It is very clear that Blockchain will be a disruptive technology – that is to say it will significantly change the way in which operations are managed in the future. In particular it will modify supply chains and distribution networks, and potentially put traditional and newer internet-based intermediaries out of business. Which raises two questions:
- What is Blockchain?
- How will it transform business?
Well, describing exactly what Blockchain is proves to be somewhat challenging. It has been variously described as a secure ‘internet’, ‘platform’, ‘database’ or ‘ledger’. Note the emphasis on the word “secure”. This is because currently the internet does enable the transfer of information, but such communication is not entirely secure. Blockchain on the other hand is totally secure, and hence it enables the transfer not only of information but also “value“. In particular, it enables money to be sent electronically without any financial intermediary i.e. bank being involved. This is best explained in Tapscott and Tapscott (2017) article in the MITSloan Management Review.
So what effect will this have? This too is challenging, partly because the technology is so new and partly because it may have different impacts on different industry sectors. Two weeks ago, Fritz Joussen, CEO of the TUI Group, gave his thoughts on how Blockchain may disrupt the travel industry, as reported here. His company has already moved all of its contracts onto this technology and ultimately is seeking to manage its entire bed stock in this way. Longer term he believes that customers would be able to access this so that they could book directly with TUI, cutting out intermediaries such as Expedia.