How Your Association Can Lead in the Blockchain Revolution

Blockchain Revolution January 30, 2019 By: Kaihan Krippendorff

Blockchain is an emerging technology that has the potential to make transactions with customers and members more seamless, transparent, and secure. Your association can help lead the charge for blockchain adoption in your industry.

The job of an association executive has never been more complex, but it’s about to get trickier thanks to the blockchain, which could be the most transformative technology taking shape in decades. Before you roll your eyes or dismiss blockchain as just the latest overhyped trend, it helps to study up on what the technology is and what it could do for your association and the industry or profession it represents.

Blockchain goes beyond cryptocurrencies like Bitcoin or Ethereum, and while companies like IBM, Google, Walmart, and ExxonMobil are early adopters, associations might actually be the natural leaders of the blockchain revolution.

But first, what is blockchain? It’s a technology that promises to redefine how any asset—real estate, electronics, intellectual property, agricultural goods---can be tracked and accounted for. It could radically redefine how players in any industry interact. Instead of one entity or business maintaining its own ledger of transactions, the blockchain would offer one master ledger, replicated and shared by multiple players.

For example, if a grocery store finds contaminated lettuce, it could query the industry ledger and rapidly identify which farm produced it, which exporter shipped it, and which distributor delivered it, saving millions of dollars in wasted produce due to a total product recall. A blockchain approach ensures four important elements:

  • Consensus. All participants agree that transactions are valid.
  • Provenance. Participants can trace where an asset came from and how ownership changed over time.
  • Immutability. Once participants reach consensus, no participant can tamper with or alter a record. There is also no centralized version of the data, and it would require unreachable levels of computing power and a simultaneous hacking of each node in the network to corrupt the data.
  • Finality. There is only one place to determine ownership of an asset or completion of a transaction or task.

This kind of blockchain network is known as a “permissioned-private” network. These networks are different from Bitcoin in two important ways: Participants cannot transact anonymously (the networks are “permissioned”) and must be invited to join (the networks are private).

Blockchain goes beyond cryptocurrencies like Bitcoin or Ethereum, and while companies like IBM, Google, Walmart, and ExxonMobil are early adopters, associations might actually be the natural leaders of the blockchain revolution.

Such networks are already emerging across many different industries, including retail, energy, financial services, media and entertainment, publishing, real estate, sports management, maritime shipping, and trucking. These efforts are being led by two types of participants: technology firms that build the infrastructure and industry leaders who set standards and induce other participants to join.

This second category may offer a prime opportunity for associations to lead blockchain adoption in their industries. So far, technology firms and industry leaders are taking the lead, but they might struggle to engage participants, establish common standards, share best practices, and shape regulations. All of these are activities that lie at the heart of what associations do.

Four First Steps

If your industry is ready to take advantage of blockchain technology, your association can help lay the groundwork for a successful network. These four steps will help you get started:

  1. Identify industry participants. To begin a blockchain network, an association must first attempt to pull together a cohort of industry partners and members to form an exploratory group. Make sure that group is diverse enough to spark an industry-wide effort and big enough to collectively move the industry forward.

  2. Overcome the ROI gap. Many companies are standing on the sidelines because they don’t foresee a potential return on investment in blockchain technology. That is because the immediate value of creating a blockchain network benefits the entire industry—it removes supply chain inefficiencies across an entire network or expedites what was once time-intensive recordkeeping. Only later will individual players be able to use the network to benefit their own interests. Associations can help bridge this gap between communal value and long-term individual gain, defining harder-to-quantify advantages of blockchain that will eventually benefit forward-thinking members.

  3. Set standards. With a cohort of industry players on board, associations can facilitate the collaborative decisions that will need to be made to establish a network. Ask questions like: What assets will we track? What information will we share? How will we establish consensus? And how will we govern the network?

  4. Develop and test. Fundamentally, blockchain is not a new technology. It combines several existing technologies—from file protocols to encryption—with outcomes and incentives that help individual actors to participate in a private and secure network. Start by gathering the right technology leaders to help you build the network, then work with your members to test the system before launching it live.

A wide array of industries can benefit from blockchain, and many associations can step forward to advance the technology in their fields. Only one question remains: Is your association ready to lead?

Kaihan Krippendorff

Kaihan Krippendorff is founder of Outthinker, a growth strategy consulting firm in New York City.