I was inspired to write this post while reading and listening to the multiple conversations and narratives addressing use cases and applicability for consensus ledgers – aka blockchains. The space is generating much hype, lots of noise, confusion as well as some excellent work from sharp entrepreneurs and startups and forward thinking corporations.
Here are the four META use cases where consensus ledgers will shine IMHO. All meta use cases share one characteristic: the ability to derive the “state” of someone or something via a decentralized consensus.
1) Proof of PROVENANCE for THINGS: I use provenance loosely and include authenticity, integrity, transparency over chain of ownership. Where did that “thing” come from, who built or created it, for what purpose, is there still integrity associated with its purpose, can we trust that “thing”, the data it generates and the entity/person that manages, handles or otherwise owns is currently.
2) Proof of IDENTITY for PEOPLE: In as much as Google built the search graph and Facebook the social graph, think of a consensus ledger powered entity – or entities – that will build a trust graph – not own it mind you – and deliver a very effective tool for individuals to manage their identity and decide what they want to share with whom for how long and for what purpose. Very powerful.
3) Proof of TRANSFER of VALUE: Mechanisms that will deliver in full or semi dis-intermediated states, in full or semi decentralized states, a consensus over the transfer of any value. One example is any application that addresses post trading activities such as clearing and settlement in capital markets (trading being understood in the capital markets contexts as part of the transfer mechanism). Another example may be any application that facilitates claims management processes in the insurance industry. Proof of transfer can apply to payment or value, or both.
4) Proof of OWNERSHIP: Mechanisms that will deliver in full or semi dis-intermediated states, in full or semi decentralized states, a consensus over the ownership of anything – tangible or intangible, and that also includes data. One example is any application that ports ownership of privately held companies from traditional share registries to a consensus ledger. Another example would be any application that facilitates fluctuating ownership states for real assets used in the sharing economy.
A few additional and non-trivial musings:
a) Consensus ledgers applications may mix and match from the above four meta use cases
b) The number of applications supported by any of the above four meta use cases is limitless. Vey simply put, any work flow that is currently supported by a siloed approach to managing data and where there is n+1 actors involved in the completion of said work flow, can be delivered with consensus ledger tech.
c) Every industry will be impacted, every business will be impacted. Take Auditors as an example and assume proof of transfer of value is powered by consensus ledgers. The first order of change applies to how reconciliation is handled within a firm by internal audit/reconciliation teams. No more data silos, no more manual reconciliation at end of day, end of week, end of month. The second order of change applies to Audit firms performing audits come end of year with drastically different work load, and sometimes much reduced work loads. No need to verify accounts the old way, to do sample testing, to call trading partners, to verify accounts receivables or accounts payables, to scrutinize transactions off of a RDBMS, off of paper records.