blockchain
Blockchain after the Hype
Optimistic about the maturing of the market and after three years on this journey with corporate performance, my vision is that it is not a panacea...
This text is for everyone who wants to understand and share the business challenges of adopting a structuring technology with pragmatism and seriousness.
n this article, I will explore some of the following steps that I believe are relevant to developing business networks. If you had the opportunity to ask a question to "an expert or not" in Distributed Ledger Technologies (Blockchains or not — semantic controversies aside), maybe, like me, you got the feeling of having heard a classical answer like in contests by Miss Universe (Sandra Bullock lending us her elegance in this article).
When you ask what you want most, a variation of "world peace" comes out for the most part. The same is true when asking about the challenges of Blockchain After Hype, usually an interpretation of "the governance"…
As in the Miss Universe pageant scenario, the desire for "world peace" is noble and valid, and "governance" too. However, there are more tangible things. How practical is this answer? What part of governance is a challenge (partnership governance is not new to the market)? As governance can be a vast concept, let's talk about business networks where this "governance lands or not."
Business Networks in DLT/Blockchain!
A Business Network is a group of independent parties that trade together, focusing on independents. Its purpose is to allow its members to create a shared representation of information or facts that occur between them and then use the shared processing of these facts to reach an agreement or consensus on the operations/transactions, assuming this as a fact between the parts.
If you got lost, read this Blockchain Enterprise article — "The significant evolutionary step of DLT" it may help with the alphabet soup and terms. And don't give up; give a step back and continue later. Or go ahead, you can do it, come with me!
The ability to allow for a shared understanding of facts and the knowledge of how they should be used is compelling in DLT/Blockchain systems. Previous (or most current) systems focused on shared representations of information. However, they could not consistently guarantee their "correctness" or uniqueness between parties independently, nor that all participants involved in that context/transaction processed the same data in the same way independently of execution/validation between the parties.
DLT/Blockchain platforms deliver "I know I see what you see" after each transaction between the parties involved, and "the business rules proposed in this transaction were respected by both parties", being processed and independently validated.
"Governance" at the moment zero starts with identifying my Business Networks with value and interest groups that have value in the day-to-day operation. And they are not always apparent groups.
Have you ever considered having a business network with your competitors? How can I extract value under the same conditions and rules in this scenario, delivering value to my customers at the end of the day?
Exploring “Business Network” Models
Let's explore some models/topologies in Business Networks and evaluate the adjusted governance in each context:
I – App-Hub Model
Software vendors or consortia have leveraged this model, and these join-ventures generate software companies around an application to sell to other market participants. Perhaps the most striking feature of this model is a network with an "owner" and a "Dapp/SmartContract." Some examples, Maersk with TradeLens (Hyperledger Fabric) and Finastra with LenderComm (R3 Corda), in this win-win scenario is sectoral, and the scale is questionable.
Whoever enters this type of initiative is clear that a software and partners lock-in is entering. So when does this model make sense? If you are a big player (generating this type of network), adding your value chain via partners, or if you are small/medium orbit around a big player gaining traction, visibility, and integration, accepting the lock-in.
II – Public Market-Place Model
The pure network (infrastructure, technology management, and operation) is separated from its possible business models. To illustrate, the successful models in public Blockchain are basically in this context, using Ethereum as a reference (without generating controversy, I hope), the miner/core devs "take care of the network" (infra, management, operation, upgrade), everything is fine, the community participates (don't get mad at me, open-source rocks), but these are the actors that will orchestrate the network in a nutshell. Participants can place their applications on this network and transact with other participants using this base infrastructure, paying fees associated with a cryptocurrency or token.
In this model of business networks, applications with end-user (end users) support the oscillations based on transactional remuneration (fluctuation of cryptocurrencies linked to each transaction) or models in which publicizing the transaction/fact globally/publicly has progressed in public networks.
Private Model with BNO — Business Network Operator
The third model presents a more business-friendly scope for B2B. A market player becomes the private network operator with a clear role in managing infrastructure (connection, security, identity, and others) and governance (the rules can be designed jointly by the participants).
This type of business network is generally focused on a group of participants with shared interests (competitors or not). This operator may or may not have a direct correlation with the business, focusing on the technical and operational aspects of the network as well as tools and processes to put "governance" and concrete terms (legal, onboarding, distribution, access, controls, and others).
He is not the owner of the ball (Net); he provides the services of leasing and organization of the field (infra, net, connection, tools of management of the participants) where this game will be played. Therefore, it does not necessarily participate in the transactions but guarantees that there will be infrastructure to execute them (shared with the participants).
It provides, among other things, a marketplace for different applications that can run on the same network, even engaging other application providers to place their DApp and contracts on this network for the participants to use.
Important: Do not confuse PaaS (Platform as a Service) solutions on Blockchain, generally provided by the cloud provider or other market players (example: IBP-IBM Blockchain Platform, Azure, or Amazon Blockchain in different flavors, R3 Corda Enterprise, and others) with governance.
The Blockchain platform is relevant and may or may not facilitate governance, but the platform/technology is not governance.
Oops, this is long. I'll stop here. We are good for now. I'll discuss onboarding, distribution, and responsibilities in the following articles.
See you.
André Carneiro
Emerging Technologies and Blockchain/DLT
Interest: people, entrepreneurship, innovation, digital transformation, agile and tech startup scene
References:
https://www.amazon.com/Blockchain-Business-Jai-Singh-Arun-ebook/dp/B07NGQ448W
https://solutions.corda.net/business-networks/what-is-a-business-network.html