Blockchain comes second only to the invention of the web, experts claim, in its disruptive power which seems to be reshaping every aspect of human activity, spanning from business to law to entrepreneurship with society, at large, ending up being assimilated confirming that blockchain is a real game changer which, sooner or later, will revolutionize also the way we all think.
Finding its roots in the anarchic computing subculture that emerged in the aftermath of the 2008 global recession, researchers refer to the rise of Blockchain as the end of the managerial capitalism era since the decentralization it brings to the system will be able to resolve pertinent issues like the principal-agent dilemma which jeopardizes business performance.
The innovative nature of blockchain resides in the fact that it acts as a digital form of structuring data which enables the sharing of a digital ledger (book-of-records) across a verified computer network without the need for a central authority with transparency and trust being key to the functioning of the system it creates between peers.
Taking this into consideration, a number of organizations from a diverse range of industries such as media, tourism and healthcare as well as the legal sector are valuing it not only as a means to cut transaction costs but also to secure intellectual property or protect digital assets such as medical records which could increase the ease of saving the lives of patients on globally.
To put this in a social context, politicians are welcoming the technological foundation which underpins Bitcoin and other digital currencies as a means to give community centric policies more time in the spotlight by destroying old monopolies and creating opportunities for the masses thanks to its decentralized nature. In other words, blockchain seems to be a powerful way to engage people in playing a more significant role in society.
For example, the United Nations Development Programme (UNDP), refers to the ability of blockchain technology as a tool to help overcome corruption issues within centralized institutions. A Swiss entrepreneur, Daniel Gasteiger, co-founder of nexussquared - a Swiss business platform focusing on blockchain technology and its application to business, commenting on the matter said,” “In Honduras they have started a land title project to register land ownership using blockchain technology (..) it’s not corruptible. If you record something as your own, it’s not in danger of being revoked and ownership is not able to be taken away because it’s been recorded in the public eye on with immutable technology. This is a powerful way to engage people in becoming part of society in such an economic way!”
When it comes to the financial world, several labs are testing blockchain, consortiums like R3 or the Hyperledger Project are rapidly establishing a global presence to be reckoned with and regulators are becoming increasingly in favor of easing the adoption of the technology on a large scale. Furthermore, as the Financial Times reports insurance firms are teaming up to study the benefits of Blockchain alongside banks who are adopting blockchain for their mortgage valuation systems.
Moreover, bankers have discovered that the use of blockchain technology reduces cross-border transaction costs down to $1 from $25 but it also proves to be a valuable resource in fraud prevention and execution of monetary policy.
The World Bank contests that despite the fact that the proliferation of the internet has created one of the most educated generations in history, the shift to a decentralized network could limit the successful adoption of blockchain because it requires the buy-in of its users and operators. Keeping this in mind, researchers in alternative finance warn not to leave anyone behind due the possible long lasting negative effect.
In fact, a new paper from the Massachusetts Institute of Technology has pointed out seeding a technology while ignoring early adopters' needs for distinctiveness is counterproductive as there is a tendency to reject the technology when natural early adopters are delayed relative to their peers. Carried out in October 2014, the experiment involved 4,494 undergraduates at the Massachusetts Institute of Technology who were given access to Bitcoin. As a unique feature of the experiment, researchers Christian Catalini and Catherine Tucker say, students who would generally adopt first were placed in a situation where many of their peers received access to the technology before them, and they then had to decide whether to continue to invest in this digital currency or exit.
On top of this, the two researchers presented further evidence that this appears to be driven by identity and by settings where the natural early adopters would have been somewhat unique in their tech-savvy status.
Why is it important that millennials aren’t left behind?
It can be argued that 85 million millennials who are coming of age will represent 75 percent of the workforce by 2025. Furthermore, the research implies that gaining their loyalty and trust is becoming increasingly difficult and it could be no longer sufficient for companies try to differentiate themselves just on pricing or offerings.
Therefore, the quick adoption of blockchain technology could be a viable solution for a new kind of engagement which would put transparency and trust at the centre of the business stage in the aftermath of the global financial crisis whose effects already produced a first real change of habits among millennials fuelling their eagerness for impactful and good companies, to which to be loyal.
As a survey on millennials points out, this “loyalty challenge” is driven by a variety of factors. For example, one of the pivotal findings of the research is that they feel that most businesses have no ambition beyond profit, and there are distinct differences in what they believe the purpose of business should be and what they perceive it to be. As a consequence of this, they tend to be loyal just to their personal values, a study in the Harvard Business Review confirms this, with 71% of American millennials that are either not engaged or are actively disengaged at work, ending to be job hoppers. This may imply that, in addition to career opportunities and growth, millennials look for ethical companies, as supported by research in the Journal for Education in Business. In particular, the incorporation of social responsibility into a company’s strategic plans seems to play a crucial role in the ability to attract and retain Millennials as employees.
Millennials argue that this is true not only from an employment perspective but a general consumer perspective in distrust of advertising and a desire for authenticity in brands before purchasing a product. Thus, with loyalty assumed to be the backbone of every successful business both from a producer and a consumer point of view, it is quintessential for companies to be mindful of this gap. but how?
One way to proceed as discussed earlier, is in codifying, for example, a smart contract to be placed on the blockchain so that decisions, progresses, or even incentives should be transparent and reached by consensus, as Don Tapscott and Alex Tapscott argue in their book Blockchain Revolution. They contend that the fundamental idea here is that the blockchain economy extends beyond mere technology and it has to do with the need for a new understanding of management systems. Putting this in their own words, “there is an inclusive principle according to which economy works better when it works for everyone, which means creating platforms for distributed capitalism, not just a “redistributed” one”.
Luca is a Doctoral Researcher in Entrepreneurship. Holding an MBA from Durham University Business School, he has developed his career in marketing working, over the past decade, with Fortune 500 companies across a number of industries. A former Financial Times blogger, he currently covers alternative finance on his brand-new blog, Oliver*.