By David Furlonger & Christophe Uzureau
Despite widespread experimentation, blockchain is still young and evolving. Today’s experiments often use only some of the core elements that make a blockchain. In particular, today’s blockchains rarely include digital tokens, and their technology architecture is almost never decentralized, as was intended in the original blockchain design. What that means in practice is that many blockchain solutions available today are owned and governed by a single company or small group, and only authorized participants can join.
Some solutions are highly centralized, with one owner or group of owners controlling the currencies, while others exert less absolute control. To help business leaders identify the difference, we have defined the following five blockchain archetypes based on their degree of centralization:
Fear of missing out (FOMO) solutions
Although FOMO blockchain solutions won’t create much value, they aren’t always pointless. They could send a message to the market that your organization is on top of current trends. Prospective customers might give you a second look. Competitors might invest time and resources for similar FOMO reasons.
Trojan horse solutions
For this archetype, one powerful actor, such as a digital giant, a dominant supply chain participant or a small group develops a blockchain solution and invites other ecosystem participants to use it. These solutions look attractive from the outside. The risk for the participants, however, is that they become dependent on the owner’s technology and locked in to the contract terms.
These aim to address known problems or opportunities around record keeping that are ill-served by existing solutions. They can bring value to participants, even if they don’t lead to a live, operational platform. They may present some loss of control over data and contracts, but the solutions offer experiential payoff.
These are designed to mature over time to use tokens with decentralized governance.
These are either developed by startups or by innovation arms of existing firms to create a new market or disrupt an existing business model. They may not start out with tokens or decentralized governance, but they are designed to move in that direction as the market matures.
Native blockchain solutions will insert new business approaches into legacy industries. Untested technology will be the major currency risk, though these will appeal to participants who want to control their own data and experiment with decentralization.
Adapted from The Real Business of Blockchain: How Leaders Can Create Value in a New Digital Age by David Furlonger and Christopher Uzureau, who are vice presidents at Gartner.
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