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Market disruptors and the future of blockchain
Inspiring an evolution in commerce
Right now, someone, somewhere, is creating a blockchain solution to drive innovation and disruption of traditional business models. This is occurring in virtually every industry and in most jurisdictions globally. Indeed, we are now witnessing an evolution in commerce.
- History of blockchain
- Who are the players?
- The evolution of commerce
- Blockchain use cases
- Navigating the complexities
Looking back to understand the future of blockchain
The advent of postal services (circa 400 A.D.) introduced a common intermediary in the collection, transport, and delivery of goods, and it inspired an evolution in commerce. The reliability and regulation of a system to move goods across great distances opened lucrative new markets to producers and distributors.
In the 1990s, a vast interconnected global network called “the internet” and a new application called “email” enabled global commerce and communications at a velocity previously thought to be impossible.
Today, the boundaries of commerce are once again being pushed and the role of this intermediary is changing given blockchain technology. As before, we will all be taking this ride together. But to understand where it is going, first we must recognize the two types of organizations driving the innovation.
Who are the players in this new ecosystem?
In the blockchain ecosystem, looking past all the hype-driven headlines, there is an exciting new cast of innovators and founders. Through our surveys and engagements, Deloitte is seeing an increasing number of less-tenured entrepreneurs frequently pairing up with industry veterans to start new organizations.
These emerging disruptors are approaching blockchain differently from legacy organizations. Disruptors are not thinking incrementally about change, rather they are fundamentally changing how business is being conducted across all industry sectors around the world. Legacy organizations, on the other hand, are evaluating blockchain technology and eager to adapt, albeit more slowly given the natural constraints of large enterprises.
According to Deloitte’s 2019 Global Blockchain Survey, 45 percent of emerging disruptors have already brought blockchain to production, while slightly less than one quarter of enterprise respondents say they have.
Two roads diverge: One leads to an evolution of commerce
As expected, many of the emerging disruptors are startups that possess the potential for rapid experimentation and growth. Those that are further along in evolving their concepts have recorded demonstrable results disrupting legacy companies in their markets.
In comparison, many legacy organizations approach blockchain from the opposing direction, trying to redefine legacy business models by shoehorning new technology into their existing operations. While these organizations look at operational efficiencies or some revenue-generating use cases, some are stopping short of grasping blockchain’s broader potential.
In either case, these organizations and the executives behind them share similar traits: The ability to recognize and perhaps willfully ignore—or not—the longstanding norms of legacy business models. True, there’s a lot to be said for simply leveraging into existing norms the benefits of blockchain adoption—the removal of intermediaries, data that’s un-alterable without a passkey, transparency to all parties, and near-real-time, frictionless transactions.
But the real winners are those who build their solutions around blockchain’s potential.
Blockchain use cases
Blockchain-enabled business models will present a seismic shift to how business is conducted in the future. Its impact on commerce will be game-changing, especially given the increasingly digital global economy and the decentralization of business models and stakeholders enabled by blockchain. In this direction, a new dimension of innovation awaits. Below are some examples of disrupters ahead of the game.
Navigating the complexities, regulatory and otherwise
With innovative business models comes the need to thoughtfully consider the regulatory environment, best practices, and strategy. Professional advisors are left with dated rules and age-old playbooks as they evaluate the applications of this nascent, innovative commerce.
Determination of cryptocurrency as
In collaboration with regulators and standard-setting bodies, the CPA auditor must embrace the opportunities and challenges in having clients who have adopted blockchain technology in their operations and financial reporting processes. There may be increased transparency and the ability to automate routine audit tasks. However, immutable information can still be inaccurate due to error or fraud.
The CPA auditor can provide both enterprise organizations and the emerging disruptors with new service offerings such as blockchain platform assurance, digital asset validation services, and smart contract assurance, as well as the traditional financial statement review and audits.
One of the most critical internal control areas centers on the granting, reviewing, and removal of access controls to encryption keys or other system settings. Access controls are also dependent on appropriate delegation of authority and segregation of incompatible duties. Another important area of internal control to ensuring the maintenance of adequate books and records is timely reconciliations between transactions recorded on the blockchain and those recorded in the entity’s financial and tax records.
Technology consultants are now in the business of debunking blog hype, educating stakeholders, and debating what blockchain does and doesn’t do. We see new vernacular in the debates as to what is “on-chain” versus “off-chain,” or how “
The advent of new protocols and platforms requires re-imagining an appropriate technology stack—which continues to evolve at both the core and the edge—as innovative solutions emerge across developer communities to help bridge the technology from its current nascent form to an enterprise-grade future. While building a scalable blockchain solution is complex, tried-and-true processes deserve ongoing consideration.
KYC/anti-money laundering (AML)
As an enabler for virtual currencies such as bitcoin, and early associations with illicit actors like Silk Road and the dark web, blockchain was initially viewed by regulators with considerable skepticism. Among other things, its inherent qualities of speed, cross-border functionality, irreversibility, and pseudonymity raised concerns that cryptocurrencies would be attractive to money launderers and sanctions evaders.
Regulatory uncertainty with respect to the applicability of AML requirements such as
Trends enabling the future of blockchain
Today, the boundaries of commerce once again are being pushed, as evidenced by innovations from companies like Brave, Civic, Rivetz, and others. These companies are helping to redefine business models, commerce, and the relationship between businesses and consumers.
They are the future of blockchain, and the founding members of a new evolution in commerce.