Blockchain stands at the forefront of technological advancements, holding the promise to revolutionize entire business models. One intriguing aspect is the potential elimination of intermediaries within complex ecosystems, coupled with a heightened focus on security over performance. However, this transformative shift in business models could also lead to disruptive effects in various industries.
Despite the significant impact of blockchain technology on business models, existing studies primarily concentrate on its technical aspects and practical applications. While examples are used to showcase how blockchain could modify processes and service delivery across industries, empirical-based research is scarce. Thus, a crucial gap exists in understanding how blockchain technology can simultaneously upend existing business models while paving the way for novel ones.
Embracing Blockchain: Real-World Examples of Business Model Integration
Future Blockchain Advancements in Manufacturing
In the manufacturing industry, emerging blockchain technologies like Moog’s VeriPart are paving the way for enhanced security and resilience, instilling greater trust in 3D-printed parts. These advancements ensure a robust and trustworthy supply chain, assuring stakeholders of the authenticity and quality of products.
Blockchain Revolutionizing Supply Chain Management
Major companies such as Nestle, Walmart, and Unilever are harnessing the potential of blockchain to tackle the persistent challenge of food-born diseases in the supply chain. Walmart, for instance, has employed blockchain innovatively to track the provenance and integrity of pork products from their origins in China. As a testament to its success, Walmart now mandates all its spinach and lettuce suppliers to adopt blockchain, revolutionizing the transparency and traceability of their supply chain.
The NFT Craze: Big Brands Joining the Bandwagon
Leading brands like Pringles, Taco Bell, and Pizza Hut are enthusiastically embracing Non-Fungible Tokens (NFTs) to engage their audiences and explore new marketing avenues. In a sign of the NFT market’s growing influence, companies like Visa and Adidas have invested substantially in digital art and NFT collections, generating considerable revenue and strengthening their brand connections with consumers.
Stablecoins: Popularity Amidst Controversy
Stablecoins, while sparking debates over their merits and drawbacks, have surged in popularity, with a staggering issuance value exceeding $113 billion. As this novel blend of public and private money continues to evolve, questions arise about regulatory frameworks and accountability. The rise of Distributed Ledger Technologies (DLTs) has further fostered the growth of stablecoins and decentralized finance, prompting exploration into the ideal monetary system for DLT platforms. Tokenized deposits emerge as a promising avenue in this context.
Transforming Access to Capital for SMEs
Financial applications enabling the tokenization of both financial assets (e.g., securities, commodities) and non-financial assets (e.g., real estate) present promising opportunities to enhance Small and Medium Enterprises’ (SMEs) access to capital. By facilitating inclusion in markets previously limited to larger investors, asset tokenization empowers SMEs and fosters a more inclusive financial ecosystem.
The Business of Logistics
While the current media spotlight on Global Supply Chains (GSCs) may seem novel, the study of GSCs has been a significant area in political economy for well over a quarter-century. This research has provided invaluable insights into the constitution and management of modern global trade. Notably, GSCs already account for approximately 70% of all international trade, making them a hallmark component of the twenty-first century.
Smart contracts, which are programs that execute when specific conditions are met and are recorded on a blockchain, play a pivotal role in modern business processes. They streamline the performance of agreements, eliminating the need for intermediaries and reducing time wastage. Moreover, smart contracts automate workflows by triggering subsequent steps when certain conditions are fulfilled. In the supply chain, smart contracts prove particularly beneficial for tasks such as payment distribution, ledger entries, and the indication of human intervention requirements.
The transformation of business models and processes along the supply chain presents a formidable challenge for sustainable supply chain management. This complexity arises due to the involvement of all parties connected to the design, production, storage, distribution, sales, finance, and use of a single product within supply chains. Such a holistic approach fosters intricate global economic and social networks centered around collaborative value creation and delivery. Consequently, the use of smart contracts profoundly impacts all relationships within a supply chain, streamlining operations and fostering efficiency.
NFTs Revolutionizing Big Business: A Closer Look at the Impact
NFTs (Non-Fungible Tokens) have become an integral part of the business models of major global brands. The fusion of NFTs and digital assets revolves around two pivotal elements – utility and marketing, forming the foundation of successful NFT projects. While the initial hype around the NFT market may have subsided, this cooling trend has created opportunities for utility-based projects and innovative marketing strategies to rise to prominence. Striking a delicate balance between these aspects appears to be the key to a robust and thriving NFT project.
Prominent companies like Mercedes and Lamborghini have ventured into the NFT space, leveraging it as a platform to reimagine their product lines and connect with their audiences in novel ways. Adidas’s successful NFT collection achieved astounding sales, generating revenue exceeding $22 million. Even traditional companies like Budweiser have embraced NFTs, launching their Heritage Collection, featuring 1,936 unique cans commemorating the year of their first Budweiser can, 1936.
Undoubtedly, the adoption of cryptocurrencies witnessed significant expansion in 2021, with major players, including countries like El Salvador and now Ukraine, making their foray into the industry. Governments worldwide are actively studying the deployment of Central Bank Digital Currencies (CBDCs) and regulations surrounding the digital assets sector. This presents immense opportunities for businesses to develop ecosystem-readiness using Blockchain Adoption Models (BAMs).
A noteworthy survey conducted by Visa revealed that 25% of businesses in nine countries plan to incorporate cryptocurrency as a form of payment. Furthermore, 13% of consumers predict that most retailers will soon utilize cryptocurrency for settlement purposes. These findings emphasize the growing relevance and potential of digital assets in shaping the future of business transactions.
Show Me The Money
The original thesis of blockchain was to enable the transfer of money from point X to point Y without the involvement of a central authority. As time has passed, blockchains have evolved, facilitating significantly faster and more cost-effective transactions. In partnership with the Global Blockchain Business Council, Heidrick & Struggles, a renowned provider of global leadership consulting and on-demand recruiting solutions, conducted a research titled “From Financial Services to Blockchain and Crypto: How Executives Are Making the Switch.”
This research delved into the transitions of executives from traditional financial services institutions to blockchain and crypto firms, shedding light on essential considerations before making such a switch. Notable findings include: nearly half of the respondents (49%) came from investment banking, holding prominent positions like senior vice presidents (33%) or managing directors (28%). Surprisingly, almost one-third of those polled revealed they left their previous jobs to venture into their own businesses (31%). The fact that so many executives are willing to take a chance on new startups underscores the growing importance of blockchain in various industries.
Another remarkable discovery is that 43% of respondents stated their businesses are in the start-up stage, while an additional 23% are in the growth stage. Leading companies like PayPal, Fidelity, and Square have publicly embraced cryptocurrencies, particularly Bitcoin, and integrated digital assets into their business models. Recent data from PYMNTS indicates that 58% of multinational corporations use at least one form of cryptocurrency, and these companies are notably more likely to employ cryptocurrencies and blockchain technology for transactional purposes rather than for investment objectives. Furthermore, according to The Cryptocurrency Payments Opportunity, an initiative by PYMNTS and i2c Inc., 40% of enterprises in the Americas, Africa, and the Middle East plan to utilize digital assets for making purchases in the coming year.
Stablecoins are emerging as foundational elements of the international finance landscape, paving the way for future innovations and paradigm shifts. As per data from Block, the total value of stablecoins now exceeds $173 billion, a significant increase from just $6 billion two years ago. If the supply growth trend continues, this crypto asset class is likely to dominate both established and emerging markets in the foreseeable future. It is no surprise that businesses and government entities are closely following these developments.
The financial industry is experiencing a clear realignment, as businesses are restructuring around blockchain and its associated digital assets to remain ahead of the curve. With these transformative technologies enhancing customer service, industries are exploring their potential applications in the metaverse. The growing interest in the metaverse and its potential benefits drive businesses to embrace this virtual realm, seeking new opportunities for growth and engagement with their target audiences.
Several top-tier tech firms, including Meta (Facebook), Google, Microsoft, Apple, Nvidia, and Shopify, share some common characteristics, but one stands out. Firstly, they are all highly valuable companies. Secondly, they have greatly benefited from digital ecosystems, whose significance was accentuated during the pandemic. Now, all of these companies are heavily invested in what Neal Stephenson referred to as the “Metaverse.” For instance, Meta has committed a substantial $10 billion investment to develop its Metaverse objectives, aiming to dominate the space in the next decade (a Web2 mindset, by the way!). On the other hand, Microsoft’s Metaverse strategy involves its acquisition of Activision Blizzard, the company behind sensational games like Call of Duty and World of Warcraft, for an impressive sum of nearly $70 billion. This deal is set to solidify Microsoft’s position in the Metaverse as it progresses towards completion in 2023. Additionally, Nvidia brands its Metaverse as the “Omniverse,” encompassing its work in artificial intelligence.
The future Metaverse holds immense potential to revolutionize the virtual economy, primarily rooted in video games and virtual worlds with minimal disturbances. As a result, both users and creators stand to benefit significantly from this transformative landscape, and the incorporation of non-fungible tokens (NFTs) into in-game assets could further amplify these advantages, enabling the decentralization of the virtual economy. In 2021, Bloomberg Intelligence projected the Metaverse to present an $800 billion opportunity by 2024. Grayscale, though not providing a specific timeline, believes it to be a staggering $1 trillion.
Various industries are enthusiastically embracing this concept, with the fashion and real estate sectors leading the way through projects on platforms like Sandbox, Decentraland, and Axie Infinity. The Metaverse land grab witnessed a remarkable 700% surge in 2021, showcasing the fervent interest and investment in this digital frontier. Major players like Republic Realm, spending $4.3 million on land in The Sandbox, and Tokens.com, investing $2.4 million in Decentraland, have made substantial deals in the Metaverse, emphasizing its potential significance.
At the core of the Metaverse lies the user, making them the most critical aspect of its success. Open-source blockchains, such as the XRPL, and rapidly growing community-based projects like onXRP, will play a pivotal role in educating users and advocating for Metaverse diplomacy. The aim is to prevent the emergence of an oligarchic Metaverse, ensuring a more inclusive and democratic virtual realm.