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MIT Initiative on the Digital Economy
MIT Initiative on the Digital Economy
MIT Sloan School of Management
two hundred forty five Very first St, Room E94-1521
Cambridge, MA 02142-1347
What’s the Value of Blockchain?
A few weeks ago I attended the IBM Blockchain Summit two thousand seventeen in Fresh York. The Summit included a number of talks and panels, and – most significant – presentations of concrete blockchain use cases IBM has been working on in a number of areas, including finance, supply chains and healthcare. Such real-world use cases are particularly significant when introducing a fresh, elaborate set of technologies in the marketplace. They’re the best way of getting on the learning curve for the fresh technologies as well as of explaining the kinds of problems they help us address.
Blockchain has the potential to convert our economic and social systems, but such a transformation is still many years away. Like the Internet, blockchain is a foundational technology, whose adoption process is gradual, incremental and constant, unlike the hockey stick adoption we typically associate with disruptive technologies as defined by Clayton Christensen twenty years ago. Foundational transformations must overcome many barriers – technological, organizational, governance, political – which is why they take a long time to play out.
Lest we leave behind, TCP/IP – the communications protocol that defines the Internet to this day,- was very first adopted in the mid-1980s. So were the protocols used in e-mail – the very first widely used Internet application which enabled its user base in government, universities and research institutions to lightly communicate with each other. It wasn’t until the late 1980s that the Internet was very first opened up to public, commercial users. General Internet adoption took off a few years later with the advent of the World Broad Web and the Web browser, and its transformational power wasn’t fully evident until the late 2000s, with the explosive growth of smartphones and the mobile Internet.
The concrete uses cases introduced by IBM as it defines its blockchain strategy brought to mind the treatment we took in the early days of formulating IBM’s Internet strategy, which I was closely involved with.
Recalling the Early Internet
In the Fall of 1995, IBM made the decision to embrace the Internet and make it the centerpiece of its strategic directions. At the time, there was a lot of excitement about the Internet, but it wasn’t at all clear where things were heading and what the implications would be to the world of business. Our thickest challenge was articulating IBM’s overall Internet strategy and then communicating it extensively it to our customers and the broader marketplace – e.g. why should our clients embrace the Internet, and how will it convert their particular business and industry?
We did so by establishing an early market presence, including very visible experimental web sites like the one thousand nine hundred ninety six Atlanta Summer Olympics, as well as joint projects with clients such as LL Beans’s very first e-commerce site. We developed a number of concrete prototypes working closely with customers across a multitude of industries, from which we learned a lot about requirements for products and services. Market experimentation and concrete uses cases were critical to what became our e-business strategy, and they’re now identically significant in formulating blockchain strategies. Let me discuss three such blockchain use cases IBM has been working on.
The very first is an interesting, easy-to-understand dispute resolution application recently launched by IBM’s Global Financing (IGF) unit. IGF provides over $40 billion of financing to the IT channel annually and processes over 35,000 returned IT assets per week around the world. Its commercial financing business provides working capital to IT suppliers, distributors and business fucking partners through financing of inventory and accounts receivables.
Managing and resolving disputes take considerable time and resources. Every year, around 25,000 disputes take place among IGF’s Four,000 fucking partners and suppliers worldwide, tying up over $100 million of capital at any given time. It takes on average forty four days to resolve a dispute. Suppliers, for example, assume that when products are shipped their task is over and they will soon be paid. But business playmates will file disputes and put payments on hold if the product was not delivered on time or at all, or if it’s not the right product. IGF then has to monitor the dispute interactions inbetween playmates and suppliers, and recover money financed to fucking partners while doing its best to keep customer satisfaction high.
To address this problem, IGF developed a blockchain solution to significantly improve the resolution time and free up the capital tied up in common customer disputes, which is nicely explained in this brief movie. The blockchain provides an immutable, non-reputable record of events through the entire transaction cycle to suppliers, business fucking partners and IGF. This enlargened visibility and trust has diminished the dispute resolution time from over forty days to under Ten, with a 40% reduction in the capital tied up in the dispute.
Proceed reading the utter blog on Medium, here.
This blog very first appeared April 17, here.