Facebook Libra blockchain announcement is a notable example of two key concepts we introduced last year in “Maverick* Research: Crypto-Politics and ‘World Wide Ledger’ Will Rock Your Business Competition ”: crypto-politics and decentralized business units.
In the Maverick research report, we also introduced the World Wide Ledger (WWL) concept and its societal impact. We drew parallels to show mutation from the World Wide Web (WWW) information exchange to the World Wide Ledger value exchange over the internet . For your background, our key findings and recommendations were:
- Rapid progress in blockchain technologies over the next decade will lead to the formation of the World Wide Ledger as the global trust fabric for value exchange. This inherent trust model enables the creation of autonomous organizations around decentralized applications (dapps) and related ledgers.
- The WWL will be the foundation of decentralized business (d-business) similar to the World Wide Web as the foundation of e-business. The outcome is a balanced society where (virtual) decentralized and (traditional) centralized organizations coexist.
- The WWL will enable pervasive digitalization by using simple and interoperable constructs that power the true programmable economy. Traditional organizations will introduce decentralized business units to leverage algorithmic competition capabilities.
- Create a decentralized business program model over the next five years. The program must be chartered to leverage WWL (or interim blockchain) capabilities to oversee the creation of decentralized business units as a new organizational construct.
- Design the decentralized business unit as an autonomous organization to leverage algorithmic competition and integrate the enterprise capabilities with the programmable economy in different contexts.”
On crypto politics, we predicted that:
“The creation of decentralized autonomous business units and the formation of communities around them will create new social and business political dynamics, or what we call “crypto-politics.” Crypto-politics can create new forces that are driven by programmable objectives within the underlying dapps that will eventually influence the competition stage in each social and business scenario.
Crypto-politics: Virtual community users/entities vie for influence to govern the autonomous organization and set the objectives. This new world structure that overlays physical borders and organizational boundaries gradually shifts the power from traditional institutions to community participants to create a new societal balance. The new landscape more dynamically manages order and chaos in a commercial, economic and societal context. It will include new forms of political integration, governance and programmable objectives that are all formulated using algorithmic methods, as well as greater participation from individuals. This power shift will create different friction points that magnify crypto-political and crypto-digital competition as traditional and autonomous entities try to broaden their span of influence and/or recentralize power. “
On decentralized business units, we stated:
“The world needs a hybrid of centralized and decentralized systems to establish balance and stability because of human needs and behaviors. However, current centralized systems, such as traditional institutions, computing platforms and social networks, have caused many challenges that require a counterbalance with decentralized systems.
WWL will bring a balanced approach that prevents a fully re-centralized scenario by introducing a global trust fabric that allows decentralized and centralized organizational units to coexist. WWL fabric enables standardized dapps and distributed ledgers to power up decentralized autonomous organizations independently or as embedded units within any centralized organization.”
The Facebook announcement produced a more vivid example of these two key concepts:
- Crypto-politics emergence: the introduction of a global cryptocurrency like Libra by a prominent company with a couple of billion users across the world can’t be taken lightly. That’s why we see quick reactions from many lawmakers across the world and central banks to scrutinize Libra. The blockchain community is also assessing the potential technical and ecosystem impact of Libra Blockchain. We will probably see more competitive posturing in the coming months. For example, Hedera was quick to put an ad in the Wall Street Journal yesterday, thanking Facebook for flattering them with their copycat governance model . This is crypto politics in play from different perspectives as predicated.
- Hybrid centralized and decentralized business units: the introduction of a new operating model that a traditional company such as Facebook establishes a separate entity such as Calibra and participate in the Libra association to enable some sort of decentralization is an example of this hybrid model. This is significant because the announcement is not just a limited experiment. We don’t make any assessment here on whether this model will succeed or fail, but this is an interesting example how to break the barrier and open up a traditional company to a blockchain-enabled business model in a (kind of / sort of / yet to be seen) hybrid ecosystem.
As we concluded in the report, this is a unique period where organizations and business leaders can focus on business innovation and influence the maturity of technology and the evolutionary paths of related ecosystems. Senior executives of traditional organizations should consider decentralization scenarios and their societal impact as they develop long-term strategic plans over the next decade. The lack of action may leave the organization ill-equipped to react/leverage the intended or unintended consequence of WWL.
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