Value Offered by Blockchain Questions

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I’m studying for my Economics class and need an explanation.

In Preparing For A Blockchain Future, The Author, Michael Ferguson, Asks 3 Key Questions:
1) What Value Do I Offer My Customer In My Blockchain?
2) What Do I Make Public and What Do I Make Private In My Blockchain?
3) What Incentives Do I Offer To Get People To Join My Blockchain?

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Preparing for a
Blockchain Future
FALL 2018 ISSUE
Consider three key questions when determining how to make
blockchain a useful part of your business strategy.
Michael Ferguson
Vol. 60, No. 1
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Preparing for a Blockchain Future
MICHAEL FERGUSON
Consider three key questions when determining how to make blockchain a useful
part of your business strategy.
their organizations have the necessary skill sets to adopt
it.
To start by unpacking what blockchain really means, let’s
refer to HubSpot’s approachable definition: Blockchain is
“a record-keeping technology that is nearly impossible to
tamper with. That’s because a blockchain’s records, or
‘ledger,’ is hosted by everyone in the network and openly
available to everyone in the network, like a public
spreadsheet that they add to but can never edit or delete.”
Blockchain technology is set to be a major player of the
future digital economy, but many business leaders remain
unsure what that means for their companies going
forward. In a Deloitte survey of 308 senior executives at
large U.S. companies, 39% of respondents had little or no
knowledge about blockchain technology. A survey of
more than 200 board-level, non-IT executives in the U.K.
yielded similar results: About 40% said they do not fully
understand the technology, and less than 10% believe
Copyright © Massachusetts Institute of Technology, 2018. All rights reserved.
But where should business leaders go from there? How
can they determine best practices for utilizing the
decentralized web and make blockchain technology a
useful part of their business strategy? My organization
has found it useful to focus on the following three
questions. These offer particular benefits for platform
businesses, which will need to address weakening
network effects as they lose ownership of participants’
data.
1. W
Wh
hat va
vallue w
wiill w
wee oofffer? This first question gets at the
paradigm shift the decentralized web presents. The
advent of blockchain isn’t just about new ways of
operating. It forces many businesses — platforms in
particular — to take a fresh look at why they exist.
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Consider, for example, eBay, Uber, and Airbnb.
Throughout the era of TCP/IP (the web protocol that
computers use to talk to each other), these platforms have
acted largely as centralized repositories of information.
You want to buy a product, they know who has it for sale.
You need a ride, they know who can give you one. You
need a place to stay, they know who has an extra
bedroom to rent.
But as blockchains become more common, this kind of
information will become publicly available and
searchable. You won’t need a centralized authority to
show you who has the waffle maker you’re looking for;
you’ll be able to see a verified record of who is selling the
waffle maker you want at a price you’re willing to pay and
who has a track record demonstrating trustworthiness in
such exchanges.
To stay relevant, companies will need to provide value in
new ways. This requires creative thinking. In the case of
my startup Rainmakers, our current business model
focuses on placing sales professionals with leading
technology companies. However, people will soon own
and fully control the data that they now make available
and view on our platform. Hiring managers will be able
to find candidates with the right skills, experiences, and
recommendations to meet their needs — without our
help.
Read more free MIT SMR articles on the future of
blockchain.
What Problems Will You Solve With Blockchain?
Blockchain Is Changing How Media and Entertainment
Companies Compete
Copyright © Massachusetts Institute of Technology, 2018. All rights reserved.
So, we’re investigating other ways to make hiring
managers’ lives easier. These offerings include phone
screening, validation of candidate data, and onboarding
support. We’re also exploring how we might help
candidates make themselves more attractive to employers.
We’re rethinking our business model because blockchain
could render the old one obsolete. This kind of strategic
foresight and ability to sense and pivot will be crucial for
organizations trying to compete in a blockchain-enabled
world.
2. H
Hoow p
pu
ublic w
wiill oour
ur bblo
locckchain
inss bbe?
e? The next step is to
decide whether to invite everyone into the blockchain
network or create a more limited system just for verified
participants. This, too, is a strategic question. It involves
weighing the advantages and risks of an “open source”
approach.
My team could end up doing both. For instance, we
might build a public network where candidates can share
much of the information that employers are looking for
and also set up a private one with paid access to more
granular data about individuals’ work experience and
sales records. For everyone in the private blockchain —
candidates and companies alike — all public and private
information would be funneled through one integrated
profile, simplifying the user experience.
Having a robust and growing public blockchain would
draw all the right players to our business, including job
seekers, hiring managers, and other staffing companies.
And the bigger our public blockchain becomes, we’re
betting, the more companies will want to pay for access to
the private one.
3. W
Wh
hat in
incen
centtives w
wiill w
wee oofffer ttoo p
paartici
icip
pate? We
recognize that we won’t suddenly have millions of
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individual job seekers and staffing companies creating
profiles on our blockchain. We’ll need to draw them in by
first attracting a critical mass of hiring companies to the
platform early on — which means providing immediate
value to those partners.
training and assessment. Employers who use our site
could earn them by validating employees’ data and spend
them on vetting and onboarding services. We could allow
third parties to provide services on our platform and earn
tokens, as well.
Even if the number of candidates on our private
blockchain is small at first, we’ll be working to gather
information from them that isn’t available elsewhere —
this kind of information will help companies make the
right hires, as we’ve seen over the years placing
salespeople into different organizations. Likewise, other
businesses could follow a similar model, capitalizing on
their expertise in their respective industries while moving
to a blockchain strategy.
To Innovate, Be Willing
to Evolve
For example, businesses might offer crypto tokens, or
blockchain assets, as additional incentives for
participation. (For a helpful primer on tokens, see “Some
Simple Economics of the Blockchain,” a working paper by
Christian Catalini of MIT Sloan School of Management
and Joshua Gans of the Rotman School of Management.)
We’re considering how we might use tokens as incentives
at Rainmakers. We could allow job candidates to earn
them for keeping their résumés updated, for example, and
cash them in for enhanced visibility on our platform, the
chance to apply for certain positions, or services such as
Blockchain and the decentralized web aren’t just hype.
They’re what lie ahead. According to the Deloitte survey,
21% of senior executives who are informed about
blockchain indicated that their company has already
brought the technology into production, while 25% plan
to do so within the next year.
Copyright © Massachusetts Institute of Technology, 2018. All rights reserved.
Of course, our strategy will most likely evolve as we see
how blockchain technology is adopted in our industry
and as our own implementation presents new challenges
and opportunities. That will be the case for every
business. It’s important to revisit these three questions
and continually assess and adjust the business model.
Businesses that don’t sort out their blockchain strategy
soon risk being disrupted by competitors and, worse,
watching their entire business models go obsolete.
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About the Author
Michael Ferguson is the CEO of
Rainmakers. He previously founded
two other startups and holds an
MBA from University of Oxford’s
Saïd Business School.
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Explanation & Answer:
4 Questions

Tags:
Information security

Blockchain Technology

Blockchain future

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