Date posted: 29/10/2018 4 min read

Blockchain redefining organisations

Mark Pascall, Director and founder of Blockchainlabs.nz, explains how blockchain can be used effectively.

In Brief

  • Faced with rapid change, we need to re-engineer how organisations and society work
  • Blockchain offers new ways of running organisations
  • The rise of decentralised autonomous organisations may challenge the dominance of mega-corporations and governments

The world is changing. Governments are struggling to get comfortable with the new global village. Big organisations are facing the challenge of digital disruption from smaller companies, and those corporations that are succeeding are creating global monopolies. We have one search engine in Google. One taxi company in Uber, one shop in Amazon, one news provider in Facebook and a single accommodation provider in Airbnb. 

All of these mega-organisations have captured unprecedented amounts of data, so they are vulnerable to hacking. 

Faced with globalisation, centralisation and rapid change, we need something different. We need to re-engineer how we work as organisations and as a society.

There are three strands to  one possible solution. The first is open-source, a decentralised software development model that encourages open collaboration. It means a group of motivated people can achieve great things outside the traditional corporate model.

The second strand is agility and how we deal with rapid change. Part of the inertia of large organisations lies in traditional hierarchies. As organisations grow, it becomes harder for the people at the top to understand what’s happening at the bottom. In a rapidly changing world, hierarchy doesn’t work. However, if we take out hierarchy we have to reinvent systems to utilise the collective intelligence of people and machines.

There is a way to run organisations without hierarchy – one which is better suited to a world of exponential change.
Mark Pascall Director and Co-founder of Blockchainlabs.nz

There is a way to run organisations without hierarchy – one which is better suited to a world of exponential change.

This is where the third strand comes in – blockchain. In a world of open-source there are alternative ways for organisations to work together. I believe blockchain is the enabler that will allow new ways of running organisations to go global.

Blockchain is fundamentally a database so secure that it can go public. Once information is in the database it is immutable. It’s the same version of truth decentralised. And there is no central control.

Cryptocurrencies – notably Bitcoin, demonstrated that a currency could be controlled by an international community based on the laws of transparent, open mathematics – and not by the laws of people in government.

From here we realised that blockchain can be used to store any information of significance. This led to Ethereum, a first generation smart contract platform. And it’s seeing the transfer of trust away from a central intermediary. This new global trust protocol has far-reaching implications for how we design our systems in the future.

Democratising capital raising

Blockchain ICO (initial coin offering) is a wonderful way to democratise capital raising. It involves creating your own tokenised asset – something the current legal system can’t get its head around. 

Already we have seen ICOs achieve exceptional results. FirstBlood, an online competitive gaming platform, raised $US5.5million in 10 minutes. Status.im, an interface to access Ethereum, raised $US100 million in under three hours. These are incredible amounts of money considering that some of the teams behind these start-ups comprise a couple of founders and a handful of staff. Yet if things go wrong with the founding team, the project can, in theory, carry on.

We are now seeing a massive world of trading and investment through blockchain, with people scrambling to buy. By late 2017, Ethereum’s token price was trading at almost $300; that’s over 94000% more than the $0.31 each token sold for during the initial offering in 2014.

There is some craziness, too. It’s definitely a buyer beware market.

A decentralised economy

What we have now is a system made up of several layers. The internet created a communications protocol. The next layer, Blockchain, is developing a trust protocol.

The top layer is comprised of decentralised autonomous organisations (DAOs) with governance models not controlled by people in boardrooms but by rules written in smart contract code that automatically execute once certain thresholds are met, and with transparent records that cannot be altered. 

The rules around these organisations are typically grouped according to reputation, value distribution and a voting system that allows decisions to be made by a community. DAOs should be able to evolve and support deviation of opinions and allow the evolution of organisational thinking. Apps such as status.im, for instance, are undoing the control Facebook and Twitter have over us. 

What we are seeing is the emergence of a decentralised economy with new organisations living on blockchain beyond geopolitical boundaries that may challenge the dominance of mega-corporations and governments.  

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Mark Pascall is a speaker at Accounting Conference 2018 in Auckland.

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