Unblocked Read online

  Preface THE ELEPHANT IN THE ROOM

  Introduction DAWN, RISING

  I. A MOVEMENT BUILDS

  1. KINDLING, MEET MATCH

  2. CATCHING FIRE Bite While the Apple Is Raw Chance, Unchained

  Opportunity Hidden by Complexity

  The Six Forces of an Unblocked Era

  It’s Time

  3. WHAT IS A BLOCKCHAIN? Beth Is Correct At the Center: Decentralization

  Value Exchange Made Smarter Through “Smart Contracts”

  Why is it Called a Blockchain?

  Blockchain or Blockchains?

  What Does Bitcoin Have to Do with Blockchains?

  The Many Roles of Cryptoassets

  Retaining Privacy When the Ledger is Open to Everyone

  So What?

  Blockchains Across Industries

  4. THE GENESIS OF THE UNBLOCKED CUSTOMER The Consumer Technology Created

  How Did We Get Here? The Internet: Built to Fail

  Enter Blockchains

  The Era of the Unblocked Customer

  A Whole New Layer of Expectations

  Blockchain-Era Expectations Will Put More Pressure on Businesses

  Why Now?

  A Huge and Disillusioned Generation

  The First Technology with Democratization Baked In?

  5. TORTOISE OR HARE? How Far Along Are We? The Age of Open Innovation

  Unlocking the New Tools of Open Innovation

  Breaking Away from Silicon Valley

  The Decentralization of Entrepreneurship

  There Will Be Blood

  Building on The Backs of Failure

  II. THE SIX FORCES OF AN UNBLOCKED FUTURE

  6. MORE VALUE Summary

  The Setting Wired for Middlemen

  The Rising Cost—and Power—of the Middleman

  When Cost Is Uncovered

  What Blockchains Make Possible Pure Peer-to-Peer

  In Code We Trust A Broad Range of Industries Are Vulnerable

  Implications: A New Balance of Power Death by Blockchains?

  The Middleman Is dead. Long Live the Middleman!

  We’ve Welcomed New Middlemen into our Lives

  The Hinge is Value

  Customers Don’t Understand What They Can’t See

  At Some Point, the Unblocked Customer Will Question Your Worth Value Is Not One-Size-Fits-All

  The Sharing Economy, Everywhere

  We May End Up Somewhere in the Middle

  The Next-Gen Middleman

  The Importance of Clear Value The Value of an Ecosystem

  Put a Spotlight on Hidden Value

  Cautions and Considerations Cautions

  Considerations

  Examples Decent: Affordable Health Insurance for All

  Open Garden: Disintermediating the Internet Service Provider

  Lantmäteriet: Streamlining Land Registry

  7. DEEPER TRANSPARENCY Summary

  The Setting Seeking Assurance in a Complex World

  Consumers Expect More

  Sustainability and Responsibility: The New Corporate Norm

  Everyone Is a Stakeholder

  The Focus on Sustainability Is Here to Stay

  A Business Case for Urgency

  Transparency Affects How Our Brain Perceives a Brand

  Trust in Crisis Fake News Fuels Skepticism

  The Elusive Nature of True Transparency

  What Blockchains Make Possible All-Seeing Meets the Ever-Knowing

  Coding for Trust

  Tracking the Intangibles: Can Blockchains Kill Fake News?

  One Feature Set Drives Value for All

  A Step Toward a Better World

  Implications: When Authenticity Becomes More Than a Buzzword

  Blockchains for the Bold and the Brave

  The Appeal of a Killer Combination Business-First View: Yet Another Digital Transformation Must-Have?

  Society-First View: Will Pioneers Push Progress?

  Refining Customers’ Taste for Transparency

  A New Spin on Spin?

  This Is a Natural Next Step in Our Journey

  Cautions and Considerations Cautions

  Considerations

  Examples Provenance: Meaningful Change through Supply Chain Transparency

  Blockcerts: Trustworthy Digital Records

  GiveTrack: Holding Charities Accountable for Use of Donations

  8. FAIR COMPENSATION Summary

  The Setting Imbalance is Baked into our Digital Norms

  We’ve Been Willingly Looking Away

  But Now, We are Poised for a Shift

  Primed for a Better Alternative

  What Blockchains Make Possible Blockchains as a Foundation for a More Sustainable Digital Future

  Blockchains Promise Direct and Feature-rich Compensation

  Value Will Solidify (One Way or Another) with Market Maturation

  Implications: What Happens When Your Customer Knows Their Worth The Birth of the Alternative

  The Short Journey from Exposure to Expectation

  Where It Could All Begin

  Contribution Doesn’t Always Mean Human

  Compensation Doesn’t Always Mean Money

  Toward a More Balanced Future

  Cautions and Considerations Cautions

  Considerations

  Examples Steemit: Compensation for Contribution

  Brave: Get Paid to Browse

  9. ALIGNED INCENTIVES Summary

  The Setting The Steady Extinction of the Loyal Customer

  Being Heard Is Harder Than Ever

  New Tools Haven’t Always Driven ROI

  Loyalty Programs Are Broken

  What Blockchains Make Possible Powerful Incentives at Scale

  Hit Me Again, Please: What the Heck Are Tokens?

  Your Token or Mine?

  Tokens Build on a Foundation of Behavioral Psychology

  Fine-Tuned Calibration—and Impact

  The Potency of Tokens + Gamification

  More Powerful, Aligned Communities

  Blurring the Lines between Business Owners and Participants

  Implications: Program the Incentives, Program the Behavior Driving Escalating Commitment

  Stoking Community through Tokens

  Using Tokens to Shape Individual Behavior

  Incenting Not Just Action, but Impact

  The Next-Gen Influencer Strategy

  Using Blockchains to Ensure Quality

  But Where Do You Start?

  Agile Strategies, Smarter Marketing

  Reinvigorate the Loyalty Program

  The Power of Partnership

  The Beauty of System-Wide Alignment The Dangers of a Coin-Operated World

  Cautions and Considerations Cautions

  Considerations

  Examples Swytch: Incenting Global-Scale Adoption of Renewable Energy

  Mobivity: Aligning an Ecosystem of Brands and Consumers

  10. BIGGER DATA Summary

  The Setting Businesses Fueled by Big Data

  Falling Short of the Big Data Promise

  Fighting the Idea of Ownership

  IoT Fuels the Fire

  Is It Time for a New Deal on Data?

  What’s Coming Next Could Change Everything

  What Blockchains Make Possible Who Really Owns the Data?

  Your Very Own Black Box

  Consumer at the Controls

  Securing and Protecting the Data

  The Potential of New, Powerful Data Layers

  The Blockchains Themselves Are Public Data Layers

  At the Starting Line

  The Two-Edged Sword of the Blockchain Data Story

  Implications: Rethinking the Rules of Competition Bigger, Better Data

  The Vision of the Data Market
place

  The Redefinition of Competitive Advantage

  Data Science Quality Could Be More Important Than Ever

  The Power of Relationships

  The Importance of Mission

  Growing Awareness of the Value of Privacy

  A Shift That Presents Nuanced Challenges

  Know Thy Data, Know Thyself

  Enabling a New Wave of Innovation?

  Cautions and Considerations Cautions

  Considerations

  Examples uPort: Take Back Control of Identity

  Ocean: Unlocking More Data

  11. NEW MODELS Summary Flipping Conventional Wisdom

  Extreme Peer-to-Peer

  The Big Flip and “Super Platforms”

  As Things Get Smaller, Value Gets Bigger

  Programmable Assets

  Machines Working Together to Serve Us

  Social-Aligned Models

  III. UNLEASHING AN UNBLOCKED FUTURE

  12. WHERE TO BEGIN Now, Where to Begin?

  Organization Models Birthed from Disruption In the Blockchain Era, This Is Not Good Enough

  Isolate or Integrate?

  Time to Rethink Innovation

  Heterogeneous Collaboration Required

  Effective and Diverse

  Blockchain-Era Table Stakes Open Mindset

  First, Search Within

  Connect the Nodes

  Put the Customer at the Core

  Change Agents in Action Lydia Krefta: Shared Knowledge Drives Innovation

  Diana Biggs: From Cypherpunk to Enterprise Innovation Leader

  13. CORPORATE INVESTING IN BLOCKCHAINS The Challenge and Opportunity in Early Moves

  Three Investment Strategies for the Corporation Investing in Disruptive Capability

  Debuting Cryptoassets in Portfolio Strategies

  Using Tokenization to Remove Friction from Capital

  A New Frontier for the Corporation

  14. THE BIG SMALL PRINT Be Skeptical

  Don’t Write off the Toys

  Don’t Overestimate Who Cares about Privacy

  It’s Nothing without Network Effects

  The Best Technology May Not Win

  Nothing Matters without Scalability

  Identity Hasn’t Been Solved

  Token Instability Hasn’t Been Cracked

  Consensus Mechanisms Are an Ongoing Battle

  We’re Still Figuring out Governance

  But Above All, Maintain Vigilance

  15. BRINGING IT ALL TOGETHER Key Questions to Help You Compose Your Next Step Assessment

  Aspiration

  Action

  Afterword THE OPPORTUNITY AND THE HOPE ARE HUMAN ACKNOWLEDGMENTS

  A. Notes

  Index

  Praise for Unblocked

  You can’t fix what you can’t see. Alison McCauley presents a smart business case for the world’s next digital transformation with Unblocked.

  Keith Weed, CMO, Unilever

  It’s essential to understand the disruptive potential of blockchains, the behind-the-scenes technology of cryptocurrency. Just as the internet transformed business models, blockchains are poised to do the same again. Alison McCauley deftly educates business leaders on the context and implications of this coming shift with Unblocked.

  Eric Ly, Cofounder, LinkedIn

  With Unblocked, Alison McCauley gives a clear and compelling explanation of the six forces powering the massive, but yet to be fully realized potential of blockchain technology.

  Bharath Kadaba, Chief Innovation Officer, Intuit

  A must-read book for any executive or investor who wants to know how to benefit from blockchain’s potential.

  Matthew Le Merle, Managing Partner, Keiretsu Capital and Author, Corporate Innovation in the Fifth Era

  Blockchains hold the potential to completely transform our digital lives. If you want your business to stay relevant in this future, you need to read Unblocked.

  Troy B. Parkes, FedEx Institute of Technology

  Alison deftly breaks down the opportunity and the risk of blockchains in this engaging book that every business leader should read.

  Mari Cross, Head of Customer Success, Adobe

  In her remarkably accessible Unblocked, Alison McCauley pulls back the curtain to demystify this new technology and how it is inspiring the next generation of visionaries and entrepreneurs.

  Andy Cunningham, Founder, Cunningham Collective, Aspen Institute Trustee, Author, Get to Aha!

  Blockchain and related technologies are poised to create massive disruption and wealth creation over the next 10 years. If you want your business to thrive in this new world order, the first thing you need to do is read Unblocked.

  Lou Kerner, Co-Founder, CryptoOracle

  Blockchains could shape a better future for consumers to engage with brands. An open framework that puts consumers in control of privacy is long overdue, and could drive new ways for brands to deliver value. But first you have to understand what’s coming—start by reading Unblocked.

  Carissa Ganelli, Chief Digital Officer, Subway

  Unblocked

  How Blockchains Will Change Your Business (and What to Do About It)

  Alison McCauley

  Unblocked

  by Alison McCauley

  Copyright © 2019 Alison McCauley. All rights reserved.

  Printed in the United States of America.

  Published by O’Reilly Media, Inc., 1005 Gravenstein Highway North, Sebastopol, CA 95472.

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  Illustrator: Rebecca Demarest

  June 2019: First Edition

  Revision History for the First Edition

  2019-06-17: First Release

  See http://oreilly.com/catalog/errata.csp?isbn=9781492057970 for release details.

  The O’Reilly logo is a registered trademark of O’Reilly Media, Inc. Unblocked, the cover image, and related trade dress are trademarks of O’Reilly Media, Inc.

  The views expressed in this work are those of the author, and do not represent the publisher’s views. While the publisher and the author have used good faith efforts to ensure that the information and instructions contained in this work are accurate, the publisher and the author disclaim all responsibility for errors or omissions, including without limitation responsibility for damages resulting from the use of or reliance on this work. Use of the information and instructions contained in this work is at your own risk. If any code samples or other technology this work contains or describes is subject to open source licenses or the intellectual property rights of others, it is your responsibility to ensure that your use thereof complies with such licenses and/or rights.

  978-1-492-05797-0

  [LSI]

  Dedication

  To Wyatt and to Eleanor,

  My dear children, my cheerleaders, my loves,

  May the architects of your tomorrow make this world better.

  Preface

  THE ELEPHANT IN THE ROOM

  Since you opened a book on blockchains and business, you probably already know this technology offers more than a new form of money called cryptocurrency—which is more than most people realize. In 2018, blockchains were caught in the crossfire of both cryptocurrency’s swift peak and dramatic plunge. This is not surprising: cryptocurrency is the first and most visible application of blockchain technology, and many people think they are one and the
same.

  It would have cost you less than $1,000 to purchase a bitcoin (the most well-known cryptocurrency) in early January 2017, and a year later it would have been worth over $14,000. By the end of 2018, it would have plunged under $4,000. That’s a pretty sensational journey. It’s no wonder the headlines focused on it.

  This obscures what’s really happening in blockchains. The core blockchain functionality underlying bitcoin and other cryptocurrencies is being leveraged to do new things in just about every industry. Thousands of companies are hard at work to solve real problems and unlock meaningful opportunity with the technology. They seek to create, in many cases, an entirely new foundation for our digital world.

  Cryptocurrency is, in a way, a fantastic first proof of concept: Can blockchains really be a way to safely transfer digital value from one person to another? (We’ll talk more about what that means in Chapter 3.) Over the past few years, bad actors, scandals, and large-scale hacks of various companies filled headlines. But at the same time, millions of people around the world battle-tested the wherewithal of the core technology, safely holding or transferring billions of dollars of digital value in the form of blockchain-driven cryptocurrency. There is still much work to do, but overall, the technology fared well. This inspired entrepreneurs to explore not only how blockchains could solve business and social problems, but also how digital assets could evolve to become a new kind of tool that removes friction or enables new business models.