A thesis on decentralization — not embracing blockchain will be non-competitive
In a data-driven world, open access to databases will be a competitive advantage in fostering human experience.
The human race is entering a 4th industrial revolution, powered not only by unparalleled access to data, but also multiple paradigm shifts in how we can use it. Technologies such as AI, Quantum Mechanics, and more seek to pioneer this 4th coming, leveraging data as their lifeblood. But blockchain, in my opinion, is not yet fully appreciated for its potential to become the infrastructure on which this future is built. The blockchain will shape the way industries store and access data, leading to innovations in how businesses use data to better the world. Let’s take a look at why and how this will happen, beginning with why businesses even exist in the first place.
Businesses exist to solve problems in the most effective way possible. Their capacity to do this depends on their knowledge and understanding of a specific problem, combined with their access to the resources required to solve it. This is a relationship powered by data, whereby more understanding leads to better resources.
Photo by Alexander Sinn on Unsplash
For example, Domino's had the resources to offer me 3 am delivery last Friday night because they know people in my area will pay for that service, so they built the necessary infrastructure ahead of time. The location, staff, ingredients, and more were all acquired and assembled in anticipation of that need, based on the data they had access to.
Right now, businesses work very hard to accumulate their own data and every company typically has its own siloed view of who you are. Domino's knows I love late night pizza, Tim Hortons knows my stepdad loves large double doubles (the most popular coffee in Canada), and Spotify knows my girlfriend is obsessed with MGK (she’s in the top .5% of listeners according to her Spotify Wrapped 😳). But none of these organizations have much understanding of who I am outside of their own customer experience, and they have zero understanding of what I do within another business’ journey, because that data is protected by closed, individual databases that are mostly incompatible with one another.
This system works well for competitors, but what about two companies that would like to partner and expand the quality of data and resources available in solving their respective problems?
Today, the difficulty of onboarding outside partners into a modern company’s data ecosystem is high. But with blockchain it’s frictionless. Scaling networks becomes efficient down to a micro level due to the transferability of blockchain-stored data. The network effects created by this will cause businesses that fail to adapt to fall behind, no matter how great their individual product or service offering may be. To understand why, let’s look at an example of how the blockchain could augment the experience of popular coffee and sandwich franchise, Tim Hortons, using data.
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Right now, Tim Hortons has a lot of valuable data about who their customers are, where they are, and when they want quality hot drinks and food. They’ve used this information to determine where Tim Hortons franchises will be located, what will be served there, and how they will service the customers that shop there. Through their rewards app, they can even take things a step further by establishing a digital identity for each customer within their ecosystem based on their unique purchase history; a profile consisting of data that is transferrable across their physical and online experiences. Meaning, if I buy a double double in Toronto, I might earn a free coffee through the app that I can redeem in Montreal. Pretty cool. But my digital identity within the Tim Hortons ecosystem offers me no value beyond those limits. Pretty lame.
The blockchain will change that. Let’s take a look at how with another example. For those who don’t know, Tim Hortons is a common road trip stop along Canada’s highways. So imagine a future where third party vendors along a specific highway can recognize my Tim Hortons data and offer me their own rewards like cheap gas or a geo-fenced Spotify Premium membership; additional value beyond the free coffee I already earned. This is possible today, but it would be a massive hassle to integrate each of those respective companies’ databases and processes.
A representation of a blockchain data network. Photo by Shubham Dhage on Unsplash.
The blockchain simplifies things. By connecting my Tim Hortons digital identity to data stored ‘on-chain’, my digital identity is no longer stored within a closed Tim Hortons database. Instead it’s on the blockchain, where it can be efficiently accessed by these third parties. Thus, through being identified by Tim Hortons as a known road trip coffee drinker, I can unlock an incredible tailored road trip experience through multiple third party vendors. Because they will have open access to this information.
If I’ve lost you, remember the blockchain is simply a public ledger that anyone can use. So anything known about me there, can be known by anyone. Tim Hortons would have the option in this case to decide how much information of mine to store ‘on-chain’, but a simple solution would be to categorize me with something like a ‘Road Tripper Digital NFT Badge’ which is viewable and verifiable on-chain, but maybe doesn’t reveal anything more specific about my shopping habits. Third parties can recognize my status and offer me rewards, but competitors have no additional info to go off of.
A representation of how blockchain networks become interconnected and interoperable. Photo by Shubham Dhage on Unsplash.
Now, imagine another coffee shop doesn’t offer these same rewards as Tim Hortons through the blockchain, ignoring the potential long-tail customer experience they could offer me. Personally, in this case, I would always choose Tim Hortons for my hot drinks because it will let me tap into the network of value described in the road trip example above.
This is not limited to Tim Hortons or Starbuck’s Third Place either. The value of individuals owning their digital identity and being able to transfer that value into a network of participating parties will extend across gaming, sports, academics, and virtually every industry you can think of. It will even create brand new industries yet to be discovered.
Of course, the efficient scalability of networks built on the blockchain is what will make this future achievable and inevitable, but more than that, it will be powered by a profound human truth: People like owning things. In the past it was impossible to truly own a digital asset. You have your Facebook profile, your personal website, your investment account and your Fortnite skins, but none of that is truly ‘owned’ by you. Meaning, primarily, that you can’t transfer that value outside of those systems the same way you could with a physical item, like a shirt that can be worn anywhere or a car that can be driven anywhere. But now, for the first time, your digital life becomes a verifiable representation of who you are—owned by you and molded by your behaviour—just like in the physical world.
And that’s all the metaverse is, really. It’s not virtual worlds or flashy avatars. It’s this immersion of the digital experience into what it means to be human. Businesses that fail to recognize this shift and begin participating in its evolution simply won’t satisfy the core purpose of what a business does. Which is to solve problems in the most effective way possible.