In the previous article What are the three necessary stages of blockchain development, and how should entrepreneurs seize the opportunity? In , we have explained the three stages of blockchain development:
Phase 1: Blockchain innovative solutions;
The second stage: a complete blockchain solution;
Phase III: Blockchain Enhanced Solutions;
Today we focus on analyzing the current stage of the blockchain industry: innovative solutions to the blockchain.
The blockchain innovation solution only includes three of the five major design elements of the blockchain: distributed, immutable and encrypted. Since the blockchain technology is not perfect enough, the decentralized system still needs the understanding and acceptance of the organizational structure, so before 2023, most of the blockchain solutions we can come into contact with are innovative solutions of the blockchain. plan.
The main purpose of blockchain innovative solution development is generally to improve efficiency, reduce back-end costs, speed up confirmation, settlement and traceability, as well as improve data quality and optimize management in an appropriate environment.
Although the solution at this stage does not involve Token and decentralization, the development at this stage can allow more onlookers to see the advantages of this new technology development, but it does not mean that there is no risk in this process .
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current business issues
Before introducing the 5 types of blockchain innovative solutions, we need to review the two elements that are not involved in innovative solutions, namely decentralization and tokenization. So in a blockchain solution without these two elements, how does centralization affect data, participation rights, contracts, and technology? We will illustrate this problem from the following four aspects.
1. Closed blockchain network
In the traditional Internet business model, users who use software or solutions for free need to pay a certain price, that is, to share their private data, interests and usage habits. In turn, the platform uses this data to attract advertisers, develop new products and features, and gradually guide specific customer behaviors.
There are no clear multilateral contracts between users and platforms, meaning there are no restrictions on how much data can be collected, how often it can be used, and under what circumstances it can be used.
All centralized digital platforms will control the data on the platform, which means that blockchain innovative solutions will also have centralized control of data like other data platforms. From the design point of view, some kind of network center is necessary for coordination and governance during the operation process. Most importantly, the centralized solution sets up a single authority and does not use a decentralized consensus algorithm to verify participation. identity and authenticated transactions.
Without tokens and decentralized consensus, innovative blockchain solutions cannot support the exchange of value between participants who do not know each other without third-party verification. This means that in innovative blockchain solutions, both technology and business are controlled by the owner, which will directly affect the evolution and evolution of blockchain innovative solutions, making it easy to become a closed, private block chain network.
2. Data is a very important commercial currency
Regardless of the stage of blockchain development, data is an important commercial currency, but data is most vulnerable to attacks during the blockchain innovation stage. This vulnerability is especially evident if blockchain solutions hope to facilitate inter-organizational interactions along the value chain. For the blockchain that your organization participates in, if the governance method allows one or some participants to obtain or even control all the data on the chain, then your business information may be exposed, but you will not get the corresponding value return .
Although these solutions do have good prospects, their centralized model makes some industry participants hesitate. The Maersk case we wrote before encountered the same obstacles in the operation process, and many participants refused to participate in such an early stage. platform until Maersk and IBM adopted a certain governance mechanism to make it an industry platform.
However, there is no token in most blockchain innovation solutions, so there is no mechanism to ensure that participants can control their own information, participate in consensus, or trade information as an asset. The degree of transformation was further strengthened.
3. The right to participate is still kidnapped by centralization
Owners of blockchain innovative solutions control the right to participate in market processes or certain parts. Other companies that want to participate will need to pay an explicit fee on the one hand, and on the other hand will also pay an implicit price by being locked into this solution or exposing their own competitive information.
The promotion of blockchain innovative solutions relies on the scarcity of resources rather than universality. For the developers of these solutions, they hope that the blockchain can serve the short-term interests of customers and partners. In some cases, however, the so-called value is enforced. For example, major customers or channel partners can set the prerequisites and conditions for cooperation, that is, suppliers must participate in the centralized blockchain.
In these cases, the use of a certain blockchain innovative solution becomes a market access condition. If you refuse, you will lose the opportunity to reach end customers, such as some enterprises that already occupy an absolute dominant position in the original industry A leading blockchain is in such a state.
4. In the blockchain network, the smart contract is the control
In ordinary business society, a contract sets out the terms and conditions of a transaction. In the blockchain, smart contracts are codes that record and enforce business rules and agreements on the blockchain, which means that the blockchain can execute transactions without human intervention. So who defines these rules, and who can decide to modify these rules?
If a certain participant or some small group of participants define these rules and own the blockchain, then the value of the blockchain will be lost. On the contrary, if decisions come from the community, and the modification and maintenance of smart contracts are transparent, then the rules can be a balancing force.
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5 Models for Innovative Blockchain Solutions
How do we define and provide an evaluation benchmark for the various innovative blockchain solutions currently being developed. We will be based on the above four aspects: How do these programs process data? Who gets the right to participate? Who defines the contract? Who develops the technology? To judge the benefits and risks that the solution will bring, according to their differences in several aspects, the book Blockchain Real Business Opportunities divides them into 5 different models.
1. Fear of missing out solutions
To put it simply, some leaders have to use the blockchain to solve the problems they are encountering because of certain policies or the fear of missing opportunities for the development of a certain industry, even though they themselves understand that it is useless to do so. However, driven by the idea of saving face or the temptation of performance bonuses, they are often affected by fear of missing out and make unnecessary decisions.
In terms of helping companies save costs or create value, blockchain projects driven by fear of missing out are often less likely to work and make little sense.
The positive significance is that the implementation of these solutions sends a positive message to the market, which is conducive to promoting the development of the industry. The negative meaning is that many people think that the blockchain is not only costly, but also unable to solve practical problems, and it does not reduce costs and improve efficiency, which makes the voice of the blockchain a scam endlessly, making the early application of the blockchain Credibility has been greatly affected during the development process.
2. Troy Wrangler Model
This type of solution is currently the most innovative blockchain solution on the market. Why is it called a Trojan horse?
Because such solutions are very attractive from the outside, what is more credible is that behind these solutions are often well-known brands, which seem to have a good technical foundation, and solve the existing and difficult problems in the industry. Solved, wide-ranging problems.
However, after using these solutions, the private data, processes and business activities of enterprises will be exposed, and at the same time they cannot obtain equal rights. Using the above four aspects to analyze, this solution requires participants to give up their own control over data to a certain extent, and accept some contract terms in order to obtain the right to enter the market and use technology.
In this model, one or a group of powerful industry participants develop blockchain innovative solutions and invite or even require ecosystem participants to use them. Consensus mechanism” and other terms, but the centralization of ownership clearly shows that the system design is centralized. This kind of solution is often initiated and developed by a certain industry leader or a certain platform, and then invites its upstream and downstream partners or partners on the platform to participate, such as some traceability blockchains built around core enterprises, or some A traceability blockchain platform built by technology companies.
With subsequent development, these solutions can analyze platform data and skew procurement activity towards the lowest-cost or least-leveraged participants in the network. They may also gradually put pressure on producers to improve production quality and reduce costs, thereby helping the platform attract more customers, and ultimately create more serious polarization and lead to more serious centralization. At present, the solutions developed and used by most platform-based companies belong to this situation.
3. Opportunistic solutions
Such solutions are commonly used in cross-border payments or matching transactions, such as the American Depository and Clearing Corporation (an intermediary agency responsible for post-trade settlement and clearing of the US financial system). In order to solve the problem of shrinking market size and high costs, they adopted Distributed ledger technology and cloud computing solutions to design transaction information warehouse. These solutions are designed to solve known problems, seize known opportunities, create certain value, optimize record keeping, and improve process-level efficiency, but these solutions will not promote the development of decentralization.
Judging by the above four aspects, opportunistic solutions cannot control data and contracts. For financial institutions, it is more acceptable. This type of solution is more suitable for centralized central banks or settlement and payment companies to use this model.
4. Evolutionary solutions
At present, due to the immaturity of blockchain technology, it is difficult to apply a complete blockchain solution to mission-critical systems. Nevertheless, some organizations are still actively exploring blockchain solutions, and intend to evolve to complete blockchain solutions as the technology advances and matures.
In order to maintain the possibility of evolution, project developers need to ensure that they support decentralization and tokenization in the future when establishing system architecture and making operational decisions from the very beginning, even if these elements are not very important at the beginning of the system. Useful.
For example, the blockchain real estate registration service under construction in Sweden is a very typical example. Everyone knows that even in developed countries, the real estate transaction process is a very cumbersome process: owners, buyers, real estate agents need to sign a large number of documents offline, and share these documents with mortgage companies, banks and legal services so that they can Verify title, review contracts, and make loan proposals. Each participant may receive, fill out and review many contracts, documents digitally, but due to the large number of process steps and number of participants, all processes may take weeks or even months with the possibility of errors.
And you may have to wait a few weeks before the documents are sent to the government registry and the title deed is officially issued. These steps take a long time, create high economic costs, limit the development of the real estate market, and create a large number of coexisting systems with inconsistent information. The Swedish Blockchain Real Estate Registry has developed a blockchain ledger to process real estate transactions.
The nodes of this blockchain ledger are distributed among various organizations in the ecosystem, and ideally, they will be decentralized. The blockchain network includes mortgage lenders, real estate brokers, law firms, real estate agents, developers, and individual buyers and sellers, with the goal of improving the efficiency and transparency of the public registry of real estate.
As an innovative solution that cannot yet achieve complete decentralization and complete information sharing, this system is still a closed network that requires authorization and runs on a limited number of nodes. All parties to the real estate transaction access the network through their own interfaces. This case combines a variety of technologies, including a centralized management database, and the design does not introduce tokens. Smart contracts are responsible for the verification process, but these contracts are not yet automated and require human review and verification.
However, as artificial intelligence and big data audit and execute digital texts higher than the results of human audit and execution, the future of automatic execution of smart contracts is conceivable. At the same time, with the access of the central banks digital currency, tokenization is possible What has been achieved is only complete decentralization, which still requires cultural and institutional changes and acceptance; it still takes a long time, but from the perspective of blockchain applications, this evolutionary solution is already very exciting and look forward to it. Because he has already fully empowered the business and provided efficiency with minimal risk, reducing costs.
5. Blockchain original solution
Blockchain-native solutions are called born on the blockchain solutions. These solutions usually come from startups or innovative projects, which are more common in the so-called coin circle projects, so they often create new markets for existing business models on the basis of blockchain , or provide subversive methods.
But because the core elements of decentralization and tokenization are not yet mature enough, there is still a lot of immaturity in this type of solution. But because these solutions are independent of the current actual enterprise environment, all this means that they can evolve to a complete blockchain solution.
For example, Wolfe University in the UK has adopted this pure blockchain model. They hope to link professors and students together through secure contracts and record interactive activities during learning. In this way, students can get Credits, professors earn warranties, creating an educational institution that is not-for-profit and borderless. For those pursuers who have faith and pursuit of the idea of blockchain and really hope to control their own data and achieve a truly decentralized solution, this is the most hopeful way to be accepted.
It’s just that even though many so-called “coin circle” projects have not really mastered their own data, they have only enlarged the tokenization to the limit and become hype concepts and bubbles, but they have not achieved the core of decentralization Element – “Master Your Own Data”.
Therefore, judging from the current development status of the blockchain, compared with the above five innovative solutions, the blockchain still has a long way to go. At least from most possibilities, there are still many obstacles in the evolution. Away from a real complete blockchain solution, we are now facing not only technical problems, but also many problems in system, organization and business thinking waiting for us to solve.
Of course, we still need to understand a premise. Although we believe that a complete blockchain solution is a better blockchain technology implementation solution, a centralized solution also has its own advantages. Moreover, different industries have their own special backgrounds. What we value more is whether the use of technology can better solve the current problems of this industry in the current period of time. Then it is a good solution for this period of time, rather than using technology. To get rid of entanglement, we must achieve a complete decentralized solution.
As for what kind of solution is suitable for this industry and what degree of decentralization is required, we believe that this will be a long-term dynamic game and a gradual evolution process. Survival of the fittest can only be achieved by actively embracing changes and finding a period of time in the changes Enterprises that have internal solutions and take the initiative in them will be more sustainable, which is why we hope that enterprises can pay more attention to new technologies.
The future has come, but the mountains are high and the water is far away. We need to search up and down and not forget our original intention.
