In a recently released study, IBM has highlighted five features that are fundamental to blockchain technology and have the potential of eliminate the “frictions” that hamper innovation and efficiency.

The report, “Fast forward: Rethinking Enterprises, Ecosystems and Economies with Blockchains”, points out three types of frictions that currently predominate: information, interaction and innovation. It says that a distributed ledger for business networks based on blockchain technology has the potential to eliminate these frictions.

“Our analysis of the impact of blockchains across the enterprise, ecosystems and economies shows that frictions can be greatly reduced or even eliminated”, it said. “The result, we believe, will be a new economic equation for organizations, trust and value exchange.”

It further noted that while internet has removed some of the frictions, the frictions that still remain are highly consequential. This includes conflicting cross-border regulations, cyber-attacks, and exorbitant role of intermediaries. Blockchains have the potential to bring about a paradigm shift and make appropriate data visible in near real-time. The report emphasized that as implementation of blockchain technology vaporizes friction, the economic equation will change.

The report points out five blockchain attributes that are crucial to reducing frictions:

• Distributed and sustainable
   
• Secure and indelible
   
• Transparent and auditable
   
• Consensus-based and transactional
   
• Flexible and orchestrated

“As blockchains speed up the flow of capital and the creation of wealth, our economy and interactions will be less subject to the fits and starts of friction, and instead head toward something more like perpetual motion”, it added. “The leveling effects across frictions at various level of the economy are startling. They suggest that transaction costs and enterprise friction could be so greatly reduced that organizations will be transformed in ways not yet imagined. Ecosystems can operate with much more robust trust. Blockchain networks, by propelling the movement of capital and exchange of value, can change how markets function and expand economic opportunity”.

However, the report cautions that while the technology can improve efficiency, trust and value, businesses must carefully evaluate where blockchains can provide the greatest gains and where they do not. It recommends businesses to identify the compelling use cases by considering which frictions are holding back their enterprise and experiment in discrete areas where the attributes of blockchains drive rapid impact.

It also suggests businesses to explore the role of blockchain-focused alliances and consortia, adding that blockchains will benefit from open-standard governance. The report also emphasizes on the need to explore how new blockchain-based services and apps can complement and scale existing revenue models.

“Distributed ledgers can become the foundation of a robust system of trust, a decentralized platform for massive collaboration. With that, intermediaries will be shuttered”, it said. “New services delivered on blockchain networks can accelerate access and liberate those that were once locked out of efficient value creation to fully participate in an all-in economy.”