Software is eating the world. Amazon, Apple, Alphabet, Microsoft, and Facebook are the top 5 companies in the S&P 500 and have a bigger market cap than the bottom 282 companies in the list. The internet is a decentralized system with major centralized-hubs run by large enterprises. But what if we could design a better system? One that more evenly distributed power to all members of society. The emergence of Ethereum, an open and permission-less public blockchain, allows for the creation of distributed systems that will “reshape the global economy and reset the global competitive landscape”.

Appreciate the present

The amount of human and financial capital necessary to build an organization like Amazon and Alphabet is breathtaking and their ingenuity should be applauded. The founders of these companies are visionaries and have reaped the rewards of their business prowess. They make money by providing real value to consumers.

However, the problem with large, centralized entities like Amazon is that network effects create vendor lock-in and monopolies have tendencies to become rent seekers. Rent seekers reduce economic efficiency by increasing their share of existing wealth without creating new wealth.

The Internet, in its current form, favors centralized entities and permission-based systems but all of that is about to change; these other articles discussed how Ethereum, a bottom-up, permission-less system, will revolutionize finance through the creation of an open financial system. However, it has much broader applications in business and commerce.

Build a better future

“The future of B2B transactions are private, secure and regulatory compliant smart contracts denominated in fiat currencies (USD, Euros, etc…) on public blockchains.” This quote from Paul Brody, Global Blockchain Leader at Ernst and Young, highlights the impending transition eloquently. In his intro talk at EY Global Blockchain Summit, Brody goes into great detail on the business transformations that will be happening this decade due to blockchain technologies. I highly recommend watching the opening talk; it is forward thinking.

This is not an anti-establishment rhetoric. Rather, it is an evolution of business process that is inevitable due to technological innovations, incentive structures, human nature and market-based competition.

As globalization has created economies of scale, large companies have inevitably created and utilized Enterprise Resource Planning (ERP) systems to conduct business more effectively so that all internal teams and relevant third parties are aware of what is happening within and across organizations. This software and the highly-skilled teams building it are the cornerstone behind efficient, monopolistic tech companies.

When you place an Amazon Fresh order, this information is routed to the packaging center as well as the ordering team so that they know how much of each food category to start buying to replenish their stock. The data is also processed with analytical tools and machine learning and passed to the sales, business development and marketing teams. The finance team receives their own report as well. It all happens in real time and Amazon is very good at building this software.

“Blockchains will do for networks of enterprises and business ecosystems what ERP did for the single company.” Ethereum will create open, permission-less standards for business logic and communication both within and across organizations, replacing and improving the set of software and communication tools that Amazon and other corporations use, while also making them free and available for everyone to access.

If you took apart Amazon as an organization and broke it into several sub-components, such as: finance, marketing, sales, manufacturing, business development, strategy, etc… the majority of these silos are audit-able and process oriented, and blockchain technology will allow for the automation of these processes.