Disintermediation reflects the fact that no single party has authoritative control. Blockchain helps prevent fraud because participants “will constantly see and check each other’s mutations. Should someone wish to mislead the network, they would have to get each participant on board to get it done”, he said, offering the example of a group of insurers.
Blockchain is not merely a tool to prevent fraud, however. Most unwanted changes are, the consultant observes, actually human errors. He cites the example of the Dutch cadaster, which ‘nobody distrusts’ but is still vulnerable to a range of errors that would be ‘detected and limited’ by a blockchain.
Disintermediation is most valuable in the absence of a trusted intermediary. Due to the high stakes and lack of trust, Bitcoin, the decentralised digital currency, provides the “best known example of this radical disintermediation, where everybody administers their own spreadsheet”, while checking up on everybody else.
Clients interested in adopting blockchain technology should also be aware that it is solely used to record information. Simply being on a digital ledger does not automatically confer legitimacy, Matthijssen stresses. One example is blockchain being used to organise land titles for residents of Brazil’s chaotic favelas. A nice idea says the supply chain implementation specialist, except, “without any legal infrastructure to back it up, a piece of information is just that – and it will not put a halt to wealthy project developers’ bulldozers.”
Having outlined examples where blockchain is either absolutely essential to the smooth operation of a mechanism – such as Bitcoin – or redundant without legislative support – in the case of the favelas – Matthijssen presents some of the practical advice M3 Consultancy might offer clients.
When blockchain adds value
Consulting firms worldwide are under increasing pressure from clients to advise them on whether or not to adopt blockchain technology and the M3 Consultancy partner suggests three specific instances when it would create serious value. “Firstly, blockchain is very good at indicating when something happened, making it perfect for registering patent applications,” he notes. Secondly, “it accurately captures the order in which information was generated, such as decision dates in board minutes or audit trails on financial transactions.”
“Finally, you can use blockchain to keep track of changes made to important information that is shared between different parties. Instead of using ‘track changes’ and having the contract (re)checked by twenty different people twenty times, your intelligent spreadsheet guarantees that any change made is visible to all.”