Leaders of large incumbents must embrace the potential of distributed ledger technology before it can be used.
Interview with Ravi Sarathy and Theodore Kinni
Reading time: 12 minutes
Not long after Bitcoin developers first used a distributed ledger to record transactions in 2008, the blockchain revolution was announced with fanfare accompanying the promising new technology. Then, as is often the case with emerging technologies, blockchain promises collided with development realities.
Now, 15 years later, that early promise is becoming apparent. in his new book Blockchain Corporate Strategy: Disruptive Lessons from Fintech, Supply Chain, and Consumer Industries, Ravi Sarathy, professor of strategy and international business at the Damore McKim School of Management at Northeastern University, said distributed ledger technology will enable many applications that could disrupt industries as diverse as manufacturing, healthcare, and more. It claims to be mature enough to be. , and media.
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Sarathy is MIT Sloan Management Reviewthe state of blockchain, its most relevant applications for large enterprises today, and how those leaders could take advantage of the pre-established technology, and how new competitors might use it against them. about.
MIT Sloan Management Review: Blockchain has been slow to gain momentum at many large companies. what is preventing it?
Salathy: Blockchain is a complex technology. It is often guarded by elaborate mathematical puzzles that are energy-intensive and require large investments in powerful computing. This also limits the amount of transactions that can be easily processed, making blockchain difficult to use in settings like credit card processing where thousands of transactions occur per second. Interoperability is another technical challenge. There are many different protocols for running blockchains, which creates weaknesses that can be hacked or fail if you need to communicate with other blockchains.
Apart from technical challenges, there are also cost and profit issues. Blockchain is not free and cannot be easily sold. It requires significant financial and human resources, and that’s the problem. Because it will be hard to convince the CFO and other top his managers to give them millions of dollars and years to develop a blockchain application. .
Finally, there are organizational challenges. Blockchain is intended to be a transparent, decentralized network where everyone talks to each other without an intermediary organized in a hierarchical world.
