Trust is a foundational element of business. Yet maintaining it—particularly in a global economy that is becoming increasingly digital—is expensive, time-consuming, and, in many cases, inefficient. Now, some organizations are exploring how blockchain—the backbone behind bitcoin—might provide a viable alternative to the current procedural, organizational, and technological infrastructure required to create institutionalized trust.
What is blockchain, and why might it have the potential to profoundly transform some of business and government’s most basic operations? Simply put, blockchain is a distributed ledger that provides a way for information to be recorded and shared by a community. It can be thought of as the tech-charged equivalent of the public ledgers that were once used in towns to record transactions, events, and legal rulings. Instead of a bearded master wielding a long-stemmed stylus to record miniscule entries into an oversized book, blockchain uses advanced cryptography and distributed programming to achieve similar results: a secure, transparent, immutable, repository of truth, designed to be highly resistant to outages, manipulation, and unnecessary complexity.
With blockchain, cryptology replaces third-party intermediaries as the keeper of trust, with all participants running complex algorithms to certify the integrity of the whole. It is this ability to replace middlemen with mathematics that makes this technology matter. The use of blockchain can reduce overhead costs when parties trade assets directly with each other, or quickly prove ownership or authorship of information—a task that is currently next to impossible without either a central authority or impartial mediator. Moreover, blockchain’s ability to guarantee authenticity across institutional boundaries will likely help parties think about the authenticity of records, content, and transactions in new ways.
Organizations across industries should aggressively explore scenarios in which blockchain could reinvent parts of their operations, value chains, or business models. They should look for ways blockchain could help bring new efficiencies to costly, slow, or unreliable transactions, and introduce new models for partnership and collaboration. Are there new products and offerings that can extend the blockchain platform? What about designing products that leverage shared-ledger technology? Whatever the specific play, it is time to dig in, gain understanding and experience, and determine if, or, more likely, where blockchain can help in your organization.
Will the eventual embrace of blockchain mean that venerable institutions of trust disappear? That seems unlikely. It does mean, however, that very soon they may have to transform themselves if they hope to continue participating substantively and efficiently in blockchain’s brave new world.
This article was produced by Deloitte and not by the Quartz editorial staff.