To start a new section, hold down the apple+shift keys and click to release this object and type the section title in the box below. Culture Cost and efficiency A blockchain represents a total shift away from the The speed and effectiveness with which blockchain traditional ways of doing things – even for industries networks can execute peer-to-peer transactions comes that have already seen significant transformation from at a high aggregate cost, which is greater for some types digital technologies. It places trust and authority in a of blockchain than others. This inefficiency arises because decentralised network rather than in a powerful central each node performs the same tasks as every other node institution. And for most, this loss of control can be deeply on its own copy of the data in an attempt to be the first unsettling. to find a solution. For the Bitcoin network, for example, which uses a proof-of-work approach in lieu of trusting It has been estimated that a blockchain is about 80 per participants in the network, the total running costs cent business process change and 20 per cent technology associated with validating and sharing transactions on the 33 implementation. This means that a more imaginative public ledger are estimated to be as much as $600 million 34 approach is needed to understand opportunities and also a year and rising. This total does not include the capital how things will change. costs associated with acquiring specialist mining hardware. Key questions every leader should ask: Blockchains are something of a productivity paradox, • W here can we pilot new blockchain approaches on the therefore. At the scale of the entire network the process is edges of our business? significantly productivity enhancing, but requires a certain ‘critical mass’ of nodes. Yet, even so, individual nodes can • W ho will be most affected by blockchain work extremely hard and may not contribute very much to implementations and are they supportive? the network overall. • W hich areas of our business are likely to be most Therefore, decisions about implementing blockchain disrupted? applications need to be carefully thought through. The returns to individual processing nodes – either individuals • H ave we thought about impacts on our strategy, in a public blockchain or organisations in a sector-wide organisational structure, business processes, blockchain – may diminish as the network grows in size. governance, talent and legacy systems? This means that blockchain applications must harness network effects to deliver value to consumers or to sectors at large. Key questions every leader should ask: • What is the business case for implementing a blockchain? How do we make it pay? • What are the bottlenecks in the processes we are replacing with the blockchain? • What are the main drivers of cost in our implementation of the blockchain? • How can the cost and processing load be shared among participating organisations? Blockchain Enigma. Paradox. Opportunity 11