Iansiti & Lakhani (2017) Flashcards
The Truth About Blockchain
blockchain
an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. the ledger itself can also be programmed to trigger transactions automatically. it is the technology at the heart of bitcoin and other virtual currencies.
disruptive technology
can attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly.
foundational technology
has the potential to create new foundations for our economic and social systems. blockchain has an enormous impact, but it will take decades for it to seep into our economic and social infrastructure.
TCP/IP (transmission control protocol/internet protocol)
laid the groundwork for the development of the internet. it created an open, shared public network without any central authority or party responsible for its maintenance and improvement. it gained traction as the basis for e-mail among researchers on ARPAnet. it transmitted information by digitising it and breaking it up into very small packets, including address information. the packets could take any route and there was no need for dedicated lines.
ARPAnet
the US Department of Defense precursor to the commercial internet.
circuit switching
used for telecommunications’ architecture before TCP/IP. connections between two parties or machines had to be pre-established and sustained throughout an exchange. to ensure two nodes could communicate manufacturers had invested billions in building dedicated lines.
“plumbing”
the hardware, software, and services needed to connect to the now-public network and exchange information.
bitcoin
a virtual currency system that eschewed a central authority for issuing currency, transferring ownership, and confirming transactions. it is the first application of blockchain technology.
novelty
the degree to which an application is new to the world.
complexity
represented by the level of ecosystem coordination involved. the number and diversity of parties that need to work together to produce value with the technology.
framework for blockchain adoption
maps innovations against the two contextual dimensions, dividing them into quadrants. each quadrant represents a stage of technology development. identifying which one a blockchain innovation falls into will help executives understand the types of challenges it represents, the level of collaboration and consensus it needs, and the legislative and regulatory efforts it will require.
single use
quadrant with low-novelty and low-coordination applications that create better, less costly, highly focused solutions. e-mail, faxes, and snail mail were single-use applications for TCP/IP. bitcoin also falls into this quadrant.
localisation
quadrant that comprises innovations that relatively high in novelty but need only a limited number of users to create immediate value. it is relatively easy to promote adoption.
substitution
quadrant that contains applications that are relatively low in novelty, because they build on existing single-use and localised applications but are high in coordination needs because they involve broader and increasingly public uses. they aim to replace the entire way of doing business.
transformation
quadrant that involves completely novel applications that, if successful, could change the very nature of economic, social, and political systems. they involve coordinating the activity of many actors and gaining institutional agreement on standards and processes. smart contracts may be the most transformative blockchain application.
