Much has been written about Blockchain and the disruption bitcoin currency can bring to financial services and other industries. However, it may also be important to evaluate the relevance & positioning of Blockchain in the promised “digital” space.
Let’s start our discussion on bitcoin currency by defining ‘experience’ in a digital world. We were posed this question for a customer workshop earlier this year. While being no fan of definitions, we concluded on the following 3 as key characteristics of experience in a digital world. Arguably, a characteristic or two can be added or removed from this representation; however, for the purpose of this article let’s consider this definition.
Summary of these characteristics
- Contextualization is about tailoring the experience as per customer needs: Persona definition, personalization and targeting constitute the components of contextualization.
- Transformation of touch points is self-explanatory and deals with transformation of channels e.g. through mobility, web channels etc. Examples could be single-click checkout with digital currency, on Amazon or simplification of cab booking through the Uber app.
What about Trust? Why is trust an important element of Digital?
Trust is about being sure that the product being ordered through an eCommerce portal would be the same as it is shown on the website and it would be delivered in the promised timeframe. In a way transparency enables trust, e.g. with the transparency provided by real time GPS movement of a delivery vehicle on the mobile app for the food you ordered, you can trust that the delivery would be made in time. Similarly, the understanding that the merchant selling on Amazon would be paid only after the goods are delivered and accepted – is a form of trust.
All of the above examples are mostly true in a B2C world. What about the B2B world? The promises of Digital apply (or should apply) as much to B2B as they do to B2C.
Let’s look at the trust model in a non-digital B2B world
Trust between organizations and businesses is held together through contracts, intermediaries and institutions. Contracts are created based on experience and laws and enforceable through a legal framework. Intermediaries include institutions such as banks – used for money transfers undertaken by the country’s reserve bank / central governments, and legal systems – law, constitutions. Enforcement of contracts is also made through a legal framework, which is a form of intermediary or institution in this case.
These institutions and intermediaries therefore provide the basic trust model through which organizations conduct their business. For the facilities, security & integrity they provide, these intermediaries have overheads which could be in terms of time or money. For example, overseas money transfers through banks can take a few hours or days. Similarly, a contract dispute resolution through a legal framework can take several months. These archaic trust models therefore betray the need of ‘Digital’ and the evolution of blockchain technology, both in the B2B and B2C world.
For digital to fulfil its promise, trust models must evolve and enable transactions and business between organizations at a greater speed and efficiency – based on blockchain, bitcoin makes the process simpler.
Simply defined – Blockchain is a distributed ledger that can be shared among all nodes (or businesses) participating in the system. Since it is shared, it provides transparency among participants. It has the capability to record programs (think contracts) and data. Blockchain technology is based on cryptographic principles and allows immutability of whatever it records – program or data. This immutability provides security along with other cryptographic constructs.
So two organizations entering a transaction can store their contract on a Blockchain which will allow the contract conditions to be triggered at the right time and relevant actions such as payments in digital currency to be initiated. Similarly, multiple organizations that are part of a supply chain can record the delivery status of a product on Blockchain, providing transparency (and therefore trust) to all the stakeholders on the supply chain.
There are several other use cases possible and defined on blockchain technology – Financial services being an early adopter of blockchain/bitcoin technologies. To validate whether a use case is valid for Blockchain, figure out if it transforms trust and transparency in transactions.
Read more about the use cases and how we are investing in blockchain technology in a subsequent post!