners understand this new technology?
Small Business, Big Problem…
For its full potential to be realized, all parties involved in an exchange must be using the blockchain.
So… as large companies adopt blockchain there will be an expectation for smaller 
companies doing business with them to also adopt blockchain.
Sounds simple enough but this is no small feat considering the differing adoption rates of new technology across industries and different size businesses.
Not surprisingly, smaller businesses tend to be late-adopters of new technology compared to larger companies with greater resources. Any such lag in adoption will likely delay the expected benefits of blockchain for everyone.
Here Is The Opportunity…
Clearly, blockchain is going to impact businesses. The question is which businesses and to what extent will they be impacted?
History tells us that early adopters of new technology stand to gain a competitive advantage while late adopters risk falling behind.
The opportunity today is for smaller businesses and entrepreneurs to quickly understand blockchain, the benefits this technology offers, and how it fits into their business model… before their competitors do.
William J. Rowe, Ph.D. is an associate professor in the Marketing and Supply Chain Management department at East Carolina University. He is currently investigating the impact of blockchain technology on business. Dr. Rowe can be contacted at rowew@ecu.edu.