SMR713 Preparing for a Blockchain Future Consider thre.docx

SMR713
Preparing for a
Blockchain Future
Consider three key questions when determining how to make
blockchain a useful part of your business strategy.
F A L L 2 0 1 8 I S S U E
Michael Ferguson
Vol. 60, No. 1 Reprint #60124 https://mitsmr.com/2CHjFS7
For the exclusive use of b. Peddireddy, 2020.
This document is authorized for use only by badarinath
Peddireddy in BLCN 634 Human Resource Management and
Blockchain-1-1 taught by Lenore Pollard, University of the
Cumberlands
from Apr 2020 to Oct 2020.
https://mitsmr.com/2CHjFS7
Preparing for a Blockchain Future
MICHAEL FERGUSON
Consider three key questions when determining how to make
blockchain a useful
part of your business strategy.

Blockchain technology is set to be a major player of the
future digital economy, but many business leaders remain
unsure what that means for their companies going
forward. In a Deloitte survey of 308 senior executives at
large U.S. companies, 39% of respondents had little or no
knowledge about blockchain technology. A survey of
more than 200 board-level, non-IT executives in the U.K.
yielded similar results: About 40% said they do not fully
understand the technology, and less than 10% believe
MITMIT SLSLOOAN MANAAN MANAGEMENGEMENT
REVIEWT REVIEW
INNOINNOVVAATIONTION
Copyright © Massachusetts Institute of Technology, 2018. All
rights reserved. Reprint #60124 https://mitsmr.com/2CHjFS7
their organizations have the necessary skill sets to adopt
it.
To start by unpacking what blockchain really means, let’s
refer to HubSpot’s approachable definition: Blockchain is
“a record-keeping technology that is nearly impossible to

tamper with. That’s because a blockchain’s records, or
‘ledger,’ is hosted by everyone in the network and openly
available to everyone in the network, like a public
spreadsheet that they add to but can never edit or delete.”
But where should business leaders go from there? How
can they determine best practices for utilizing the
decentralized web and make blockchain technology a
useful part of their business strategy? My organization
has found it useful to focus on the following three
questions. These offer particular benefits for platform
businesses, which will need to address weakening
network effects as they lose ownership of participants’
data.
1. W1. Whhaat vat vallue wue wiilll wl we oe offffer?er? This
first question gets at the
paradigm shift the decentralized web presents. The
advent of blockchain isn’t just about new ways of
operating. It forces many businesses — platforms in
particular — to take a fresh look at why they exist.

Cumberlands
https://www2.deloitte.com/us/en/pages/about-
deloitte/articles/press-releases/deloitte-survey-blockchain-
reaches-beyond-financial-services-with-some-industries-
moving-faster.html
https://www.businesswire.com/news/home/20171013005038/en/
MBN-Blockchain-Survey-UK-Senior-Executives-Planning
https://www.businesswire.com/news/home/20171013005038/en/
MBN-Blockchain-Survey-UK-Senior-Executives-Planning
https://research.hubspot.com/emerging-tech-for-smbs
https://sloanreview.mit.edu/article/rethinking-the-value-of-
customers-in-a-digital-economy/
Consider, for example, eBay, Uber, and Airbnb.
Throughout the era of TCP/IP (the web protocol that
computers use to talk to each other), these platforms have
acted largely as centralized repositories of information.
You want to buy a product, they know who has it for sale.
You need a ride, they know who can give you one. You
need a place to stay, they know who has an extra

bedroom to rent.
But as blockchains become more common, this kind of
information will become publicly available and
searchable. You won’t need a centralized authority to
show you who has the waffle maker you’re looking for;
you’ll be able to see a verified record of who is selling the
waffle maker you want at a price you’re willing to pay and
who has a track record demonstrating trustworthiness in
such exchanges.
To stay relevant, companies will need to provide value in
new ways. This requires creative thinking. In the case of
my startup Rainmakers, our current business model
focuses on placing sales professionals with leading
technology companies. However, people will soon own
and fully control the data that they now make available
and view on our platform. Hiring managers will be able
to find candidates with the right skills, experiences, and
recommendations to meet their needs — without our

help.
Read more free MIT SMR articles on the future of
blockchain.
What Problems Will You Solve With Blockchain?
Blockchain Is Changing How Media and Entertainment
Companies Compete
So, we’re investigating other ways to make hiring
managers’ lives easier. These offerings include phone
screening, validation of candidate data, and onboarding
support. We’re also exploring how we might help
candidates make themselves more attractive to employers.
We’re rethinking our business model because blockchain
could render the old one obsolete. This kind of strategic
foresight and ability to sense and pivot will be crucial for
organizations trying to compete in a blockchain-enabled
world.
2. H2. Hoow pw puubblic wlic wiilll ol our bur
blolocckkcchhaainins bs be?e? The next step is to
decide whether to invite everyone into the blockchain

network or create a more limited system just for verified
participants. This, too, is a strategic question. It involves
weighing the advantages and risks of an “open source”
approach.
My team could end up doing both. For instance, we
might build a public network where candidates can share
much of the information that employers are looking for
and also set up a private one with paid access to more
granular data about individuals’ work experience and
sales records. For everyone in the private blockchain —
candidates and companies alike — all public and private
information would be funneled through one integrated
profile, simplifying the user experience.
Having a robust and growing public blockchain would
draw all the right players to our business, including job
seekers, hiring managers, and other staffing companies.
And the bigger our public blockchain becomes, we’re
betting, the more companies will want to pay for access to

the private one.
3. W3. Whhaat int incencenttiivves wes wiilll wl we oe offffer
ter to po paarrtticiicippaatte?e? We
recognize that we won’t suddenly have millions of
MITMIT SLSLOOAN MANAAN MANAGEMENGEMENT
REVIEWT REVIEW
INNOINNOVVAATIONTION
Cumberlands
https://searchnetworking.techtarget.com/definition/TCP-IP
https://sloanreview.mit.edu/article/what-problems-will-you-
solve-with-blockchain/
https://sloanreview.mit.edu/article/blockchain-is-changing-how-
media-and-entertainment-companies-compete/
https://sloanreview.mit.edu/article/blockchain-is-changing-how-
media-and-entertainment-companies-compete/
MIT SLOAN MANAGEMENT REVIEW

INNOVATION
individual job seekers and stafng companies creating
profles on our blockchain. We’ll need to draw them in by
frst attracting a critical mass of hiring companies to the
platform early on — which means providing immediate
value to those partners.
Even if the number of candidates on our private
blockchain is small at frst, we’ll be working to gather
information from them that isn’t available elsewhere —
this kind of information will help companies make the
right hires, as we’ve seen over the years placing
salespeople into different organizations. Likewise, other
businesses could follow a similar model, capitalizing on
their expertise in their respective industries while moving
to a blockchain strategy.
For example, businesses might offer crypto tokens, or
blockchain assets, as additional incentives for

participation. (For a helpful primer on tokens, see “Some
Simple Economics of the Blockchain,” a working paper by
Christian Catalini of MIT Sloan School of Management
and Joshua Gans of the Rotman School of Management.)
We’re considering how we might use tokens as incentives
at Rainmakers. We could allow job candidates to earn
them for keeping their résumés updated, for example, and
cash them in for enhanced visibility on our platform, the
chance to apply for certain positions, or services such as
INNOVATION
training and assessment. Employers who use our site
could earn them by validating employees’ data and spend
them on vetting and onboarding services. We could allow
third parties to provide services on our platform and earn
tokens, as well.
To Innovate, Be Willing
to Evolve
Of course, our strategy will most likely evolve as we see
how blockchain technology is adopted in our industry

and as our own implementation presents new challenges
and opportunities. That will be the case for every
business. It’s important to revisit these three questions
and continually assess and adjust the business model.
Blockchain and the decentralized web aren’t just hype.
They’re what lie ahead. According to the Deloitte survey,
21% of senior executives who are informed about
blockchain indicated that their company has already
brought the technology into production, while 25% plan
to do so within the next year.
Businesses that don’t sort out their blockchain strategy
soon risk being disrupted by competitors and, worse,
watching their entire business models go obsolete.
Cumberlands

http://ide.mit.edu/sites/default/files/publications/SSRN-
id2874598.pdf
http://ide.mit.edu/sites/default/files/publications/SSRN-
id2874598.pdf
INNOVATION
INNOVATION
About the Author two other startups and holds an
MBA from University of Oxford’s
Michael Ferguson is the CEO of Saïd Business School.
Rainmakers. He previously founded
Cumberlands
https://www.rainmakers.co/

INNOVATION
INNOVATION
PDFs Reprints Permission to Copy Back Issues
Articles published in MIT Sloan Management Review are
copyrighted by the
Massachusetts Institute of Technology unless otherwise specifed
at the end of an
article.
MIT Sloan Management Review articles, permissions, and back
issues can be
purchased on our website: sloanreview.mit.edu or you may
order through our
Business Service Center (9 a.m.-5 p.m. ET) at the phone
numbers listed below.
Paper reprints are available in quantities of 250 or more.
Reproducing or transmitting one or more MIT Sloan
Management Review
articles by electronic or mechanical means (including
photocopying or archiving
in any information storage or retrieval system) requires written
permission.
To request permission, use our website: sloanreview.mit.edu
or
Email: [email protected]
Call (US and International):617-253-7170 Fax: 617-258-9739

Posting of full-text SMR articles on publicly accessible Internet
sites is
prohibited. To obtain permission to post articles on secure
and/or password-
protected intranet sites, email your request to [email protected]
Cumberlands
http://sloanreview.mit.edu
http://sloanreview.mit.edu
mailto:[email protected]
https://mitsmr.com/2CHjFS7Structure BookmarksPreparing for
a Blockchain Future Preparing for a Blockchain FutureTo
Innovate, Be Willing to Evolve About the Author
10 Workƒorce | w o r k f o r c e . c o m j u l y / a u g u s t 2 0
1 8
TRENDING
B lockchain is best known as the infra-structure behind bitcoin
and other
cryptocurrencies that makes financial
transactions safe without a bank or other

middleman. But the technology could
soon change the way human resources
leaders handle all sensitive data.
That has big implications for HR, said
Jeff Mike, vice president and HR re-
search leader for Bersin by Deloitte.
“The reason it is relevant is that block-
chain creates the potential for personal
data to be owned by the individual rather
than the organization,” he said.
That means every employee could po-
tentially maintain control over their en-
tire academic and work identity, includ-
ing where they went to school, their
grades and degrees, and their work histo-
ry and training. “It would be more secure
and more portable, moving with the in-
dividual instead of getting stuck inside
the organization,” he said.
What Is Blockchain Anyway?
In a nutshell, blockchain is a peer-to-
peer network of ledgers that encrypts and
stores blocks of data and digital history,
and can be viewed and verified by anyone
in the network. Every time new data is
added it extends the ledger’s chain of
blocks. The public nature of blockchain is
what makes the technology unique, said
Tim Griffiths, chief technology leader of
Xref, an automated reference checking
company in Sydney, Australia.

“Every time you add data to a block it
is confirmed by the network,” he said.
For example, a university might verify
completion of a degree, or an employer
could confirm dates of employment.
Once data is added to a ledger, it is up-
dated across the network. Ledgers can be
added to but not altered, ensuring infor-
mation remains safe and uncompromised
— if someone tries to alter a ledger, ev-
eryone else on the network is able to see
it, Griffiths explained. “It guarantees the
data is certified and can’t be manipulated.”
It provides a way for two parties to
safely complete transactions — including
payroll and contract payments — with-
out a bank or other intermediary. But
safety isn’t just useful for financial trans-
actions, said Stacey Harris, vice president
of research and analytics for Sierra-Cedar.
“Any time you have sensitive data that
needs to be verified, moved or shared
there is a place for blockchain.”
Health care is a perfect example. Many
employees who get health care benefits
through their employers don’t want to
share their health history with their
company. But in order to choose provid-
ers and secure services, the employers
acts as an intermediary to share that data.

If the employee owns that data via
blockchain, it removes the need for a
third party, Harris said. “Any time a piece
of data is touched by another human it
create risk that the data will be lost or
used inappropriately,” she said. “Block-
chain reduces that risk.”
Blockchain also has the potential to
streamline a lot of the drudge work related
to employee data verification, said Griffiths.
If all of a candidate’s education, certifica-
tions and work history were stored in a
single ledger it would take minutes rather
than days to verify that data. “Education
checks are the biggest pain point in the
background check process,” he said. “It’s
the ideal use case for HR.”
Where to Begin
All that said, the days of instantly veri-
fying an entire work history or stream-
lining health benefits via blockchain are
a long way off.
“This is still a nascent field for HR,”
Harris said, though she notes that the in-
flux of venture capital flowing into
blockchain startups suggests the industry
could evolve quickly. Early adopters such
as Bitwage are already using blockchain
to streamline overseas wages and secure
contract payments, and companies like
Xref are exploring the use of blockchain

in background checks. But none of these
applications have gained traction — yet.
The big challenge is where to begin.
Like the internet or the rollout of elec-
tronic health care records, blockchain for
HR will only add benefit when it
achieves scale. For example, if every can-
didate had a blockchain verifying their
degree, it would significantly speed the
education background check process —
but if only a handful of universities pro-
vide that data in blockchain, it doesn’t
add much value, Griffiths said. He pre-
dicts that we are still two to five years
away from seeing any meaningful appli-
cations of blockchain in HR.
This doesn’t mean HR leaders can af-
ford to completely ignore blockchain.
“You don’t want to get caught up in
the hype, but it is worth paying attention
to,” Mike said. He encouraged HR lead-
ers to get familiar with the technology
and to talk with their IT leaders about
how it works and how it could affect the
way they practice HR in the future. “If
you no longer need to track down re-
sources to verify records and record
transactions, what ramifications will that
have on the job?” he asked. These are the
questions HR leaders should ask today
to be ready for the future. “It won’t
change your life in the next six months,”
he added, “but it is going to happen.”

BLOCKCHAIN IS A
PEER-TO-PEER NETWORK
OF LEDGERS THAT
ENCRYPTS AND STORES
BLOCKS OF DATA.
BLOCKCHAIN: THE FUTURE OF HR?
Cryptocurrency tech will change the way you do your job. Don’t
panic, it’s still few years away.
By Sarah Fister Gale
Jeff Mike Tim Griffiths
Copyright of Workforce is the property of MediaTec Publishing,
Inc. and its content may not
be copied or emailed to multiple sites or posted to a listserv
without the copyright holder's
express written permission. However, users may print,
download, or email articles for
individual use.

UV7356
Rev. Dec. 7, 2017
An Introduction to Blockchain
I love this stuff—bitcoin, blockchain technology—and what the
future holds…huge new markets and products
will be built on these platforms.
Abby Johnson, CEO of Fidelity1
Introduction
For more than 7,000 years, humankind has used ledgers (see
Exhibit 1 for a glossary) to record economic
transactions.2 Clay tablets in ancient Mesopotamia recorded
simple purchases and sales of basic goods, growth
of herd sizes, and so on.3 Even the concept of counting was
impacted4 by developments of ledger keeping in
antiquity. Maintaining a record of transactions appears to be a
common denominator of all human life.
The world has come a long way since clay tablets. Modern

computing has transformed basic financial
ledgers into lightning-fast, highly automated, and precisely
accurate relational databases (Exhibit 1). Today, as
cybersecurity and transparency emerge as paramount priorities
during a digital transaction, blockchain has the
potential to be the next generational improvement in how
parties record the exchange of value.
However, while commercial enterprise has moved from pen-
and-ink ledger keeping to digital databases, it
appears unclear whether there will be widespread adoption of
blockchain technology.5 This may be in part due
to a lack of understanding of the technology and an opaque
regulatory environment.6 Recent qualitative surveys
across senior executives in different industries revealed that,
while many believe the impact of blockchain will
be profound, nearly 40% have little or no knowledge of what it
is.7
This note introduces blockchain, its potential uses and
limitations, and includes additional considerations
for current and future leaders in financial services.
1 Joe Morris, “Abby Johnson: ‘I Love Bitcoin’,” Ignites, May
24, 2017.
2 George T. Friedlob and Franklin J. Plewa, Understanding
Balance Sheets, New York: John Wiley, 1996; Beverley Milton-
Edwards, “Iraq, Past, Present
and Future: A Thoroughly-Modern Mandate?” History & Policy,
May 8, 2003.
3 Friedlob and Plewa, Understanding Balance Sheets.
4 Keith Robson, “Accounting Numbers as ‘Inscription’: Action
at a Distance and the Development of Accounting,” Accounting,
Organizations and

Society 17, no. 7 (1992): 685–708.
5 “Blockchain Reaches beyond Financial Services with Some
Industries Moving Faster,” Deloitte, December 13, 2016.
6 “Blockchain Reaches beyond Financial Services;” Stan
Higgins, “New York Reveals BitLicense Framework for Bitcoin
Businesses,” CoinDesk, July
17, 2014.
7 “Blockchain Reaches beyond Financial Services.”
This technical note was prepared by George (Yiorgos)
Allayannis, Paul Tudor Jones II Professor of Business
Administration, and Aaron Fernstrom,
Associate Director of the Mayo Center for Asset Management.
Foundation,
Charlottesville, VA. All rights reserved. To order copies, send
an e-mail to [email protected] No part of this publication may
be reproduced, stored
in a retrieval system, used in a spreadsheet, or transmitted in
any form or by any means—electronic, mechanical,
photocopying, recording, or otherwise—without the permission
of
the Darden School Foundation. Our goal is to publish materials
of the highest quality; please submit any errata to
[email protected]
Cumberlands

UV7356
What is Blockchain?
In its most abstract sense, blockchain is a new platform
technology enabling an improved ability to verify
and record the exchange of value among an interconnected set
of users; it is a secure and transparent way to
track the ownership of assets before, during, and after any
transaction. Each transaction between parties in the
network is a “block,” and the cumulative set of transactions
across the entire network is the “chain:” blockchain.
Blockchain technology enables any network of users to track
and trade virtually anything of value.

Broadly speaking, there are currently two types of blockchains:
public and private. The bitcoin blockchain
is an example of a public—or “permissionless”—blockchain
(Exhibit 1). These networks—these
blockchains—are open to anyone, and each use their own
digital, native currencies (Exhibit 1), for example,
bitcoin and Ethereum. These native currencies are the required
mediums of exchange for using public
blockchains to exchange value. Public blockchains allow for
unlimited, anonymous or pseudonymous
participation. On public blockchains, native currencies are
needed for two reasons: (1) to compensate network
members who verify their transactions (called “miners”), and
(2) given the anonymous or pseudonymous nature
of network members, it is the medium required to claim an
underlying asset from its issuer.
Exhibit 2 represents a simple example of trading assets using a
digital currency on a public blockchain:
using bitcoin to pay monthly rent for an apartment. To trade and
claim the underlying assets, in this example,
rent in U.S. dollars and an apartment to live in for one month,
the property owner and tenant both exchange
their assets using bitcoin as the common currency. From the
perspective of the tenant, the benefits include
permanence and tamper-resistance of the record of transaction
(i.e., it is auditable), increased security (e.g.,
checks can be lost in the mail, destroyed or counterfeited), and
increased privacy (e.g., a stranger would not be
able to see the routing number and account number on the
checks). See the bulleted list below for a more
complete list of blockchain transaction benefits. From the
perspective of the property owner, though, the
Exhibit 2 transaction may bring unwanted exchange rate risk.
The price of bitcoin is highly volatile (Exhibit 3),
and it may decrease in value versus the U.S. dollar in the time it

takes to exchange bitcoins for dollars, which
has also been historically volatile (Exhibit 4). Additionally,
there is a fee miners require to verify transactions,
which is also volatile (Exhibit 5). It is worthwhile to consider
whether these benefits and challenges will benefit
certain types of digital currency transactions and hinder others.
A private—or “enterprise” or “permissioned”—blockchain
(Exhibit 1) also records the exchange of value
between parties in a network, but access to the network is
permissioned because not everyone can join it. Private
(i.e., enterprise) and public blockchains are not mutually
exclusive either. In practice, and in general,
organizations that are piloting proof-of-concept blockchain
projects can build on public blockchain
infrastructure and design additional bespoke, internally
developed technology in order to use it for their own
private network’s purposes. JPMorgan Chase’s Quorum is an
archetypical example of this for financial
institutions.8
In general, while specific applications of blockchain technology
are still developing, there appears to be
consensus9 that enterprise blockchains have the following
benefits versus legacy ledger technologies:
8 As of August 13, 2017, JP Morgan Chase offered an enterprise
blockchain platform called Quorum, specifically for and
marketed to financial
institutions.
9 Morris; “Blockchain Reaches beyond Financial Services;”
“Simple Introduction to Smart Contracts on a Blockchain,”
YouTube video, 5:07, uploaded
by “Chainthat,” December 6, 2015,
https://www.youtube.com/watch?v=FkeLDPZ-v8g (accessed

Aug. 31, 2017); Matthew Hancock and Ed Vaizey,
“Distributed Ledger Technology: Beyond Block Chain. A
Report by the UK Government Chief Scientific Adviser,” UK
Government Chief Scientific
Adviser, January 19, 2016; “The Blockchain Practice,” Deloitte
UK, 2017; Christian Cachin, “Blockchain, Cryptography, and
Consensus,” IBM (Zurich),
October 2016; “Blockchain Innovation in Wealth and Asset
Management,” EY, 2017; Accenture Digital, “Blockchain
Technology. How Banks Are
Building a Real Time Global Payment Network;” Accenture,
2016; Matt Higginson, “How Blockchain Could Disrupt Cross-
Border Payments,” The
Clearing House, 2017; “Leading Global Transaction Banks Kick
off Blockchain Proof of Concept with SWIFT Gpi,” SWIFT,
April 25, 2017; He Dong,
Cumberlands

UV7356
f all transactions
within it, and all users in the network
have an identical copy of the record/ledger.
governs the rules for its use.
tects
all data and information, and the use of
digital keys and digital signatures is required to access data in
the ledger.
-defined rules, users’
digital keys and digital signatures (Exhibit 1)
can access the entire ledger, a particular transaction, a set of
transactions, and so forth.
centralized point of control (Exhibit 1),
and the details of all recorded transactions cannot be altered
retroactively without the full agreement
of the network.
transaction) in near real time, every user’s
copy within the network reflects these changes in the same time

frame, and records of transactions can
be maintained and updated securely by the users themselves.
contracts” (Exhibit 1).
These benefits enable the development of many potential
products and applications for industry.
What Blockchain Can Do
With an understanding of the potential benefits of blockchain,
we can now begin to develop visibility into
possible ways to deploy blockchain technology. In practice
today, it appears that most current blockchain
products and applications fall into three buckets: (1) the
clearing, payments, and settlement functions in
financial services companies (e.g., banks, asset managers), (2)
creation and use of a digital identity within an
enterprise, and (3) smart contracts. Before exploring
applications, though, we need to understand digital
identities and smart contracts.
Blockchain enables the creation of a secure, private and tamper-
resistant “single source of truth” for each
customer within an enterprise—a customer’s digital identity.
Digital identities have the potential to affect the
customer onboarding process, which can be cumbersome and
time consuming. Recall the last time you bought
insurance, opened a checking or savings account, opened an
account at a brokerage or investment firm, or
applied for a mortgage or a bank loan. We refer to this broadly
as customer onboarding. The purpose of
customer onboarding is to provide personal information and
verify your identity to an enterprise, and for the
enterprise to meet compliance requirements for onboarding new

customers (e.g., know your customer [KYC]
and antimony laundering [AML]). Customer onboarding has the
potential to be a cumbersome process for both
the customer and the enterprise and can include waiting in line,
holding on the phone, meeting face-to-face
with an agent or salesperson, signing many documents, filling
out long forms, sending documents back and
forth, making deposits, or paying premiums, and so forth. Using
a diversified financial institution as an example,
a customer who has checking and savings products, investment
management products, and a mortgage all
within that same enterprise more than likely had to do an
onboarding process for each one of these products
even though these products exist within the same
enterprise…and even though the individual was already a
customer.
“Fintech and Financial Services: Initial Considerations. Staff
Discussion Notes,” IMF, June 19, 2017; and Lucy Burton,
“Bank of England Trials Artificial
Intelligence and Blockchain in Bid to Stay Ahead of the Pack,”
Telegraph, March 17, 2017.
Cumberlands

UV7356
Referencing the benefits of blockchain from the previous
section, the digital identity is:
n(s);
digital keys can access the record;
-resistant: others in the network cannot alter the
record; and
digital identity receives any updates the
customer makes to their record immediately (e.g., mortgage

broker, consumer banker, investment
manager, insurance agent).
Smart contracts10 are a type of blockchain transaction that can
be thought of as event-triggered automated
pieces of computer code. They can be as simple as “ship the
product when we receive the payment” or
“distribute dividends to shareholders upon their declaration.”
All smart contract transactions are stored on a
blockchain, which provides both an audit trail (ref. Glossary) of
events and assurance of fulfillment of contract
terms. Further, if any party/user fails or does not fulfill their
obligation, the blockchain continues to function
with no loss of data or integrity.11
Including digital identity and smart contract applications, the
following are examples of possible ways for
asset managers to use blockchain technology in a product or
application:12
ny kind (e.g., proxy)
transactions (e.g., property)
.g.,
rollovers, estates)
Potential blockchain applications touch other industries, too.
There are also potential applications across

enterprises in CPG, government, and technology industries:13
Many of the applications listed above are expected to reduce
many forms of operational waste. While the
quantifiable impacts remain unproven given the stage of
implementation of blockchain technology industry-
10 https://www.youtube.com/watch?v=FkeLDPZ-v8g.
11 Hancock and Vaziey.
12 Morris; “Blockchain Reaches beyond Financial Services;”
https://www.youtube.com/watch?v=FkeLDPZ-v8g; Hancock and
Vaizey; “Distributed
Ledger Technology;” “The Blockchain Practice;” Cachin;
“Blockchain Innovation in Wealth and Asset Management;”
Accenture Digital; Higginson;
“Blockchain Proof of Concept with SWIFT Gpi;” Dong; and
Burton.
13 “Blockchain Reaches beyond Financial Services;” Cachin;
“Blockchain Innovation in Wealth and Asset Management.”
Cumberlands

Page 5 UV7356
wide, financial services institutions specifically expect
blockchain to yield benefits in the following areas in the
short term:14
-to-person transactions

Financial services institutions expect these benefits to accrue
due to:15
Blockchain has the potential to deliver cost savings to financial
services institutions, better customer
experiences, and more seamless interactions between enterprises
and customers—as well as capturing the
benefits of blockchain listed in the previous section.
Use Case Example: Cross Border Payments
Whether it is at the household level or between Fortune 100
enterprises, sending payments across a border
is, at present, a highly intermediated, cumbersome, somewhat
opaque, costly, and slow process. Global financial
services institutions with retail bank businesses appear
particularly interested in using blockchain to simplify,
hasten, and reduce the cost of cross border payments.16 For the
sake of illustration, Exhibit 6 is a simplified
description of how blockchain can potentially improve a
straightforward cross border payment.
Sender wants to send money to receiver, and sender and
receiver are in different countries using different
currencies. Sender goes to their bank (or the bank’s website)
and initiates the transfer. Sender and receiver’s
banks then work with networks of domestic and cross border
banks, each of which add incremental cost and
additional processing time. Fees that sender’s bank are charged
during the transfer are not always known at its

initiation, and it is not always clear when costs will also be
charged to receiver.17 Fees are high, too, running an
average of 2% to 3% when volumes of payments and payment
values are high, and can exceed 10% if they are
low. Sender and receiver are not typically able to track the
transfer while it is taking place, either, creating
additional uncertainty regarding delivery and final payment
amount; as of 2015, the average time to complete a
cross border payment was from three to five business days.
Finally, total pricing, fees, and foreign exchange
rates for the cross border payment are not actually finalized
until the funds arrive in the receiver’s account.
In this case, if global financial services companies with retail
and/or commercial banking businesses set up
an enterprise blockchain, this cross border payment could occur
in near real time, require no additional
intermediaries other than the sender and receiver’s banks (i.e.,
no third parties are needed to verify transactions),
and cost a negligible fee (Exhibit 7). Additionally, in this case,
foreign exchange providers could compete to
offer the lowest rate to these global financial institutions for
these transactions, and banks in the network could
search for and select the best rate offered in the market.
Additionally, the transaction would be secure, private,
14 Accenture Digital.
15 Accenture Digital.
16 Hancock and Vaizey; “The Blockchain Practice;” Cachin;
Accenture Digital; Higginson; “Blockchain Proof of Concept
with SWIFT Gpi.”
17 The remainder of this paragraph is drawn from Higginson.

Cumberlands
Page 6 UV7356
and verifiable. This could potentially both drive cost savings for
the banks as well as the customers and
immediately improve the customer experience.
There is evidence that global financial services companies have
come to the realization that blockchain

technology can be applied to cross border payments. Some of
the largest banks in the world, including the Bank
of England, 18 are currently piloting applications like this,19
and the IMF is evaluating it independently for this
purpose as well.20
But…Is What We Have Already Good Enough?
There appears to be a lot of interest in blockchain across diverse
industries,21 and industry-leading
technology companies and financial institutions have deployed
teams of experts to work on how to use it.22
There also appears to be a consensus that blockchain offers a
host of new features and benefits versus legacy
methods for exchanging value.23
Does this mean companies should invest in developing
blockchain-driven products or applications? Some
experts are skeptical that blockchain technology will find a
broader home in industry.24 The basic argument
against investing in a blockchain project appears to be that
financial ledgers can be easily expressed as tables
(i.e., relational databases), and current best-in-class database
tools are more proven tools that are typically
sufficient for many needs. More precisely, as Gideon Greenspan
argues:
If your requirements are fulfilled by today’s relational
databases, you’d be insane to use a blockchain.
Why? Because products like Oracle have decades of
development behind them. They have been
deployed on millions of servers running trillions of queries.
They contain some of the most thoroughly
tested, debugged and optimized code on the planet, processing
thousands of transactions per second
without breaking a sweat…[Blockchain] is still in its diapers.25

Bill Gates wrote in his 1995 book The Road Ahead, “We always
overestimate the change that will occur in
the next two years and underestimate the change that will occur
in the next ten.”26 Applying that concept to
blockchain invites reflection regarding whether or not relational
databases will be sufficient today but
blockchain might be preferred tomorrow.
An Introduction to Network Effects27
All other things being equal, blockchain technology becomes
more valuable as more people use it to do
different things. However, while many large, multinational
organizations have carefully studied blockchain and
its possible uses, there does not appear to be unified agreement
regarding blockchain usage and deployment.
18 Burton.
19 “Blockchain Proof of Concept with SWIFT Gpi.”
20 Dong.
21 “Blockchain Reaches beyond Financial Services.”
22 “Linux Foundation Unites Industry Leaders to Advance
Blockchain Technology,” Linux Foundation, December 17,
2015.
23 “Blockchain Reaches beyond Financial Services;” Cachin;
Accenture Digital; “Linux Foundation Unites Industry Leaders.”
24 Gideon Greenspan, “Avoiding the Pointless Blockchain
Project,” LinkedIn, November 24, 2015.
25 Greenspan.
26 Bill Gates, Nathan Myhrvold, and Peter Rinearson, The Road
Ahead (New York: Viking, 1995).
27 Richard Johnson, Paul Farris, and Paul Pfeifer, “The Value
of Networks,” UVA-M-0645 (Charlottesville, VA: Darden
Business Publishing, 2001);

Anu Hariharan, et al., “All about Network Effects,” Andreessen
Horowitz, March 26, 2017, https://a16z.com/2016/03/07/all-
about-network-effects/
(accessed Aug. 10, 2017).
Cumberlands
Page 7 UV7356
Why? The answer may be in that blockchain is a “network
effect” technology. A network effect describes

anything that becomes more valuable to its users as more users
use it.
There are several types of networks, and each has a
corresponding valuation concept that help explain their
value relative to one another. The most straightforward example
of the most basic network type is the
broadcast, for example, when a group of people consumes the
same material at the same time broadcast from
a single source. In a broadcast network, none of the viewers are
connected with one another and the connection
is unidirectional (i.e., information flows in one direction). From
a valuation perspective, it has been suggested
that the value of a broadcast network is described by Sarnoff’s
Law,28 which says that the value of this type of
network is proportional to the number of viewers, or N.
A step beyond the broadcast network is the homogenous
network, in which the same type of user uses a
platform or product for a similar purpose. A good example of
this type of network is Skype (Exhibit 8). To
illustrate the value of a network effect within a homogenous
network, Skype has more limited value if only two
people use it to call each other, but becomes more valuable with
tens of millions of users using it for calls, texts,
videoconferencing, and so on. From a valuation perspective, the
value of networks in which users are connected
is described by Metcalfe’s Law,29 which says that the value of
this type of network is proportional to the square
of number of connected users, or N2.
A step beyond the homogenous network is the heterogeneous
network, in which diverse sets of users use
a platform or product for varying purposes. A simple example
of this type of network is OpenTable, in which
two distinct categories of participants—diners and restaurants—

interact with one another (Exhibit 9). The
value of OpenTable, though, would still be described by
Metcalfe’s Law. However, one of the features that
makes heterogeneous networks so valuable is that groups can
form within it. In this case, Facebook may be the
ultimate example of a heterogeneous network, as it has a large
user base and a large number of self-forming
groups. From a valuation perspective, the value of networks
capable of generating user groups is explained by
Reed’s Law,30 which says that value grows exponentially with
the size of the network, or 2N.
However, as Peter Thiel wrote in 2015, “Network effects can be
powerful, but you will never reap them
unless your product is valuable to its very first users when the
network is small.”31 If blockchain technology
attracts diverse users doing different things with it, its value
will be described by Reed’s Law, and it will become
increasingly more valuable as engagement increases (measured
by an increasing number of transactions across
an increasing number of users occurring at an increased
frequency).32
Regulatory and Governance Considerations
When novel technologies in the financial services industry
gather—or appear to gather—critical mass,
regulation follows. Blockchain does not appear to be an
exception to this rule. Legislators and central banks
started publically talking and wondering about blockchain in
2015 and 2016, and most of the focus appears
around payments, clearing, and settlements—“a core element of
the financial infrastructure at the national and
international level.”33
28 Johnson, Ferris, and Pfeifer.

31 Peter A. Thiel and Blake Masters, Zero to One: Notes on
Startups, or How to Build the Future (London: Virgin Books,
2015).
32 Hariharan et al.
33 “Payment, Clearing and Settlement Statistics,” Bank for
International Settlements, December 11, 2015.
Cumberlands

UV7356
The U.S. House of Representatives is exploring the regulatory
and …

Copyright 2019 by Kelley School of Business, Indiana
University. For reprints, call HBS Publishing at (800) 545-7685.
BH974
Business Horizons (2019) 62, 295—306
Available online at www.sciencedirect.com
ScienceDirect
www.elsevier.com/locate/bushor
How blockchain technologies impact your
business model
Vida J. Morkunas a,*, Jeannette Paschen b, Edward Boon c
a Luleå University of Technology, Universitetsområdet, Porsön,

971 87 Luleå, Sweden
b KTH Royal Institute of Technology, Lindstedtsvägen 30, 114
28 Stockholm, Sweden
c School of Business & Technology, Webster University
Geneva, 15 Route de Collex,
1293 Bellevue, Geneva, Switzerland
KEYWORDS
Blockchain;
Private blockchain;
Public blockchain;
Business model;
Blockchain technology;
Innovation strategy
Abstract Much of the attention surrounding blockchain today is
focused on finan-
cial services, with very little discussion about nonfinancial
services firms and how
blockchain technology may affect organizations, their business
models, and how they
create and deliver value. In addition, some confusion remains
between the block-
chain (with definite article) and blockchain (no article),
distributed ledger technolo-
gies, and their applications. Our article offers a primer on
blockchain technology
aimed at general managers and executives. The key
contributions of this article lie in
providing an explanation of blockchain, including how a
blockchain transaction works
and a clarification of terms, and outlining different types of
blockchain technologies.
We also discuss how different types of blockchain impact
business models. Building on
the well-established business model framework by Osterwalder

and Pigneur, we
outline the effect that blockchain technologies can have on each
element of the
business model, along with illustrations from firms developing
blockchain technology.
# 2019 Kelley School of Business, Indiana University.
Published by Elsevier Inc. All
rights reserved.
1. Blockchain beyond bitcoin
Emerging technologies regularly serve as enabling
forces for economic, social, and business
* Corresponding author
E-mail addresses: [email protected] (V.J. Morkunas),
[email protected] (J. Paschen),
[email protected] (E. Boon)
https://doi.org/10.1016/j.bushor.2019.01.009
transformation (Cohen & Amorós, 2014; Paschen,
Kietzmann, & Kietzmann, in press). According to the
Gartner Hype Cycle for Emerging Technologies, a
tool to illustrate the maturity and adoption of
specific technologies, blockchain placed among
the top five technology trends in 2018 (Kietzmann,
2019; Panetta, 2018). Much of the attention on
blockchain today has focused on its ability to change
the financial services industry fundamentally. But
the impact of blockchain technology goes beyond
0007-6813/# 2019 Kelley School of Business, Indiana
University. Published by Elsevier Inc. All rights reserved.

Cumberlands
https://doi.org/10.1016/j.bushor.2019.01.009
www.elsevier.com/locate/bushor
www.sciencedirect.com

296 V.J. Morkunas et al.
the financial sector (Hughes, Park, Archer-Brown, &
Kietzmann, 2019) and encompasses any business
that acts as or relies on an intermediary between
two parties–— for example, a buyer and a seller–— and
extracts economic rents from a brokerage position
in the value chain. Therefore, blockchain is pre-
dicted to challenge existing business models and
offer opportunities for new value creation.

Unfortunately for businesses, there is little guid-
ance on the different blockchain technologies and
solutions in existence today and how these might
affect businesses and business models. While the
blockchain technology underpinning Bitcoin is the
most discussed variant, it is far from the only one.
While it is easy to find sources that support block-
chain’s potential to disrupt all business activity as
profoundly as the internet, email, social media, or
mobile did (Swan, 2015; Tapscott & Tapscott, 2016),
it is much harder to find material that explains how
blockchain technologies vary and how the different
types can offer value to businesses. Furthermore,
there exists confusion over related terms, such as
the blockchain (with definite article) and block-
chain (no article), both distributed ledger technol-
ogies, and applications of these by which economic
actors exchange digital representations of assets.
Our article addresses these gaps.
2. Foundations of blockchain
technology
The beginnings of blockchain go back to a white
paper written by Satoshi Nakamoto (2008). Nakamo-
to introduced a peer-to-peer version of electronic
cash, bitcoin, that allows online payments to be
sent directly between parties without going through
centralized financial intermediaries. As part of the
implementation of bitcoin, Nakamoto also devised
the ledger, which Nakamoto named “ a chain
of blocks” (Nakamoto, 2008, p. 7). This chain of
blocks supports the new version of electronic cash
(The Economist, 2015) and was later termed block-
chain. Many other blockchain technologies have

been developed since Nakamoto first introduced
the blockchain.
Blockchain provides a decentralized digital da-
tabase of transactions, also known as a distributed
ledger, which is maintained and updated by a net-
work of computers that verify a transaction before
it is approved and added to the ledger. It allows
transacting parties to exchange ownership of digi-
tally represented assets in a real-time and immuta-
ble peer-to-peer system without the use of
intermediaries. Figure 1 illustrates the six steps
of asset exchange between two economic actors
using blockchain technology.
When a transaction between two parties is about
to take place (Step 1), it is first converted into a
hashed transaction proposal and stored as a candi-
date to be printed on the ledger. This proposed
transaction includes basic information such as
date/time, sender, receiver, asset type, and quan-
tity. The proposed transaction is provided with a
unique cryptographic signature that ensures the
integrity and authenticity of the record (Step 2)
and then broadcast to a network of distributed
computers for processing and authentication (Step
3). These computers process and authenticate the
transaction (Step 4) and, once authenticated, the
transaction is added to the digital ledger (Step 5),
which completes the asset transfer between the
two parties (Step 6). Each new transaction is linked
to those recorded previously, providing a complete,
irreversible, and verifiable history of all transac-
tions ever made on this blockchain.
Before proceeding further, it is important to

clarify noteworthy blockchain-related terminology.
Consistent with the approach suggested by Swan
(2015) and Evans-Greenwood, Harper, Hillard, and
Williams (2016), we herein use the terms as follow:
� Blockchain, without the use of an article. Block-
chain technology, or a blockchain (indefinite
Figure 1. The six steps of asset exchange using blockchain
Source: Adapted from Coinmama (2018).
Cumberlands

297 How blockchain technologies impact your business
model
article), refers to the underlying technology: A
network of computers and algorithms that pro-
cess Bitcoin and many other distributed ledger
applications.
� The blockchain, using a definite article, refers to
the technology underpinning bitcoin specifically.
At its core, a blockchain is a decentralized store of
information (Swan, 2015) comparable to an infor-
mation systems database that is updated in real
time and distributed to its user base for validated
record keeping. As outlined above, validators re-
view and authenticate each proposed transaction
before it is added to the ledger.
With regard to the type of access for the users of
a blockchain, there exist two types of blockchains:
public and private. Private can take on one of two

subforms.
Public or open blockchain technologies allow
anyone to interact with another transacting party.
The identity between the two parties is either
pseudonymous or even entirely anonymous (i.e.,
the transacting parties do not know each other prior
to the transaction; Vaughn, 2015). An open block-
chain implies little to no privacy for transactions,
implying that all participants can view all trans-
actions. An open blockchain also requires a substan-
tial amount of computational power that is
necessary to maintain a distributed ledger on a
large scale (Jayachandran, 2017). More specifically,
to achieve consensus in most public blockchains,
each node in a network must solve a complex,
resource-intensive cryptographic problem called a
proof of work to ensure all nodes of the blockchain
are in sync. Examples of open blockchain include
Bitcoin, Litecoin (a cryptocurrency designed to be
faster than Bitcoin), and Ethereum, which is proc-
essed in a different manner than Bitcoin and Lite-
coin and is used primarily for smart contracts. A
smart contract consists of self-executing code on a
blockchain that automatically implements the
terms of an agreement between parties.
Private or closed blockchain technologies allow
only prevalidated individuals or groups of individu-
als to access the ledger and enter and view data.
Here, others know the identities of all users prior to
transacting. A variant of the private blockchain is
the federated or consortium model, in which the
blockchain operates under the leadership of a
group. This type of blockchain is a private network
that maintains a shared record of transactions ac-

cessible only to those who have been prevalidated.
Who grants new entrants permission to use the
blockchain varies: Existing participants can decide
on future entrants, a regulatory authority can grant
new users licenses to participate, or a consortium
can make participation decisions. In contrast to a
public blockchain, a private blockchain offers more
transaction privacy, which is critical for transac-
tions involving sensitive data (e.g., the transmission
of medical or financial data). The right to read the
private blockchain may be open in some cases or
this right is restricted to the participants only.
Closed blockchains are easier to scale up, cut down
costs, and feature greater transactional through-
put. Additional advantages include added security,
lower costs, added reliability, and a higher level of
trust, as only preverified parties are able to initiate
a new node in the blockchain (Coburn, 2018). Some
members of the blockchain developer community
do not consider private blockchains to be block-
chains; heated discussions continue in web commu-
nities as well as during conferences (Kessels, 2018).
Examples of closed blockchains include Linux-based
Hyperledger, which supports the collaborative
development of blockchains and tools in banking,
finance, Internet of Things, supply chain,
manufacturing, and technology, and R3, a distrib-
uted ledger technology company that leads a con-
sortium of more than 200 firms and develops
applications for finance and commerce on its block-
chain platform (Vaughn, 2015).
Despite the differences described above, open
and closed blockchains offer some common fea-
tures:

� Both are decentralized peer-to-peer networks, in
which each participant maintains a replica of a
shared append-only ledger of digitally signed
transactions;
� Both maintain the replicas in sync through a
protocol referred to as consensus; and
� Both provide certain guarantees on the immuta-
bility of the ledger, even when some participants
may be faulty or malicious (Coburn, 2018).
3. How can blockchain impact your
business model?
Blockchain technologies offer many possibilities to
grow entirely new businesses and pose direct
threats of disruption to traditional incumbents.
Organizations using conventional business models
built on the predication of acting as an intermediary
between two transaction parties must ask them-
selves if and how blockchain technologies may im-
pact their value propositions, how they compete,
and how they operate. Pilot projects are currently
Cumberlands

underway in several industries including the use of
blockchain to track the transport of goods inside of
an industrial supply chain; use of smart contracts to
enable secure, faster, and less expensive real estate
transactions; and use of blockchain to enable con-
sumers to send funds abroad without incurring de-
lays or high exchange fees. Firms need to consider
how their business model may be affected by rap-
idly growing blockchain applications. To allow for
a structured discussion of the potential impacts
that blockchain can have on business models, we
use the business model framework illustrated by
Osterwalder and Pigneur (2013, p. 14), who said a
business model “describes the rationale of how an
organization creates, delivers, and captures value”
and consists of nine building blocks. These nine
blocks cover the four main areas of a business: its
customers, the offer, the infrastructure, and finan-
cial viability. The nine elements are (1) customer
segments, (2) value proposition, (3) channels,
(4) customer relationships, (5) revenue streams,
(6) key resources, (7) key activities, (8) key partner-
ships, and (9) cost structure. When taken together
and properly aligned, these elements create and
deliver value. Osterwalder and Pigneur (2013) sum-
marized the nine essential parts of a business model
in a visual template termed the Business Model
Canvas. The canvas is usually drawn on a large piece
of paper with sections for each of the model’s
elements and thus serves as a tool to define,
change, or evaluate a firm’s business model.
In the following subsections, we provide a blue-
print of how each of the nine essential elements
could be affected by blockchain technologies and

illustrate our propositions with examples that we
collected from blockchain development startups in
Europe, North America, and South Africa. We gath-
ered public information from the startup firms’
websites, as well as news articles, press releases,
and other sources.
3.1. Customer segments
Osterwalder and Pigneur (2013, p. 20) defined cus-
tomer segments as “the different groups of people
or organizations that an enterprise aims to reach
and serve.” An organization using blockchain can
address existing customer segments in a market.
Individuals wanting to buy or sell real estate in
Sweden can use a blockchain technology pilot proj-
ect powered by ChromaWay to purchase or sell
homes. Customer markets served by blockchain
systems can be similar to the segments served by
typical organizations: niche markets, diversified
markets, and mass markets. However, blockchain
is distinctive in that it can facilitate access to a
target market that was previously not reachable
(Larios-Hernandez, 2017) and therefore creates
new customer segments for a business. These
are the customer segments targeted by Everest in
Africa, Asia, and South America. Everest, a firm that
uses a private and permissioned Ethereum-based
protocol, provides a decentralized distributed
ledger technology that incorporates a payment
solution, a multicurrency wallet, and a biometric
identity system to facilitate microfinance transac-
tions, land claims, and medical records to customer
segments in developing countries. The potential
target market is the group of 2 billion people who

have limited or no access to financial services.
3.2. Value proposition
The value proposition building block includes all of
the firm’s activities that create value for customers
(Osterwalder & Pigneur, 2013). As Harvard Business
School Professor Theodore Levitt (1974, p. 8) fa-
mously said: “People don’t want to buy a quarter-
inch drill, they want a quarter-inch hole.” In other
words, customers do not purchase products; they
buy a solution to get an important job done. The
value derived by the customer will increase in direct
proportion to the importance that the customer
places on the job to be done and by the level of
satisfaction with the current options to complete
this job, the availability of other options, and their
cost (Johnson, Christensen, & Kagermann, 2008).
Blockchain technology can influence customer
value by providing access to products or services
that were previously not available or could only be
garnered by expensing a large amount of time or
money. Swedish company Safello uses an open
blockchain protocol to provide a transparent
means to exchange bitcoin against fiat currencies.
By doing so, it provides resources (e.g., foreign
currency) that would have been otherwise not
available or only available at additional expense.
Centbee, in South Africa, enables the users of its
mobile app to send bitcoin to users’ contact lists.
Centbee users can move money simply and cheaply
across borders to support family and friends
without incurring exorbitant currency exchange
fees. Safello and Centbee disintermediate by re-
ducing the requirement for a centralized bank, or

even eliminating a currency exchange service for
transactions.
Moreover, blockchain technology can also pro-
vide faster or less expensive transactions than those
completed in traditional settings. As an illustration,
the customer value proposition of certified notaries
for homebuyers is based on facilitating the owner-
ship transfer of the asset from seller to buyer by
Cumberlands

299 How blockchain technologies impact your business
model
authenticating the documentation of the respective
contracts. Working with a notary for home pur-
chases or sales requires time and is often expensive.
Here, blockchain technologies can reduce the trans-
action cost and time for the respective parties. This
may be achieved by using smart contracts. As an
example, ChromaWay’s private blockchain protocol
will enable Swedish citizens to use smart contracts
to purchase or sell a house and reduce time and
costs during the transaction.
3.3. Channels
The channels building block “ describes how a
company communicates with and reaches its
customer segments to deliver a value proposition”
(Osterwalder & Pigneur, 2013, p. 26). These channels

may be the company’s own sales force, website, or
stores, or the channels may be the stores of its
partners or wholesalers. One impact of using block-
chain is the simplification of doing business. Middle
parties may become disintermediated. In the previ-
ous section, we mentioned an example of real estate
transactions that are facilitated by smart contracts.
This is accomplishedbyremovingtherequirement for
time and personnel required to complete a validity
check or a transaction. New types of channels may
also be introduced within an organization (e.g., by
sharing common code to strengthen a supply chain;
Montecchi, Plangger, & Etter, 2019).
3.4. Customer relationships
The customer relationship building block “ describes
the types of relationships that a company establishes
with specific customer segments” (Osterwalder &
Pigneur, 2013, p. 27). These relationships may be
drivenbya motivation toacquirecustomers, toretain
customers, or to boost sales. Examples of categories
of relationships include personal assistance, dedicat-
ed personal assistance, self-service, automated
services, the creation of communities, or the co-
creation of new content. For Lantmäteriet, the
Swedish government’s land registry authority, the
pilot workflow powered by ChromaWay streamlined
the process of transacting real estate. The digital
ledger records each step of a real estate transaction
as well as the property title. The application can
also beaccessed by bank representatives as well as by
real estate agents and contains secure information
that is up-to-date and easy to access. Lantmäteriet
remains involved in the purchase throughout the
process–— rather than intermittently–— and fulfills its

aims ofcreating greaterconfidence and transparency
in its dealings with Swedish citizens (Cheng, Daub,
Domeyer, & Lundqvist, 2017).
3.5. Revenue streams
The fifth building block element of a business model
is the revenue streams. The revenue streams block
represents (Osterwalder & Pigneur, 2013, p. 30):
The cash that a company generates from each
customer segment. There are two kinds of
revenue streams: Transaction revenues result-
ing from one-time payments and recurring rev-
enues resulting from ongoing payments to
either deliver a value proposition to customers
or provide post-purchase customer support.
ABI Research (2018) estimated that $10.6 billion in
revenue will be generated by blockchain projects by
2023, mainly from software sales and services
(Mearian, 2018). Technology companies that pro-
vide blockchain-related professional services derive
revenues from transaction fees for activity on a
network, service level agreements for enterprise
clients, or platform fees for software-as-a-service
(SaaS) contracts. The greatest revenues from block-
chain, however, have been derived from crypto-
crowdfunding, using initial coin offerings (ICOs).
An ICO is a form of fundraising that uses the power
of cryptocurrencies and blockchain-based trading
and provides an alternative to classic debt/capital
funding as provided by venture capital and private
equity firms and banks. An ICO allocates tokens
instead of shares to the early investors in a business.
These tokens can be traded on an aftermarket and

all transactions are verified on a blockchain. In
2017, 800 ICOs raised over $5 billion (CB Insights,
2018), whereas in the first 5 months of 2018, a total
of 537 ICOs closed successfully with a volume of
$13.7 billion (PwC, 2018a).
3.6. Key resources and activities
Osterwalder and Pigneur (2013, p. 34) defined key
resources as “ the most important assets required to
make a business model work.” These are the re-
sources that create the value proposition, reach
markets, maintain relationships with customer seg-
ments, and earn revenues. These resources may be
physical, financial, intellectual, or human. Key ac-
tivities encompass all activities required to deliver
value (i.e., how a firm transforms the resources in
value-creating ways). While resources and activities
are considered as two separate elements in the
Osterwalder and Pigneur (2013) framework, we
discuss them jointly in this section because these
two elements are tightly linked.
Blockchain technologies require firms to recon-
sider the key resources that make up their business
model. In the following paragraphs, we discuss two
Cumberlands

300 V.J. Morkunas et al.
aspects of how blockchain technologies influence

resources and activities. The first aspect concerns
the opportunity to make resources more fluid, al-
lowing firms to move away from the traditional
ownership and to access resources only when re-
quired. This opportunity is especially pertinent to
the application of public blockchain technologies in
which, as described earlier, anyone can transact
with another party in a peer-to-peer network. In
some cases, firms can refrain from investments in IT
infrastructure build and maintenance because, in
the case of public blockchains, the network pro-
vides these resources and processes. Furthermore,
both applications of public and private/federated
blockchains enable firms to automate processes
that were previously manual, enabling human
resources to focus on other, more value-added ac-
tivities. Examples of these processes include docu-
mentation, verification, and audit reporting.
The second important aspect of how resources
and activities can be affected by blockchain
technologies is when the users provide many of
the key resources and processes and use block-
chain technologies to facilitate resource ex-
change. Using the example of smart contracts in
real estate transactions, …
Cumberlands

10 MIT SLOAN MANAGEMENT REVIEW WINTER 2017
PLEASE NOTE THAT GRAY AREAS REFLECT ARTWORK
THAT HAS BEEN INTENTIONALLY REMOVED.
THE SUBSTANTIVE CONTENT OF THE ARTICLE APPEARS
AS ORIGINALLY PUBLISHED.
F
or the last century, academics and business
leaders have been shaping the practice of
modern management. The main theories,
tenets, and behaviors have enabled managers to
build corporations, which have largely been hierar-
chical, insular, and vertically integrated. However,
we believe that the technology underlying digital
currencies such as bitcoin — technology com-
monly known as blockchain — will have profound
effects on the nature of companies: how they are
funded and managed, how they create value, and
how they perform basic functions such as market-
ing, accounting, and incentivizing people. In some
cases, software will eliminate the need for many
management functions.
Sound far-fetched? Let us explain. The internet
vastly improved the flow of data within and be-
tween organizations, but the effect on how we do
business has been more limited. That’s because the
internet was designed to move information — not
value — from person to person. When you email a
document, photograph, or audio file, for example,
you aren’t sending the original — you’re sending a
copy. Anyone can copy and change it. In many

cases, it’s legal and advantageous to share copies.
By contrast, if you want to expedite a business transaction,
emailing money directly to someone is not an option — not only
because copying money is illegal but also because you can’t be
100% certain the recipient is the person he says he is. As a
result,
we use intermediaries to establish trust and maintain integrity.
Banks, governments, and in some cases big technology compa-
nies have the ability to confirm identities so that we can
transfer
assets; the intermediaries settle transactions and keep records.
For the most part, intermediaries do an adequate job, with
some notable exceptions. One concern is that they use servers
that are vulnerable to crashes, fraud, and hacks. Another is that
they often charge fees — for example, to wire money overseas.
They also monitor customer behavior and collect data, and they
exclude the hundreds of millions of people who can’t qualify
for
a bank account. And sometimes, they make terrible mistakes, as
the 2008 financial crisis made evident.

What would happen if there was an internet of value where
parties to a transaction could store and exchange value without
[OPINION]
How Blockchain
Will Change
Organizations
What if there were an internet of
value — a secure platform, ledger,
or database where buyers and sellers
could store and exchange value without
the need for traditional intermediaries?
This is what blockchain technology
will offer businesses.
BY DON TAPSCOTT AND ALEX TAPSCOTT
F R O N T I E R S
Cumberlands
SLOANREVIEW.MIT.EDU WINTER 2017 MIT SLOAN
MANAGEMENT REVIEW 11
the need for traditional intermediaries? In a nutshell, that’s

what blockchain technology offers. Value isn’t saved in a file
somewhere; it’s represented by transactions recorded in a global
spreadsheet or ledger, which leverages the resources of a large
peer-to-peer network to verify and approve transactions. A
blockchain has several advantages. First, it is distributed: It
runs on computers provided by volunteers around the world,
so there is no central database to hack. Second, it is public:
Anyone can view it at any time because it resides on the
network.
And third, it is encrypted: It uses heavy-duty encryption to
maintain security.
Blockchain transactions are continuously verified, cleared,
and stored by the network in digital blocks that are connected to
preceding blocks, thereby creating a chain. Each block must
refer
to the preceding block to be valid. This structure permanently
time-stamps and stores exchanges of value, preventing anyone
from altering the ledger. To steal anything of value, a thief
would
have to rewrite its entire history on the blockchain. Collective

self-interest ensures the blockchain’s safety and reliability.
There-
fore, we think blockchain provides a powerful mechanism for
blowing traditional and centralized models, such as that of the
corporation, to bits.
The Role of Transaction Costs
In a classic article published in 1937 titled “The Nature of the
Firm,” economist Ronald H. Coase noted that there are costs
associated with organizing production through the open mar-
ket rather than through a firm — such as the cost of searching
for relevant prices and the cost of negotiating numerous con-
tracts. Coase expected businesses to expand internally until
the cost of performing an additional transaction inside the
organization become equal to the cost of using the open mar-
ket. In a 1976 article, scholars Michael C. Jensen and William
H. Meckling added another dimension by introducing the
concept of “agency costs,” which are the costs associated with
managers’ tendencies to make decisions that are not optimal
from an owner’s point of view.

Like many other analysts, we envisioned that the internet
would reduce transaction costs so that corporate boundaries
would become more porous and organizations would seek
talent outside their boundaries. As it turned out, the costs fell
much further than we expected and in turn lowered barriers
to entry for startups and established businesses looking to ex-
pand into adjacent areas. To be sure, the internet reduced the
costs of search, while email, social media, cloud computing,
and applications such as enterprise resource planning reduced
the costs of coordination. More broadly, these new capabilities
enabled corporations to outsource overhead, crowdsource inno-
vation, and eliminate middle managers and other intermediaries,
thus freeing industries such as accounting, commercial banking,
and even music to consolidate assets and operations.
Managing With Blockchain
We believe that blockchain will transform how businesses are
organized and managed. It allows companies to eliminate
transaction costs and use resources on the outside as easily as

resources on the inside. Vertical integration may continue to
make sense in some situations (for manufacturing controlled
pharmaceuticals, for example, or where companies have
industry-
leading strengths throughout the supply chain). But in most
cases, we believe that networks based on blockchain will be bet-
ter suited for creating products and services and for delivering
value to stakeholders.
Human Resources and Procurement Blockchain will enable
organizations requiring specialized talent and capabilities to ob-
tain better information about potential contractors and partners
than many traditional recruitment and procurement methods
offer. With a prospective employee’s consent, an employer will
have access to a cache of information that’s known to be correct
because it has been uploaded, stored, and managed on a highly
secure, distributable database. For example, job prospects
wouldn’t be able to lie about their training or degrees because
an
authority, such as the university they graduated from, has
entered

the data on the blockchain. Tampering with data after the fact
wouldn’t be possible: It would involve taking over the entire
blockchain, a nearly impossible task. Individuals would control
their own personal data (including birth date, citizenship,
We believe that blockchain will transform how businesses
are organized and managed. It allows companies to eliminate
transaction costs and use resources on the outside as easily
as resources on the inside.
Cumberlands
12 MIT SLOAN MANAGEMENT REVIEW WINTER 2017
SLOANREVIEW.MIT.EDU
F R O N T I E R S
financials, and educational records) in a virtual black box. They
alone would be able to decide what to do with the information.
Human resources and procurement staff will need to learn how
to query the blockchain with specific yes or no questions — for

example, Do you have this kind of license? Can you code in this
specific language? The responses from all the black boxes will
provide a list of people who meet these qualifications.
Employers
can ask whatever they want, and job seekers can program their
black boxes with answers or refuse to answer.
Finance and Accounting Information about a business’s finan-
cial well-being changes all the time. When you search the web
for a company’s financial data, you search in two dimensions:
horizontal (across the web) and vertical (within particular
websites). What you find can be out-of-date or inaccurate in
other ways. On a blockchain, though, there’s a third dimension:
sequence. In addition to being able to obtain a historical picture
of the company since it was incorporated, you can see what has
occurred in the last few minutes. The opportunity to search a
company’s complete record of value will have profound
implica-
tions for transparency as it brings to light off-book transactions
and hidden accounts. People responsible for records and reports

will be able to create filters that allow stakeholders to find what
they are searching for at the press of a button. Companies will
be
able to create transaction ticker tapes and dashboards, some for
internal use and some for the public. As extreme as this may
sound, it’s really not.
Sales and Marketing Just as a blockchain provides a way to ob-
tain information about potential contractors and partners, it will
be able to tell you about people or businesses who are potential
customers. As we have noted, individuals will control access to
their own data in virtual black boxes, which will limit a compa-
ny’s ability to profile customers by tracking and capturing their
behavior online. However, the blockchain will allow companies
to engage with individual customers on a peer-to-peer basis.
This may seem like a lot of effort, but it could actually be a
huge
opportunity. Some consumers may offer businesses access to
their data in exchange for freebies; others will charge fees to
license their data. Either way, companies will be able to reach

their target audience with greater precision.
What’s more, sellers won’t have to worry about who the
customers are and whether they are able to pay. With the new
platform, sellers won’t have to incur the cost of establishing
trust — thus they can facilitate transactions that would have
been
risky or might not have been possible otherwise. Furthermore,
blockchains will eliminate the cost of warehousing data and
pro-
tecting other people’s data from security breaches. It should
also
be easier to target customers who make their interests known.
Despite the advantages of being able to reduce risk, there is
also a downside. The ability to make precise queries leads to
pre-
cise results. This means that there will be much less serendipity.
With blockchains, you are less likely to discover people or part-
ners who don’t fit your profile but are open to change, willing
to
adapt, and eager to learn.

Legal Affairs Coase and subsequent economic theorists have
argued that corporations are vehicles for creating long-term
contracts when short-term contracts require too much effort to
negotiate and enforce. Blockchains facilitate contracting in both
the short and long term. Through smart contracts — software
that, in effect, mimics the logic of contracts with guaranteed
exe-
cution, enforcement, and payments — companies will be able to
automate the terms of agreement. A contract can refer to data
fields elsewhere on the blockchain (for example, a party’s
account
balance, a change in a commodity price, or an additional sale of
a
copyrighted work). It can trigger alerts and ensure payments.
Because the contracts will be self-enforcing, corporations will
not want to enter into them lightly. Changing the terms of deals
(or attempting to manipulate them) will be more challenging.
Lawyers and other managers will need to learn how to audit
legal templates and make sure the contract software supports
what both parties agreed to do. They will also need to become

knowledgeable on issues involving the blockchain and smart
contracts. The fastest-growing specialty in the law firm of the
future is likely to be “smart contract mediator.”
With the new platform, sellers won’t have to incur the cost
of establishing trust — thus they can facilitate transactions
that would have been risky or might not have been possible
otherwise.
How Blockchain Will Change Organizations (Continued from
page 11)
Cumberlands
SLOANREVIEW.MIT.EDU WINTER 2017 MIT SLOAN
MANAGEMENT REVIEW 13
Raising Capital We believe blockchains will also transform
the process of raising money. In our view, the blockchain has
the potential to disrupt the way the global financial system
works
and change the nature of investment. Mindful of this prospect,

the New York Stock Exchange has invested in Coinbase Inc., a
digital currency wallet and platform company headquartered
in San Francisco, California. For its part, the Nasdaq Stock
Market is also experimenting with blockchain technology.
Integrating the Pieces
So how will blockchain help companies become stronger com-
petitors? How can a company use it to integrate the various
pieces? Blockchain technology provides a platform for people
to work together with the persistence and stability of an organi-
zation but without the hierarchy. Consider ConsenSys, a venture
production studio based in Brooklyn, New York, that builds de-
centralized software applications and end-user tools that operate
on blockchain. Founder Joseph Lubin describes the company’s
structure as a hub-and-spoke arrangement rather than hierarchi-
cal; each project operates on its own, with the major
contributors
holding equity. For the most part, people get to choose what
they
work on. The central hub provides supporting services to the

spokes in exchange for a share of the ownership. The various
rights and relationships are codified in smart contracts that
hold the entity together.
In recent years, we have been reminded all too often that
managers don’t always act with the highest degree of integrity.
(Think of the scandals at Enron, AIG, and Volkswagen, for
instance.) What if we could codify ethics and integrity into
the circuitry of the enterprise, or reduce the moral hazard that
too often sees management gambling with shareholder capital?
Through smart contracts under blockchain, shareholders
will be able to enforce the commitments executives make.
Companies can specify relationships and state specific outcomes
and goals so that everyone understands what the respective
parties have signed up to do and whether those things are
actually getting done.
On blockchain, executives will someday no longer need to
attest that their books are in order once a year or every quarter;
the blockchain will keep a company’s books in order in what is,

in effect, real time as a matter of course. Financial statements
will go from snapshots of the enterprise at one point in time
to a transparent, three-dimensional view of the whole
enterprise.
Shareholders and regulatory agencies alike will be able to
exam-
ine the books whenever they choose. Institutional investors will
have the ability to create their own credit dashboards based
on the facts, as opposed to relying on interpretations by ratings
agencies. And ratings agencies themselves may overhaul their
rating systems based on information from blockchains.
In contrast to the internet, which took two decades to develop
and yet another decade to become commercial, the blockchain
ecosystem is developing more rapidly as an economic platform.
For executives, this means there is little time to waste. They
will
want to examine their industries and their competitors with an
eye toward identifying opportunities for profitable growth.
Executives should begin by identifying people within the
company who are interested in the technology or using digital

currency. They should talk to people in the company’s IT
depart-
ment about the technology’s implications, buy some bitcoin,
and experiment with purchasing inexpensive items on the block-
chain to see how it works. At the same time, they should
identify
nearby companies using blockchain — take the opportunity to
visit their operations and talk with people involved, and invite
experts to meet with the team. Now is the time to reimagine
how your company organizes the way it creates value. If you
don’t, someone else will.
Don Tapscott is the chancellor of Trent University in Peterbor-
ough, Ontario, and CEO of the Tapscott Group Inc. in Toronto.
Alex Tapscott is founder and CEO of Northwest Passage
Ventures,
an advisory firm incubating early-stage blockchain companies,
in Toronto. They are the authors of Blockchain Revolution:
How
the Technology Behind Bitcoin Is Changing Money, Business,
and the World (Portfolio, 2016). Comment on this article at
http://sloanreview.mit.edu/x/58222, or contact the authors at
[email protected]
Reprint 58222.
rights reserved.

Shareholders will be able to enforce the commitments
executives
make. Companies can specify relationships and state specific
outcomes and goals so that everyone understands what the
respective parties have signed up to do.
Cumberlands
Cumberlands
Human Resource Information Management Model based on
Blockchain Technology
Xin Wang
School of Traffic and Transportation Management
Dalian Maritime University

Dalian, P. R. China
Libo Feng*, Hui Zhang
Digital Society & Blockchain Laboratory,
School of Computer Science and Engineering,
Beihang University
Beijing, P. R. China
Chan Lyu,
Assistant Professor, School of Business,
Macau University of Science and Technology
Macau, P. R. China
Li Wang Yue You
School of Economics and Management
Beihang University
Beijing, P. R. China
Abstract

The authenticity of human resource
information has become an important factor that
affects the cost and efficiency of human resource
management. With the rapid development of
mobile devices and Internet technology, various
human resource risks caused by information
asymmetry constantly bring economic loss, and
even a fatal blow, to enterprises. Based on
Blockchain(BC), this paper aims to combine
traditional encryption technology with Internet-
distributed technology, to establish a human
resource information management model that
reduces the risk of authenticity of human resource
information. This model aims to solve the lack of
discrimination of the authenticity of human
resource information, and to provide authentic and
effective decision support information to the
human resource management of an organization.

The operation method, such as Bitcoin, is used to
certify the human resource documentations, as
well as to bind the information and the
documentation. Furthermore, human resource
information is recorded in an accounting book
based on BC technology; thus, modifying and
validating may be difficult in the entire net work.
Consensus mechanism, smart contract, accounting,
and payment functions of BC can provide the basic
support for human resource information
management. Moreover, decentralization of the
protection mechanism can be achieved to achieve
low cost and high efficiency of information transfer,
and to ensure a high-performance work system in
the human resource management of enterprises.
Keywords: Blockchain; Human resources;
Information management
1. Introduction

With the rapid development of society and the
accelerating process of economic globalization,
enterprises face unprecedented pressures and
challenges. Human resources, as an important
carrier of knowledge, technology, and service, is
the core element of enterprise management
practice. The strategic value and significance of
human resources for the development of
organization cannot be replaced. The increasing
update of information technology has become a
powerful driving force for the rapid development
of all sectors of society. Human resource is the
primary productive force. Only retaining talent can
promote the development of the organization.
Accordingly, modern human resource management
should combine information technology with an
advanced human resource management concept,
optimize management method and mode, as well

as improve human resource management
efficiency and effect to guarantee the attainment of
the core competitive power in the dynamic
environment of an enterprise.
The authenticity of human resource
information directly affects the cost and efficiency
of human resource management. Some surveys
show that over 70% of job seekers show relatively
hidden and fraudulent information during the
recruitment process. Some job applicants submit
fake résumés, diplomas, and certificates of
2017 IEEE Symposium on Service-Oriented System Engineering
978-1-5090-6320-8/17 $31.00 © 2017 IEEE
DOI 10.1109/SOSE.2017.34
168
Authorized licensed use limited to: University of the
Cumberlands. Downloaded on June 13,2020 at 22:59:25 UTC
from IEEE Xplore. Restrictions apply.

qualification, and others deliberately exaggerate
their abilities. To enhance the quality of service, the
process of improving identification and
management of human resource information
authenticity has become an urgent issue that
requires solutions from the human resource and
social security department. This paper aims to
establish a human resource-oriented management
mode by introducing BC technology to reduce the
risk faced by human resource information
authenticity, thereby providing authentic and
effective decision support information for the
human resource management of an organization.
2. Analysis of risk management needs of human
resource information
Information is the key issue in human resource
management. For a long time, the authenticity of
human resource information has been in a

relatively ineffective regulatory state. In the
practice of human resource management, we
constantly face the following risks:
(1) Employment risk
In the labor market, the labor age value that
job seekers are willing to accept, as well as the
ability, educational background, and experience of
job seekers are the private information of
applicants. Furthermore, enterprises spend
significant costs to obtain the information, as well
as to conduct interviews and psychological tests. In
most cases, enterprises do not know if the types of
job seekers comply with the needs of organizations.
Reality shows that a relative number of job seekers
are not honest, and many enterprises do not easily
believe in the message of job seekers. Job seekers
intentionally deceive enterprises, and enterprises
cannot completely identify the types of job seekers

that they have to deal with. Thus, the application
process may have poor results. This practice is
simply a form of adverse selection in information
economics. Adverse selection results in increased
costs. Therefore, a high uncertainty exists in the
labor service trade, there by resulting in human
resource risks of enterprises.
(2)Risk of moral degeneration
In the process of implementing labor contracts,
enterprises frequently address the following
problems: employees are lazy and they cut corners.
Alternately, employees sell products at lower
prices to relatives and friends, or they claim back
expenses for tickets unrelated to their work. In the
process of implementing labor contracts, the
efforts of employees cannot be generally observed.
Employees know their own efforts, but managers
do not. Thus, employees may behave in an indolent

manner, such as contributing to non-labor.
The information is asymmetric between
enterprises and job seekers (or employees). Job
seekers have private information regarding their
types. Uncertainty occurs whether or not they
truthfully inform the enterprises about their types.
After labor contracts are assigned, uncertainty still
exists whether the employees are lazy or diligent at
work. This uncertainty poses risks to human
resources. Thus, information asymmetry is the
important reason for human resource risk.
The human resource risk information that
affects the operational efficiency of enterprises are
as below includes the following:
� demographic information of human resources,
including age, marital status, work experience
as measured by number of years, and so on;
� education and training of human resources,
including education and various training

experiences;
� ability of quality information of human
resources, including technical title, technical
grade, certificate, and so on;
� pay-for-performance information of human
resources, including assessment result, salary
incentive, promotion, and so on;
� incentive information of human resources,
including various certificates of honor, as well
as reward and punishment information.
The risks of human resources caused by
information asymmetry constantly bring economic
loss to enterprises, even causing a fatal blow.
Therefore, developing a new human resource
management modeis imperative to effectively solve
employment risk and the risk of moral
degeneration in human resource management.
3. Blockchain Technology model
3.1Introduction to Blockchain technology
The concept of a BC was initially presented by

Satoshi Nakamoto in a paper titled “Bitcoin:A Peer-to-
Peer Electronic Cash System,” which was published in
2008. A BC is a type of new decentralization data
framework. It is commonly owned, managed, and
supervised by all nodes in the network, without
accepting a single control. This technology is the core
of Bitcoin and other new digital encryption currencies.
Many well-known banks and insurance companies, as
well as brokers and future companies worldwide have
made technical development in the field of BCs. They
used blockchain-based Bitcoin and other electric
currencies in related commercial systems or
application services.
Blockchain technology is a type of technical
program to save, validate, transfer, and communicate
network data through its own distributed node without
depending on a third party. Based on agreed
regulations and agreements (similar to hash algorithm
and various mathematical algorithms adopted by
Bitcoin), all nodes can automatically and safely
validate and exchange data in the system without any
human intervention. A BC is a series of data blocks
generated from the association with the cryptography
method. Each block contains all network trade
169
Authorized licensed use limited to: University of the
Cumberlands. Downloaded on June 13,2020 at 22:59:25 UTC
from IEEE Xplore. Restrictions apply.
information in the last 10minutes, which is used to

verify the validity of the information (anti-fake
mechanism) and to form a next block. A BC has the
following main features:
(1) Decentralized structure. Blockchain
technology does not rely on third management
organizations or hardware facilities; without
central control, all nodes realize information self-
validation, transmission, and management.
Decentralization is the most prominent and
essential feature of BC.
(2) Trustlessness. Data exchange in the system
does not require nodes to trust one another. The
operation regulations of the entire system and all data
contents are open and transparent. Therefore, nodes
are unable to deceive each other in terms of rule scope
and time range designated by the system.
(3) Collective maintenance. Data blocks in the
system are commonly maintained by all nodes with
maintenance function in the entire system.
Furthermore, these nodes with maintenance function
can be involved by anyone.
(4) Reliability and security. When 51% of all data
nodes cannot be grasped, network data cannot be
controlled and modified without restraint. Thus, the
BC itself becomes relatively safe and is able to avoid
subjective and artificial data modification. Therefore,

SMR713 Preparing for a Blockchain Future Consider thre.docx

SMR713 Preparing for a Blockchain Future Consider thre.docx

Recommended

Recommended

More Related Content

Similar to SMR713 Preparing for a Blockchain Future Consider thre.docx

Similar to SMR713 Preparing for a Blockchain Future Consider thre.docx (20)

More from pbilly1

More from pbilly1 (20)

Recently uploaded

Recently uploaded (20)

SMR713 Preparing for a Blockchain Future Consider thre.docx