Blockchain application: from technical tools to innovative thinking

This article will discuss two issues:

1. What is the current development status of the blockchain market?

2. What is the value of the “+blockchain” and “blockchain+” models?

Current status of blockchain development

It has been 13 years since the Bitcoin white paper was released. People have been continuously understanding the blockchain, defining the blockchain, iterating the blockchain, and implementing blockchain applications. Related products have expanded from encrypted assets to the fields of supply chain finance, government management, supply chain traceability, and data storage. Although the number of projects on the ground is increasing rapidly, in addition to the financial sector, what value can blockchain play in the physical industry? It is generally believed that it is difficult to implement blockchain applications.

Existing studies explain this phenomenon from many aspects, including:

First, the current technology cannot stably support commercial applications. For example, there is a lack of key technologies of high availability, high performance, high scalability, and security and privacy.

Second, the supporting facilities are insufficient, resulting in no data available. For example, most small and medium-sized enterprises are undergoing dumb equipment transformation and lack available data.

Third, the value that blockchain brings to enterprises cannot match the investment for the time being. At present, the main projects focus on data on-chain services such as certificate deposit and traceability.

Fourth, companies lack knowledge of the basic principles of blockchain technology, so there will be conflicts between supply and demand in the market: technology providers wonder what problems the demand side has to use blockchain technology to solve, and the demand side wonders what blockchain can do. There is a lack of service providers.

Fifth, the main battlefield of the blockchain-the compliance of the data trading market is still being explored.

The market value of blockchain

What is the market value of the blockchain? We have to return to the concept of blockchain. In the past 13 years, the concept of blockchain has been iterated in multiple versions, and the definition of each version is also quite different. Some definitions think that the blockchain is a new technology, others think that the blockchain is a tool that integrates multiple technologies, and some definitions think that the blockchain belongs to a higher dimension and represents a kind of innovative thinking.

This article quotes the definition of “Information Technology Blockchain and Distributed Ledger Technology Reference Architecture”: Blockchain is a distributed ledger formed by sequentially adding blocks confirmed by consensus using cryptographic technology. It can be seen from the definition that the blockchain includes various technologies such as cryptography, consensus algorithms, and distributed algorithms. So is the blockchain a technical tool or innovative thinking? Next, discuss the issue from two aspects: “+blockchain” and “blockchain+”.

1. The status quo of “+blockchain”

Except for encrypted assets, most of the existing projects in other markets belong to the “+blockchain” model, that is, companies store business data on the chain through a hash algorithm to ensure the authenticity of the data and cannot be tampered with. Under the “+blockchain” model, the original end-to-end business model of the enterprise is not affected, and the blockchain is used as a technical tool to solve specific business problems. We take the case of “traceability” as an example to discuss in detail, focusing on the following three questions: (1) Does traceability belong to the basic needs of the enterprise[i]? (2) Can traceability be achieved through traditional centralized means? (3) From the perspective of return on investment, is it worthwhile for companies to invest in blockchain technology?

The first question is whether traceability belongs to the basic needs of the enterprise? Before answering this question, we need to clarify why we need to trace the source. For the production enterprise itself, it is necessary to understand the circulation of the product through traceability information, which is used for product upgrades and production plan adjustments. For customers, they need to refer to the basic product information (including origin, production information, etc.) to make purchasing decisions. For third parties (regulators, banks, etc.), supervision and financing are carried out through traceability information.

We will continue to discuss the first issue in conjunction with the second question “Can traceability be achieved through centralized means”. In a centralized way, each participant only holds data at a certain stage of the supply chain, thus forming a number of data islands. Due to business data security concerns, companies generally do not share data in a traditional environment, and few companies can obtain complete data in the supply chain, which leads to the failure of a true closed loop of supply chain information flow. In the supply chain management stage of the fourth source of profit, subject to technical and security concerns, opening up data islands in the supply chain has become an expected demand of enterprises [ii]. However, entering the digital transformation phase of the fifth source of profit, it is expected that demand will gradually become basic demand. In this context, opening up the supply chain data islands to obtain full-cycle data has become a basic requirement for business development, and data security after opening up the data islands will become a pain point for enterprises[iii].

In order to meet the basic needs and solve the pain points, there are currently three solutions: the first is to build an industrial Internet platform around the core enterprises in the supply chain, through the industrial Internet platform to achieve the integration of IT and OT, to break the data island, and at the same time to achieve privacy computing. Data privacy protection. In this way, data security mainly relies on the endorsement of the platform owner’s credit, that is, the belief that the platform owner can properly keep the data and will not use the data without authorization. The second method is “Industrial Internet + Blockchain Technology”, which encrypts “critical data” on the chain to ensure the authenticity and security of the data, the certification of product quality, and meet the regulatory and management requirements of third-party agencies . The third method “blockchain + industrial Internet”, such as the distributed cognitive industrial Internet of Wanxiang blockchain, the source data is encrypted on the chain, does not rely on the management of centralized institutions, and solves the problem of data islands and solves the problem of data silos through technology The security issues in the data sharing process make the entire process data controllable and available.

The third question is, is it worthwhile for companies to invest in blockchain for traceability? Traceability itself cannot be profitable, and can only be used as a guarantee function, that is, when an emergency occurs, it helps to quickly locate and solve the problem. Real data in a centralized way can be used for internal decision-making and product optimization of the enterprise, but the data provided by the centralized platform is not convincing for the external market of the enterprise (including customers, partners, regulatory agencies, and financial institutions, etc.). In a centralized manner, it takes a lot of time, energy, and cost to prove the authenticity of “real data”, and the cost of establishing trust is very high. In this case, blockchain can help companies solve their worries. Back to the question itself, is it worthwhile for companies to invest in blockchain for traceability? This question can be asked in another way, that is, does the company need to prove the authenticity of the data to the external market in a low-cost way? This needs to be answered according to the type of enterprise and its strategic development positioning.

Based on the above analysis, companies need to be clear about the purpose of investing in a technology or tool; if the source is traced to the source, this does not belong to the basic needs of the company. But if it is the need of an external organization, traceability may be the basic need of the enterprise. Taking bank financing loans as an example, there are some light asset-light companies with strong profitability in the market that require a large amount of funds (basic demand) during business expansion, but it is difficult to obtain financing loans from banks (pain points) because they have no collateral. In this case, the blockchain platform can play an important role in helping companies lock in operating cash flow data and use trusted data to obtain financing from banks to solve corporate pain points. This scenario is a typical application scenario of “+blockchain”.

In general, “+blockchain” defines the blockchain as a technical tool that uses blockchain tools to solve specific business problems within the enterprise without changing the original business model of the enterprise. Affected by the inertia of thinking in the use of traditional technologies and tools, customers prefer standardized platforms and products, but the problems that different companies need to solve are different. Therefore, under the “+blockchain” approach, it is recommended to provide customers with more past cases as a reference to help customers quickly locate their needs.

2. “Blockchain+” development

Different from the tool function in “+blockchain”, “blockchain+” advocates a kind of thinking, rather than pure tools and technology. “Blockchain+” thinking requires everyone to not think about what the blockchain can do from the standpoint of basic needs and expected needs. The mission of “Blockchain+” is to reshape the business model based on credible data, to subvert the traditional business model, and to meet the new needs of society through innovation and iteration. What specific effects will the business ecology under “blockchain+” show? There is currently no standard answer. Whether it is the government, research institutions or the industry, they are further understanding and innovating. Let’s make a simple analysis with reference to the projects on the public chain and current industry discussion hotspots.

(1) Ecological governance

The construction of a traditional business ecosystem relies more on the power of the government and leading enterprises. From the perspective of benefit maximization, each participant in the ecology has different goals, and it often happens that the development direction of the business ecology goes against the organization’s own benefit goals. In this case, most institutions usually choose to safeguard their own interests, leading to stagnant or even retrogression in the development of the business ecosystem. In the “blockchain+” consortium chain ecology, each participant becomes a stakeholder. The alliance chain ecology not only binds the interests of participants, but also binds the interests of participants. In other words, when ecological interests are lost, the interests of participants will also be damaged. It is this kind of interest binding that allows each participant to actively participate in the governance of the ecology. In the future, business will no longer be a competition between supply chain and supply chain, but a competition between ecology and ecology. The application of blockchain will gain greater business opportunities in ecological construction. Therefore, the “blockchain+” model will change the way of ecological governance and change the relationship of multi-party collaboration.

(2) Data flow

In our lives, a digital world parallel to the real physical world has gradually formed. The element in the digital world-data, the economic value generated can be mapped to the physical world and generate greater value. In this process, we need to formulate complete data management rules (storage rules, transaction rules, etc.) and solve security issues in data circulation. The ecological construction under the “blockchain+” model can realize data right confirmation, data circulation rules and data security guarantees, and some new roles will emerge, such as data banks, data trusts, etc., to build a more complete digital world.

(3) Commercial innovation

The most fundamental meaning of blockchain is to reduce the cost of trust, which can bring us many daydreams, including payment methods, transaction methods, lifestyles and ecological construction methods. For example, NFT has the characteristics of indivisibility, irreplaceability, and uniqueness, which can help us establish the property relationship in the digital world. NFT texts, pictures, and videos are equivalent to having a unique identity in the digital world. No matter how many copies of the information are copied, the original with the NFT identity is protected, protecting the intellectual property rights of the original creator. The application of NFT in a wide range of goods and services will make it possible for the Internet to move from the “Internet of Information” to the “Internet of Value”.

Note:

Basic requirements, also known as necessary requirements, are attributes or functions that customers consider “must have” for a service/product.

Expected demand refers to a product that can better meet the needs of users within the scope of users’ awareness compared with existing products.

The pain point is the problem that the customer encounters in the process of meeting the basic needs. If the problem is not effectively solved, it will affect the normal development of the business.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/blockchain-application-from-technical-tools-to-innovative-thinking/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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