Professional Documents
Culture Documents
Companies can determine whether they should invest in blockchain by focusing on specific
use cases and their market position.
Despite the hype, blockchain is still an immature 1. Identify value by pragmatically and skeptically
technology, with a market that is still nascent and assessing impact and feasibility at a granular
a clear recipe for success that has not yet emerged. level and focusing on addressing true pain points
Unstructured experimentation of blockchain with specific use cases within select industries.
solutions without strategic evaluation of the value
at stake or the feasibility of capturing it means 2. Capture value by tailoring strategic approaches
that many companies will not see a return on their to blockchain to their market position, with
investments. With this in mind, how can companies consideration of measures such as ability to
determine if there is strategic value in blockchain shape the ecosystem, establish standards, and
that justifies major investments? address regulatory barriers.
Myth Reality
1 Blockchain
is Bitcoin
Bitcoin is just one crypto-
currency application of
blockchain
Blockchain technology can be
used and configured for many
other applications
2
Blockchain is Blockchain’s advantages Blockchain is particularly
better than come with significant valuable in low-trust environments
traditional technical trade-offs that where participants can’t trade
databases mean traditional databases directly or lack an intermediary
often still perform better
3
Blockchain is Blockchain data structure Blockchain could be tampered
immutable or is append only, so data can’t with if >50% of the network-
tamper-proof be removed computing power is controlled
and all previous transactions
are rewritten—which is largely
impractical
4
Blockchain is Blockchain uses immutable Overall blockchain system
100% secure data structures, such as security depends on the adjacent
protected cryptography applications—which have been
attacked and breached
5
Blockchain is a Blockchain can verify all Blockchain cannot assess
“truth machine” transactions and data entirely whether an external input is
contained on and native to accurate or “truthful”—this applies
blockchain (eg, Bitcoin) to all off-chain assets and data
digitally represented on blockchain
Exhibit 2
There are six distinct categories of blockchain use cases addressing two major needs.
1 Static
registry 2 Identity
3 Smart
contracts 4 Dynamic
registry 5 Payments
infrastructure 6 Other
Permissionless Permissioned
Anyone can join, read, write, Anyone can join and read
Public and commit Only authorized and
Hosted on public servers known participants can
Anonymous, highly resilient write and commit
Architecture
Low scalability Medium scalability
based on
ownership
of the data
infrastructure Only authorized Only authorized partici-
participants can join, pants can join and read
Private read, and write Only the network operator
Hosted on private servers can write and commit
High scalability Very high scalability
Agriculture
Automotive
Financial services
Healthcare
Insurance
Manufacturing
Mining
Property
Public sector
Retail
Technology, media,
and telecommunications
Utilities
Feasibility of blockchain
by industry Limited Low Medium High
Asset Technology Standards and Ecosystem
regulations
Agriculture
Automotive
Financial services
Healthcare
Insurance
Manufacturing
Mining
Property
Public sector
Retail
Technology, media,
and telecommunications
Utilities
How to compete: Optimize blockchain strategy These two factors are critical in determining a
based on market position company’s optimal strategic approach because they
Once companies have identified promising use are integral to achieving the coordination required
cases, they must develop their strategies based on (Exhibit 6). Blockchain’s value comes from its
consideration of their market positions relative to network effects and interoperability, and all parties
their target use cases. Many of the feasibility factors need to agree on a common standard to realize this
already discussed are within a business’s sphere of value—multiple siloed blockchains provide little
influence; even technology and asset constraints can advantage over multiple siloed databases. As the
be managed through trade-offs and a series of design technology develops, a market standard will emerge,
choices to shape a viable solution. Therefore, a and investments into the nondominant standard
company’s optimal strategic approach to blockchain will be wasted.
Exhibit 6 Optimal blockchain strategy for each use case is dependent on market
position and ability to influence standards and regulatory barriers.
Lower Higher
Leader Convener
Act now to establish the Build alliances to shape
Higher industry standard blockchain solutions
Focus on use cases with Focus on high-impact use
highest potential value and cases that require broadly
network effects shared standards
Market
dominance Attacker Follower
Focus on disruptive Prepare to move fast to
Lower peer-to-peer adopt emerging standards
use cases Focus testing on use
cases that enable internal
benefits
The insights from our analysis suggest that, beyond “Maersk and IBM to form joint venture applying blockchain to
6