Blockchain technology has emerged in recent years as having immense potential to transform traditional business models across industries. A blockchain is a distributed ledger that forms a permanent, transparent record of transactions through a decentralized, peer-to-peer network. This secure, trusted system for recording transactions and exchanging assets has the ability to increase efficiency, reduce costs, and enable new revenue streams. As blockchain platforms mature and adoption accelerates, forward-thinking organizations are reimagining how they create, deliver, and capture value through innovative blockchain-based business models.
Disintermediating Value Chains
One of the most disruptive blockchain capabilities is disintermediation – cutting out intermediaries in transactions and value chains. Blockchain enables producers and buyers to connect directly and conduct trusted transactions through “smart contracts” without requiring third parties. This removes friction and costs from supply chains. Walmart and other major retailers are collaborating on the Food Trust blockchain to track produce from farm to store. This increases transparency, reduces food waste due to contamination, and improves profit margins. Media and content platforms are also emerging that allow creators to publish work and get paid directly by consumers without going through publishers, record labels or online marketplaces. Models like these redistribute value across the chain to content producers.
Enhancing Marketplace Liquidity
Blockchain-based marketplaces can provide increased market liquidity, catalyzing network effects. Decentralized global platforms allow buyers and sellers to find each other and exchange assets directly through cryptocurrency transactions. OpenBazaar is a blockchain-based peer-to-peer marketplace without intermediaries. It connects merchants and consumers directly for products and services using cryptocurrency for payments. Real estate, transportation, computing power, and other markets are being reimagined with blockchain, reducing transaction friction and costs for participants. Liquidity enhances the value of the marketplace for all actors.
Transforming Customer Loyalty & Rewards
Customer loyalty programs can be transformed through blockchain-based tokens and rewards. Consumers can have ownership of their own loyalty points which can be freely exchanged without locking into a single vendor. The Atlanta-based BitLoyalty program issues loyalty coin tokens to reward customer repeat business. Coins are redeemable across participating vendors, giving customers flexibility and driving cross-promotions. Blockchain enables interoperability between loyalty programs. Companies like the Maharashtra Innovation Society in India are bringing companies together into collaborative loyalty programs drawing from a common rewards pool on the blockchain.
Improving Transparency & Corporate Governance
Shareholders and regulators are demanding transparency from companies. Blockchain establishes a permanent ledger of transactions that can be monitored to assess performance and corporate governance. Maersk is using blockchain to improve transparency in global shipping transactions. This helps reduce fraud and errors, improves inventory management, and increases trust and visibility. Smart contracts written on blockchain can automate regulatory filings and share transparent records. The Dubai government is leveraging blockchain to record company data and transactions reducing the need for audits and inspections. The immutability of records on blockchain enhances corporate governance.
Securing Digital Identities & Credentials
Digital identity verification is essential for financial services and e-commerce. Blockchain avoids risks of identity theft by preventing duplication of identities. Using blockchain, original data like birth certificates or degrees can be indelibly recorded. Credentials remain with the individual and are shared securely with institutions like banks for KYC checks, background verification or credit applications through encrypted digital signatures. Microsoft and Accenture collaborated on a digital ID prototype. Learning Machine offers blockchain-based digital diploma certificates. Secure digital IDs are enabling new remote customer onboarding models and financial inclusion.
Monetizing Data through Tokenization
Data marketplaces powered by blockchain allow users to take ownership and monetize their data. Through the blockchain, people can securely grant access to their data assets in return for compensation. Companies like Datacoup enable users to sell data like social media activity, purchase transactions, web browsing, and location data directly to interested companies through blockchain-based data exchanges. Individuals earn tokens that are redeemable for cash. Organizations also benefit from access to enriched data sets. Data marketplaces and exchange models shift control of data to individuals while fairly compensating them.
Crowdfunding New Ventures
By automating and decentralizing finance, blockchain opens up new models of crowdfunding and venture capital. Through ICOs (initial coin offerings) blockchain startups have raised over $12 billion. While prone to hype and scams, ICOs enable new ventures to raise funds globally from individual backers without intermediaries. Backers receive tokens rather than equity, enabling smaller investments. Platforms like Krypton allow qualified investors to trade pre-IPO shares of startups. Such crowdfunding models shift control from traditional VC gatekeepers to communities. Compound’s open lending platform likewise enables peer-to-peer lending based on tokens.
Designing Decentralized Autonomous Organizations
Blockchain enables the emergence of decentralized autonomous organizations (DAOs) governed transparently through open source smart contracts without centralized management. DAOs provide flexibility to organize for entrepreneurial innovation and growth. Early DAO experiments like The DAO encountered problems. But improved designs and governance processes make DAOs viable. The LAO aims to be a decentralized autonomous hedge fund. DAOs automate governance through smart contracts embedded with rules. They exemplify distributed models of collaboration and value creation.
Tokenizing Natural Capital
Nature and ecological processes create vast forms of value not captured in markets. Blockchain can help tokenize natural capital – enabling these assets to be traded, priced and valued. For example, the Rainforest Foundation uses blockchain to register land ownership for indigenous forest communities. This helps prevent exploitation through transparent, immutable records of claims. Other groups issue blockchain tokens to represent carbon credits that can be freely traded to incentivize rainforest preservation that offsets carbon emissions. Such mechanisms incentivize stewardship of ecosystems through market signals.
Blockchain is an evolving technology with disruptive potential. While still nascent, an array of innovative business model archetypes are emerging across industries that leverage blockchain’s inherent strengths – decentralization, security, transparency, automation, and standardization. Blockchain enables both incremental improvements and entirely new modes of value creation and exchange. As platforms mature, adoption accelerates and standards coalesce, blockchain promises to transform legacy business models and generate opportunities through technological disruption. Early experimentation and learning lay the foundations for reimagining value chains, marketplaces, service ecosystems and organizational designs.