Distributed ledger technology: Applications and implications

• Date: 01 September 2017
• Published date: 01 September 2017
• DOI: http://doi.org/10.1002/jsc.2148

RESEARCH ARTICLE

Strategic Change. 2017;26(5):481–489. wileyonlinelibrary.com/journal/jsc © 2017 John Wiley & Sons, Ltd. 481

DOI: 10.1002/jsc.2148

Abstract

Distributed ledger technologies (DLTs) are rewring convenonal noons of business transact‐

ing, creang fresh opportunies for value creaon and capture. Using qualitave interview data

as a primary resource, the proposed ve‐point model synthesizes these possibilies, demonstrat‐

ing how they may lead to “disrupve innovaon.” A further conceptual model is subsequently

provided with a view to assisng future problem solving in the area.

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 INTRODUCTION

The relaonship between technological development and business

model innovaon has been a maer of academic debate for many

years (Schumpeter, 1939). Distributed ledger technology (DLT) is one

of the latest in a long list of digital technologies that appear to be

heralding a new industrial revoluon (Perez, 2009). This was empha‐

sized in a recent report by the UK government’s Chief Scienc O‐

cer (Walport, 2016), in which it is stated that “in distributed ledger

technology we may be witnessing one of those explosions of creave

potenal that catalyse exceponal levels of innovaon” that could

have “the capacity to deliver a new kind of trust to a wide range of

services” (p. 4). This arcle presents empirical evidence of how these

developments might occur and their implicaons for business model

innovaon. We conducted a workshop of senior industrialists, taped

and transcribed their comments, and idened a conceptual model

that has ve elements: DLTs as a new and unique technology; lead‐

ing to transparency and trust; leading to new ways of thinking, which

combine with dierent soluons to produce a disrupted future (busi‐

ness and economic models). Our second contribuon arises from an

extensive series of interviews over a 6‐month period which has pro‐

duced a conceptual model of the limitaons of DLTs, that is to say,

where they cannot be used and what types are appropriate for what

condions. In combinaon, they provide a link between the technol‐

ogy of distributed ledgers and the business and economic models that

are developing alongside the technology.

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 TECHNOLOGICAL REVOLUTIONS

Perez (2009) argues that technological revoluons can be seen

stretching back to the original Industrial Revoluon, followed by the

railway revoluon, the oil revoluon, and now the informaon and

telecommunicaons revoluon. She idenes three drivers common

to all the revoluons: a signicantly lower cost input, a new method of

communicaon, and altered logiscs and infrastructures. These lower

costs of inputs create tensions in exisng markets, leading to nancial

bubbles and crashes, and ulmately changed instuons. In short, as

Jacobides, Knudsen, and Augier (2006a) observe, technological revo‐

luons lead to changes in the economic model of who does what, who

gets what.

Two major enablers of the digital revoluon are the blurring of

boundaries between physical and digital worlds and the development

of open standards. The blurring of physical and digital is occurring

across many industries. For example, Yoo, Boland, Lyynen, and Maj‐

chrzak (2012) describe how the convergence of GPS, mobile digital

technology, in‐car navigaon and entertainment systems, and on‐

board microprocessors not only enables novel features for the car but

also has had an impact on related industries such as insurance, safety,

and car maintenance. This ability to separate the informaon from the

physical world requires a special infrastructure, oen based on sen‐

sors or devices collecng data on individuals. Once this infrastructure

is in place, then informaon is free to ow, aer being dematerialized.

An immediate eect of dematerializaon is liquecaon (Normann,

2001), or the movement of informaon across the digital infrastruc‐

ture and its combinaon with other liquied assets to create potenal

new insights. Digital technology makes it possible for almost any asset

Distributed ledger technology: Applicaons

and implicaons*

Roger Maull1 | Phil Godsi1 | Catherine Mulligan2 | Alan Brown1 | Beth Kewell1

1University of Surrey, United Kingdom

2Imperial College, London, United Kingdom

Correspondence

Beth Kewell, Surrey Centre for the Digital

Economy, University of Surrey, Surrey GU2

7XH, United Kingdom

Email: e.kewell@surrey.ac.uk

* JEL classicaon codes: D20, O38, O39.