Recently, Jonathan coined the phrase “the drag of orthodoxy” as it relates to regulated industries and their inability to quickly adopt new technologies even when they provide the best use cases. Often, this is due to both the inability to implement new technology (easier to solve) and the opportunity costs of losing trust (harder to solve).
Digital adoption in these industries requires buy-in from traditional institutional mechanisms and an evolution of norms as well as consumer trust.
Unquestionably, the push of consumer expectations will continue to combine with digital forces to propel these industries past their legacy infrastructures and into a new age of innovation and growth.
Bitcoin could very well be the inflection point that is needed for mass adoption of blockchain technology in regulated industries and launches them into a new era.
Bitcoin was blockchain’s first mass consumer product
— Pomp (@APompliano) January 3, 2018
We’ve been here before with less revolutionary technologies. Marketplaces, enabled by wide-spread adoption of the internet have been around for over 25 years.
However, industries such as insurance and energy are just now beginning to leverage technologies like API’s to offer consumers the chance to compare plans just as they have flights for years.
The adoption cycle also applies to business model innovation. Uber and Airbnb offer on-demand services to better match supply and demand of goods. It may not seem like it, but those companies are over 10 years old.
Just recently, we’ve seen startups like Honor and Trov apply the same concepts to elderly care and property insurance respectively.
The important thing to note is that just like consumer adoption of technology is rapidly increasing, the same thing is occurring in institutionalized industries.
Bitcoin, what is it good for? https://t.co/OvH0ttiesX
— Paul Krugman (@paulkrugman) December 24, 2017
Where can we go from here with blockchain in regulated industries?
Electricity transactions are still tracked almost exclusively in Excel before being submitted into databases that rarely are connected. This system adds millions in additional transaction costs and makes full transparency between market actors almost impossible.
If smart meters and API’s wrote these transactions into a decentralized ledger, the errors would be eliminated almost immediately and new entrants (i.e. consumers with excess power capacity due to solar panels) would be encouraged to enter the market.
Healthcare provides maybe the most obvious applications of blockchain technology. Patient information, research data, and prescription purchases all require privacy, security, and have rigorous standards for quality.
In finance, the unbundling of the job will require new platforms for the reintegration of common services like payroll, insurance, and financial planning. Blockchain technology provides the perfect solution for transaction and ID verification.
The rise of Bitcoin and other cryptocurrencies has started a conversation centered mostly around their skyrocketing prices. Yet, what is most exciting for me are the potential use cases that will come as the masses become more comfortable with the underlying technology and its ability to improve the industries that most affect their everyday lives.