Fact or fiction: blockchain needs an ecosystem to succeed

Photo by Robin Noguier on Unsplash

Ecosystem — a large community of living organisms (plants, animals, and microbes) in a particular area.

To be sure, the dictionary definition of the word ecosystem is not the same as Silicon Valley’s adaptation of the word.

When I first learned about ecosystems, it was in my high school biology class. And it was more a box office movie hit Avatar world in my imagination than business terminology.

Nonetheless, the term ecosystem was embraced by technology companies to describe the conduit whereby their creative, and sometimes disruptive, technologies are set-up for global success.

https://medium.com/media/1bdc14c3abd19b0699a36ae57bdeb6a0/href

To put the escapism to one side and head back to our real-world. Global supply chains are an excellent example of when blockchain technology has adopted an ecosystem approach.

“By 2023, blockchain will support the global movement and tracking of $2 trillion of goods and services.” ~Gartner

A case study: supply chains

A few years ago, when I started researching blockchain for business. The most mature solution then was Hyperledger, an open-source blockchain built by The Linux Foundation.

The Foundation is a non-profit technology consortium founded in the year 2000. Their mission is to build sustainable ecosystems around open source projects that accelerate technology development and commercial adoption. So, the Hyperledger blockchain solution was an excellent place for me to start exploring the validity of this new technology.

Photo by Jules Bss on Unsplash

The question I asked myself back then was this;

Blockchain and distributed ledger technology appears to be a groundbreaking and socially transformative technology, but does it make commercial sense for business adoption?

At a surface-level, this innovative technology seems to be an excellent solution for optimizing complex business systems that require collaboration.

How does blockchain help?

In essence, blockchain enhances the ability to increase transparency and trust, where a business would have to engage a third-party to do this for them frequently. Blockchain offers a solution without any need for a middle party while maintaining security and building trust.

In supply chains, which are highly complex systems and often siloed, asset tracking, provenance, transparent record-keeping, and transportation can all benefit from blockchain technology.

From farm to port to shop, these once siloed systems become interconnected businesses using blockchain technology — thereby, it is an industry ripe for technological innovation and disruption.

Walmart, IBM, and HSBC, all household names have seized the blockchain opportunity.

Walmart

Walmart’s food safety initiative uses the IBM Food Trust Hyperledger blockchain solution. The benefit to supermarkets is mainly food traceability in seconds rather than days to help combat health issues related to food.

https://medium.com/media/319bd40396231e430ec8e90273d3cc15/href

Walmart focused on a business-led blockchain project compared to building the technology and then finding a business gap. This initial business analysis is the most powerful way to form business use cases for blockchain.

HSBC

HSBC innovated using blockchain technology to create we. trade. The HSBC partnership platform enables the direct business to business transactions for integrating into a supply chain. Thereby quickly removing barriers for sellers who have not traded before and creating trust where there has been none.

“The we.trade platform is a digital one stop shop for trade. The platform built on the IBM Blockchain Platform using Hyperledger Fabric offers banks’ customers access to a simple user-interface, leveraging innovative Smart Contract and opening up potential new trading opportunities.” ~HSBC

https://medium.com/media/9f8efc682fb15e02049cf78a12bf7164/href

Shipping Ports

Another benefit to supply chain companies is reducing risk at shipping ports, as you see a reduction in manual paperwork; hundreds of pieces of paper can be used for one shipping container, and this increases the risk of theft or loss to a business.

This digital optimization using blockchain technology can provide a solution to enable real-time cargo tracking by innovating alongside IoT devices, and thus increasing real-time traceability and transparency and reducing the loss of goods at port or sea.

Blockchain strategies

Walmart, HSBC, and IBM strategically choose to be a first mover in supply chains, and this a powerful move as they can now mandate participation, thereby adding to the success of the blockchain solution.

Where you have any complex siloed systems that require harmonization, blockchain seems like an ideal solution to explore for cost savings and transformation of business processes.

In regions like ASIAPAC, you see a four times adoption rate of blockchain technologies over The Americas. This adoption is driven mainly by demand, skill, and government investment.

New guiding principles

Finally, another compelling reason to be part of a blockchain ecosystem is that new guiding principles and laws need to be formed as companies more widely adopt blockchain technology. Ecosystem participation is an excellent tool for collective lobbying and adopting new interconnected operating practices.

Clarity of goals, better governance, tools for collaboration, and a shared understanding of risk and the possible rewards of those seeking to transform their operations ecosystems is one way to springboard all of these benefits.

“The US technology sector has led the way in creating collaborative capabilities. The open source movement paved the way for the explosion in apps; Apple Inc.’s products and services were conceived as an ecosystem to provide an enhanced customer experience.

An important characteristic of these innovation ecosystems is that they often exist on top of powerful business platforms that become increasingly difficult to replace over time.” ~Deloitte — University Press

Conclusion

Yes, blockchain is a technology that requires an ecosystem. For this technology to be successful, blockchain projects need to form new coalitions. These new partnerships are essential in our future of technology and work.

To be sure, businesses welcoming ecosystem participation as part of a more comprehensive blockchain strategy are setting themselves up for success.

8 tips for getting involved in blockchain — a beginner’s guide

Get in touch

If you would like more blockchain insights, then check out my other articles at the Blockchain Scout or follow me here on Medium or Twitter.


Fact or fiction: blockchain needs an ecosystem to succeed was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.