Blockchain technology can be used to give clients control of their data while also providing full transparency. This second article in a series on blockchain explains how the technology will eventually impact the business model of platform companies.
Today, many of the most prominent technology companies gather value by collecting as much data as possible from their customers. For the most part, their customers don’t have a choice. If they want to use Google, Amazon or Facebook, they are obliged to give away their personal information.
However, there are growing signs of resistance against this platform business model. Consumers are becoming increasingly aware of their data’s value, and so, more reluctant to give up their privacy to use a service, and more demanding of data protection assurance.
This increased awareness brings a likely shift from data sharing back to personal ownership (with the right to grant access and full transparency). Customer-centric companies will attempt to ensure anonymity and protect their customers’ data. A blockchain protocol could significantly impact industries where privacy is critical by allowing access to be managed and controlled by distribution.
Anonymity and Transparency – How It Works
In an anonymous and transparent system, every user is assigned an unidentifiable ID or goes through a trusted third-party verification process. The data is encrypted and stored on a blockchain or with a trusted provider. Only the owner assigns access rights. The blockchain is crucial because it ensures that the data owner controls permissions without any party in between.
Using blockchain technology in more common services like search engines, social networks or email is more difficult. The first attempts at creating decentralized search engines with anonymized profiles are emerging (BitClave/BASE). Their approach is to store data encrypted so that only the owner holds the key and can hand out personalized keys to allow limited access to other service providers. A user’s data on a social network or with an email provider could be contained that way, and data privacy would be guaranteed. Access to personal data can only happen with the consent of the owner.
Some organizations strive to gain the trust of users by disclosing as much data as reasonable. For example, Encosia, a search engine provider, publishes financial data to show how they invest their earnings into a promised goal. The success with this transparency advance shows that customers value this information. Nonetheless, only a blockchain could ensure the integrity and availability of this data in a fast and efficient way.
Blockchain Business Models
The business model of companies which use transparency and trust as a selling point is different from the one of companies that profit from selling data. Profitability is possibly lower or must be gained elsewhere, by, for example, charging for free services or reinventing revenue streams. A complete shift to blockchain-based business models faces hurdles and may take some time.
Radically Change a Market
One of the biggest hurdles organizations that want to start using blockchain technology face is figuring out how to manage the blockchain. Companies will need to ensure that entities are correct and actually exists, perhaps through an independent verification process when onboarding users or assets. For example, the service might require that every participant only has one account. Although it’s against the original spirit of the blockchain to require third-party providers, it might be necessary to advance the immature technology.
Another hurdle involves resolving disputes. If an “on chain” transaction works, but the real-world exchange fails, the organization that manages the blockchain isn’t always legally obliged. For example, if someone rents and pays for a house through an Airbnb blockchain, only to discover that the house doesn’t exist, where will the liability land? Regulations to ensure the exchange are lagging behind.
The blockchain future is still undefined, but one thing is sure: Blockchain technology has the potential to make traditional platform companies that use personal data to earn money obsolete.
Related Blockchain Technology Information
This three-part series explores ways to find Blockchain Technology use cases. Published by Xebia & GoDataDriven Published by Xebia & GoDataDriven.
In the other two articles we cover your business transactions in depth and discuss the different ways you can use blockchain to establish trust. The other blog posts are:
- How to Find Blockchain Use Cases – Part I
- Establishing Trust in Reputation Systems: Challenges for Blockchain-Based Reviews – Part III
Blockchain Technology Foundation – Training
Sometimes it can be hard to distinguish the different elements of blockchain and its surrounding phenomena. You can learn to differentiate between hype and real potential! This one-day training course at Xebia Academy is available on 26 September, 12 November, and 17 December 2018: Blockchain Technology Foundation.
Blockchain Survey 2019
Free download of Blockchain Survey 2019! Together with Computable, we recently conducted a survey about the use and expectations of #blockchain, and we condensed all the results into one comprehensive report.
Want to learn more about our vision about blockchain technology and what we could add to your business? Feel free to get in touch and discover how to identify relevant use cases.