Is Blockchain technology truly revolutionising our economic model?
Contributed by Alex Mezhvinsky, co-founder of Invox Finance Pty Ltd
Earlier this month, I attended the Blockchain Economic Forum in Singapore and was fortunate to experience the resounding international expansion of the Blockchain industry in real time.
Blockchain and crypto protagonists flooded from all corners of the world. Presenters, panelists and supporters flew in from as far as Mauritius for the event. With many others from the US, UK, Switzerland, Australia, Korea, India, Hong Kong and Russia.
A multitude of topics were discussed across various panels; however, all seemingly contained an overarching theme—how the exciting blockchain technology will revolutionise the way we interact in business, in our social life, and ultimately, in what ways will we all benefit from this decentralised way of thinking.
I listened with great enthusiasm to experts in fields such as artificial intelligence, virtual reality, biotechnology, finance, economics, politics and marketing. Having spoken to a number of these experts personally, I couldn’t help but ponder whether we truly are on the verge of something groundbreaking.
Rattling my brain was the thought, “What would be the killer app to pave the way for the global explosion of this technology?” I continually drew on the analogy of what search engines and social networks did for the internet … or what Elon Musk’s companies are about to do to the automotive, aerospace and green energy industries.
The answer, however, was staring me right in the face. The blockchain killer app is already here, it is not a novel application driven by a particular use case, it is a paradigm shift in an economic model that blockchain has unveiled to us.
What I mean, is this.
The traditional business model for any enterprise is to create as much wealth as possible for its shareholders without recognising in any meaningful way, the contribution of its customers. This creates a dichotomy between the insatiable appetite of the shareholders for the never-ending growth, and the interests of its customers—who do not really benefit from the enormous profits being generated and, more importantly, feel that they are being taken advantage of. The banks are a perfect example of this.
What we see emerging with the use of blockchain in a peer-to-peer environment and the issue of tokens by the community of users, is a complete alignment between the interests of the business owners and the community of users, in a way that has never happened before.
Let me unpack this.
The new economic model not only produces value for the owners of the enterprise, it also offers the same value proposition to its community. This is achieved first, by establishing a business structure that gives the community of users the power to influence the development of the product or service. And secondly, by creating a business model that is not profit driven, but reward oriented. The rewards should be distributed between the shareholders and the users, in proportion to the value added to the business.
While ICOs may have surfaced in the past that attracted significant interest and funds from an engaged group of participants, what we are seeing now is that it is vital to give contributors to ICOs something in return for their support. It is not enough to simply conclude the ICO and then focus on turning a profit and pleasing shareholders.