How Blockchain Technology Will Redefine Business Models

How Blockchain Technology Shifts Business Models

Blockchain technology is more than crypto-currencies, and it’s coming to an industry near you.

At Bloomberg’s Value of Data conference, sponsored by Western Digital and hosted in New York, IBM joined three panelists to discuss the new business models coming out of three different industries—all driven by blockchain technology.

  • IBM Blockchain General Manager, Marie Wieck
  • Walmart Vice President of Food Safety, Frank Yiannas
  • UN Engagement and Blockchain Technology Special Advisor, Yoshiyuki Yamamoto
  • Patientory CEO, Chrissa McFarlane

Industry #1: Blockchain Technology in Food Safety

“Walmart is not chasing blockchain technology. What we’re trying to do is solve challenges in the food system.” – Frank Yiannas, Walmart

Frank Yiannas of Walmart talked about how today’s food system is incredibly complicated, with many players involved between the farm and when a food item hits store shelves. When contaminants are found and recalls happen, it’s incredibly hard to pinpoint exactly which items are affected and immense waste is occurring when extra food is pulled for safety.

How Blockchain Technology Will Redefine Business Models

The size and scope of the system is another current barrier to visibility. Three key factors attracted Walmart to the possibility of using blockchain in the food supply chain:

  • Visibility: Human and digital interaction with validation along the chain makes it much easier to see discrepancies or trace an issue to the source
  • Validation: Everyone involved has access to the information, allowing for natural checks and balances
  • De-centralization: No one entity is a service provider, so all share in the workload and benefits

Remember the horse meat scandal in UK and Europe? In the short video below, Marie and Frank talk about how that could have possibly been prevented by blockchain making any fraud much more visible.

“I’m convinced that if you just take what’s happening today and put it on blockchain, you’ll deter a lot of food fraud activity.” – Frank Yiannas, Walmart

Industry #2: Blockchain Technology in Healthcare

“While it’s still early, we are definitely seeing governments beginning to adopt blockchain technology for health services.” – Chrissa McFarlane, Patientory

Chrissa McFarlane of Patientory shared that some federal agencies are looking to blockchain to help secure health data and decrease breaches which she cited can cost up to $700,000. One example is encrypting data tied to electronic medical records (EMR), which Patientory is currently piloting.

But medical data raises the privacy question as well.

Maria Wieck from IBM addressed the balance of transparency with governance and confidentiality when implementing blockchain for sensitive uses like healthcare. Regulations like GDPR are beginning to emerge with the objective of empowering people to take control of their own data. One example is shared in the short clip below.

“Technology isn’t the issue so much as it’s a governance issue.” – Marie Wieck, IBM

But do people understand the notion of owning their own data enough to take advantage of it?

Chrissa believes it’s a company’s fiduciary duty to educate the consumers whose data they are collecting or working with. And IBM has already opened a Center for Blockchain & Data Transparency with Columbia University to examine these key issues and help inform policies.

Industry #3: Blockchain Technology in Government & Humanitarian Efforts

Data traceability is very attractive for public offices. “We want to make sure anything we spend public money on is spent only on ethically sourced materials and services,” says Yochiyuki Yamamoto of the United Nations.

Marie added that blockchain can also help ensure the promises of organic, non GMO, non-conflict minerals and diamonds for consumers. It can reduce scalping and robo-buying of concert tickets, and help ensure charitable donations are going where they are supposed to.

How Blockchain Technology Will Redefine Business Models

“Blockchain is an interesting technology because it’s so de-centralized and difficult to break it down.” – Yoshiyuki Yamamoto, United Nations

Yoshiyuki also shared the UN vision for blockchain-assisted economies. “Failing states are the root cause of many other problems such as hunger and education.” He explained how blockchain could provide people with the ability to rise above an oppressive state and participate in a digital economy that ultimately raises them from poverty and oppression.

Although Walmart’s focus is food security, Frank expressed that a new, de-centralized world where everyone gets smarter together is very possible using this technology. He addresses how it applies to all industries where shared value is created in the clip below.

There is a misconception that blockchain actually requires heavy processing.

Marie explained the difference between the mining required for crypto-currencies vs the anonymous networks that don’t require it, thus don’t require the same amount of processing power:

Marie went on to cite that it’s actually more efficient to remove the “middle man” inherent in virtually all our digital and internet models today with the app or service provider connecting two parties or activities.

That middle entity is the one setting the privacy policies and price points. Blockchain eliminates the middle step by re-distributing the network and allowing everyone participating to have an equal share of both the workload and the benefits.

And for those concerned about too much transparency …

The panel expressed you should know that blockchain transparency doesn’t necessarily mean everything is public.

Marie cited that the hyper-ledger fabric opensource technology IBM uses actually allows for different “channels” where visibility can be owned by a series of users all self-governing their own ledger. This makes the information easily accessible to everyone within a given chain, and readily available should it need to be shared more broadly or traced.

This is an important distinction to understand when addressing the rate of adoption.

“Blockchain incentivizes collaboration by democratizing information though a de-centralized and distributed database.” – Frank

Igniting The New Business Model

“This is a very large, burgeoning field and it will change business models and the value chains affecting them,” said Marie. As a business leader, it’s important to get informed and get some experience. One way to do that is by joining a network relevant to your business.

Frank was a major skeptic at first, but once he started studying and working with blockchain, he was transformed into a blockchain believer. “Food safety can’t wait, so if you have a use case that could benefit get started now.”

He cited that the most important benefit will ultimately be that we create a more responsible world.

“When you can trace, track and monitor in any system, that drives a new level of transparency. Transparency leads to accountability—because you’re being watched. And I like to be optimistic and believe that accountability will lead to responsibility. Because people will self-govern their behavior knowing they are operating in an accountable system.” – Frank Yiannis, Walmart

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