To some extent, Blockchain is suffering from what we can call a déja vu cycle of “new technology in search of a market” growth pains. At the same time, conversations with enterprise clients and providers this week have provided insights on unexpected ways that blockchain is being applied – from relatively mundane business operations to being a catalyst for reinvention of old-line businesses.
On the mundane business front, we learned of one US-based restaurant chain utilizing a blockchain-based solution for managing key aspects of its loyalty program points. Blockchain enables more consistent and traceable point and reward tracking, helping to reduce errors (e.g., incorrect rewards payout) and improve customer satisfaction.
On the business reinvention front, we see erstwhile photographic titan Eastman Kodak using blockchain in several ways. One is the development and management of a blockchain-derived copyright management service that Kodak professes will improve the ability of copyright owners to track usage of images – and to then improve their ability to obtain usage royalties. At the same time, Kodak has also announced its own blockchain-based “cryptocurrency” to facilitate trading in image copyrights, using its new blockchain-based protection service. Copyright experts are split on whether or not Kodak’s approach will be even as useful as current copyright protection schemes. Time will tell if the initiative helps Kodak to re-establish a position of strength in the photography marketplace.
Even more intriguingly, Kodak is also in the business of mining Bitcoin itself. Mining Bitcoins and other “cryptocurrencies” requires significant processing power, which in turn requires tremendous amounts of electricity. Turns out, Kodak had substantial unused, power generating capabilities at its old photographic processing factories. The company found that it could generate a large amount of electrical power at much less cost to users than could local or regional energy utilities. The company is now hosting hundreds of Bitcoin mining processors that take advantage of Kodak’s relatively inexpensive power production – and taking up to 50% of profits from the mining operations. And of course, electrical power is only one requirement for data center sustainability; things like affordable and reliable broadband networking are needed as well.
The object here is that re-invention of businesses and markets often comes from innocuous origins. Amazon Web Services of course translated excess e-commerce data center capacity into global cloud infrastructure dominance. Will energy generation capacity left over from decades-old manufacturing facilities enable Kodak to transform itself from faded Kodachrome glory and Instamatic fame to blockchain-based profitability? Likewise, will the application of blockchain into mundane business operations create and sustain competitive advantages – either for providers of blockchain-based services, or for enterprises that can translate improved processes into saleable services? Our opinion: the more initiatives like this that we see, the more tech-driven business reinvention and disruption will follow, at an increasingly rapid pace. Is your business ready to rethink and re-invent?