How Blockchain Can Be a Creative Disruptor for Business

How Blockchain Can Be a Creative Disruptor for Business

Blockchain – a highly encrypted way of transmitting data over a network – first appeared in the public consciousness with the rise of cryptocurrencies such as Bitcoin and Ethereum, but major companies have been slow to adopt the technology.

Now, a new book by Ravi Sarathy is Professor of International Business and Strategy at Northeastern UniversityAnd the “Enterprise Strategy for Blockchain: Lessons in Turmoil from the Fintech, Supply Chain, and Consumer Industries,” It explores the reasons behind this reticence and offers solutions to the problems that the blockchain still exists.

Blockchain relies on a distributed network of computers to provide “a very high level of encryption,” Sarathi says, with member computers within the network collectively validating transactions.

Ravi Sarathy is Professor of International Business and Strategy at Northeastern University. Photo by Matthew Modono/Northeastern University.

When a transaction is approved, it is added to a “block”, each containing information about the transactions in the previous blocks. When these blocks accumulate, they form a chain, an “immutable” digital record, or ledger, for every transaction that has ever occurred along the blockchain, Sarathi says. “You can go back to 2009, when the first Bitcoin transaction happened, and keep track of literally… every transaction in every Bitcoin ever created.”

He says that thanks to these mass verifications, the blockchain is extremely secure. “The bitcoin network itself has never been hacked. Wallets are hacked, where people store bitcoins, [and] The exchanges that store Bitcoin on behalf of the customer have been hacked,” but the Bitcoin blockchain itself has remained secure.

According to Sarathy, these distributed secure digital records represent the next biggest driver of traditional business. In all kinds of industry, Sarathy says, disruption is important, as it is a force of “creative destruction”.

Describing what creative destruction looks like, Sarathi cites the rise of digital photography over the past 20-30 years. On the one hand, digital photography has eliminated the large business of chemical film photography; On the other hand, the turmoil of the industry has allowed photography to spread into the hands of anyone who owns a smartphone, and a whole new market for both digital photos and new camera equipment.

So how might blockchain disrupt the standard ways of doing business thus far?

Sarathi says that the blockchain essentially promises to simplify some of the most common day-to-day activities of businesses, from validating complex exchanges to removing “middlemen” from web-based transactions.

Traditionally, intermediaries such as banks provide a guarantee between two parties who exchange one thing for another. After a product is introduced, a seller may wonder, “How will I make sure I get paid? The bank represents this kind of counterparty trust.” But the bank charges a fee, Sarathi says.

Using a blockchain solution, “a decentralized network, users can directly transact with each other without the need for an intermediary.”

Take supply chains, a field that the COVID-19 pandemic has thrown into a state of repose. Sarathi noted that traditional supply chains have relied on “bills of lading” to provide “proof that goods were on board, as well as title to those goods. And you can trade [bills of lading] between the parties.”

But, Sarathi is quick to note that these are all paper documents, prone to damage, loss, theft, forgery and simple mistakes.

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