Everyone’s talking about blockchain. Everyone’s hailing its potential to revolutionize everything from banking and insurance to supply chain management and capital formation. And, indeed, the potential exists to reinvent all of those things, but there are some scary implications as well.
Blockchain is an inherently decentralized structure. In particular, distributed ledger technology (DLT) is inherently decentralized, but the two often go hand in hand. And every time you shift from a centralized structure to a decentralized structure, you lose a bit of power along the way.
When all of the information resides on your server, you have complete control. But as soon as you distribute that information on multiple servers, some of which are under other people’s control, you automatically lose some of that control. In many ways, that decentralized and shared control is the primary benefit of the architecture, but it simultaneously leaches control from those who had it before.
Over the years to come, those with power will lose some of it. It won’t happen all at once, and there will inevitably be exceptions, but the prevailing trend will be towards more decentralized structures.
Individuals are getting more and more choice and, by extension, more and more power every year. Henry Ford was famous for saying: “You can have any color you want as long as it’s black.” Today, by contrast, consumers have almost unlimited choice in vehicle designs and features. Businesses trip over each other, trying to satisfy every possible customer desire.
This trend started over two hundred years ago, but it’s reaching a fever pitch in today’s technology-driven economy. Technology enables much of this individual power. We’ve all heard the striking reality that every single citizen has access to more information today than the President had access to just 20 years ago. And every additional “convenience” from the consumer perspective equates to additional control from the power perspective.
There’s one broad exception to this trend. Those businesses who help facilitate this trend towards decentralization gain power in the process. Google makes the world’s knowledge available to individual users, and they have become very powerful as a result. Apple delivers that knowledge to consumers (along with music, apps and social media) with their iPhone products, and they have become very powerful as well. Facebook, Amazon and Tencent are other examples.
These companies are delivering technology infrastructure, enabling decentralization in the process. Blockchain will drive that trend even further. Consumers will soon have direct control over their assets, financial obligations and identity. That appeals to those who have become increasingly skeptical of large organizations like governments, banks, insurance companies, and healthcare providers.
The term “anarchy” has very negative connotations. People assume it implies armed militias in the streets and malicious hackers online, but the true definition of “anarchy” is broader than that. It refers to a society that broadly rejects authority in favor of self-governance. Yes, that does introduce chaos to the environment, but it doesn’t necessarily involve violence or destruction. The one thing that’s guaranteed is an “every-man-for-himself” system.
Anarchy has already filtered into our economy. The media environment is already there. With social media, endless blogs, YouTubers and podcasters, every possible perspective is well represented, and they all accuse each other of “fake news.” Does the media environment still function? Yes, it does, but it is anarchy, plain and simple.
Every industry will trend in this anarchical direction in the coming years. So as a leading sector, what can we learn from the media environment? There are three primary lessons.
First, success amidst anarchy requires defiance. Just like the media environment, anarchy leads to parallel realities where each reality has ample evidence to prove that they are right, and everyone else is wrong. Our polarized political system is a case in point. Businesses have to pick their reality and ignore the rest. Donald Trump does this every day. Countless people dispute his reality, but he doesn’t care. Whether you like Donald Trump or not, we all need to identify our own reality and cater only to those who subscribe to our version of the truth.
Second, success amidst anarchy requires leadership. Moderate voices get drowned out. Only extreme voices get heard. That means businesses need to take a stand and be the best in some respect. They can be the fastest, the cheapest, the most customizable, or the most altruistic. It doesn’t really matter what it is, but it has to be something. Take a stand. Those who like you will love you, and those who don’t like you don’t matter!
Third, success amidst anarchy requires unselfishness. Those who succeed will be those who support, encourage and facilitate the trend towards decentralization. Businesses should relentlessly look for opportunities to transfer power from large organizations (including their own businesses) to individual consumers. Business models that facilitate decentralization will be well received by today’s tribal and self-reliant consumers.
Anarchy is a scary concept for most of us. Nevertheless, it’s creeping into our society from every angle, and blockchain is accelerating the trend. In the end, blockchain enables decentralization, and decentralization enables anarchy. There will be winners and losers. Visionary leaders will see the opportunities in decentralized environments and thrive as a result.
Latest posts by Patrick Schwerdtfeger
- Blockchain Enables Anarchy - July 31, 2018
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- How to Use AI and Blockchain in a Disruptive World - March 27, 2018