Blockchain - It Will Take Years to Transform Business, but the Journey Begins Now – Marco Iansiti and Karim R.Lakhani

- In a digital world, the way we regulate and maintain admin control has to change. – Blockchain can solve this problem

- Blockchain is an open, distributed ledger that can record transactions between 2 parties efficiently and in a verifiable and permanent way. – With blockchain, every agreement, process, task, and payment would have a digital record and signature that could be identified, validated, stored and shared.

- Authors are worried about the hype of blockchain.

- Blockchain is a foundational technology: It has the potential to create new foundations for our economics and social systems. – It will take decades for blockchain to come into our economic and social infrastructure.

Patterns for technology adoption

- Took more than 30 years for IP to move through all the phases – single use, localised use, substitution and transformation. – Today more than half the world’s most valuable public companies have internet driven, platform based business models.

The new architecture

- Blockchain was introduced in oct 2008 as part of a proposal for bitcoin – a virtual currency system that had a central authority for transferring ownership, and confirming transactions. – Bitcoin enables bilateral financial transactions (gets rid of middle man). – Blockchain has the potential to dramatically reduce the cost of transactions.

- In a blockchain system, the ledger is replicated in a large number of identicle databases, each hosted and maintained by an interested party. When changes are entered in one copy, all the other copies are updated. – No need for 3rd party intervention

Framework for blockchain adoption

- Compare bitcoin to early email. – Blockchain is decades away from reaching its full potential.

- 2 Dimensions affect how a foundational technology and its business use evolve. – 1.Novelty: The degree to which an application is new to the world. The more novel it is, the more effort will be required to ensure that users understand what problems it solves. – 2. Complexity: the number of parties that need to work together to produce value with the technology.

- Single use: Low-novelty and low co-ordination apps that create better, less costly, highly focused solutions. – Bitcoins offers value to people who used it as an alternative payment method.

- Localization: High in novelty but needs only a limited number of users to create immediate value, so its easy to promote their adoption. – If blockchain follows the path network technologies took in business, we can expect blockchain innovations to build on single use applications to create local private networks on which multiple organizations are connected through a distributed ledger.

- Substitution: Relatively low in novelty because they build on existing single-use and localised apps, but high in coordination needs because they involve broader and increasingly public uses. – These innovations aim to replace entire ways of doing business and face high barriers to adoption. E.g Cyrptocurrencies. E.g Stellar aims to bring affordable financial services, including banking to people whove never had access to them. Stellar offers its own virtual currency called lumens, and also allows users to retain on its system a range of assets, including other currencies, telephone minutes etc.

- Transformation: Completely novel applications. If successful,