BlockChain removes intermediation within transactions. It uses a mathematical technique to prove that someone owns something, and that someone transferred that ownership to someone else.
This replaces a trusted third party in many commercial situations. For example, being paid for a product, transferring ownership of a house to another person or even when a supplier requires a courier document saying the buyer has received goods.
There are many profitable lines of business made on the lack of trust between parties in all industries. It is unfortunate to say this but there may be considerable pressure on organisations to maintain those lines. One way of doing this is to sabotage the adoption of a substitute technology adoption for as long as possible.
Why does this affect BC
BlockChain requires two entities to be registered with the BlockChain to enable a transaction. This is fine if the cost savings between two entities warrant investment in BlockChain enabled payments but not so great if return on investment is predicated on quantity.
For example, in trade finance there is a use case that putting events which cause the provision of financing on a BlockChain will reduce the bureaucracy of document management. Banks often provide supplier financing when a buyer receives their goods for example. However, if the supplier sells to many buyers or uses many couriers who confirm to the bank that the goods have been delivered then a large integration activity is required making it less likely this will go ahead.
How will it manifest?
Where a network of entities is required to make the technology work efficiently, then gatekeepers to those existing networks may not be overly helpful in plugging their customers into the new BlockChain network.
Current gatekeepers are predominantly banks. Banks support transactions by being recognised as ‘governors’ of deposits from which funds are taken to enable a transaction between buyer and seller. If a banks formed a coalition and decided they will not support consumer-level access to the BlockChain then the bank’s benefit from the cost savings of the BlockChain but not consumers.
How to solve it
Governmental support will reduce this ability to block the creation of BlockChain networks.
For example, if a government recognised a BlockChain as a holder of digital currency then retail and corporate account-supplying banks would not hold the only key to accessing a consumer’s money.
Also, if a government decides to put its electronic records of property ownership onto a BlockChain then solicitors will be forced to initiate new users into the technology.
Another method is to BlockChain-enable a current, well-used payment provider such as PayPal. As this technology is currently enabled across companies world-wide, an adoption of a single BlockChain which is publicly available will suddenly enable millions of consumers.
Part three coming soon …