A little over a month ago I completed an MBA program. In this program, I juggled many life events ranging from buying cars and minor surgeries to the everyday tasks of taking kids to soccer practice. In addition to daily life, the program was a major commitment that required creating what seemed like volumes of original content, all supported by extensive research. During the whole process, I transformed from barely being able to fill up a page in a few hours to needing a few hours to get my wordcount down to one page. Several weeks ago, a classmate of mine approached me and asked if I would write an article about blockchain and Distributed Ledger Technology (DLT) as it relates to leadership. These were two subjects I extensively researched during my MBA program and am passionate about, so I took him up on the challenge.
Trust in Leadership
I’m an Army veteran with several overseas tours, my last being to Afghanistan where I supported Special Forces as their money man. That’s right. My primary weapons on the battlefield were a bill counter, calculator, and several millions of dollars. As a Finance Officer in a mostly ungoverned country, I was able to learn many lessons that are hard to imagine, coming from a mostly regulated world. Afghanistan is very tribal, and they place their trust in their elders. This is an important aspect to understand if you want to win the hearts and minds of the people. Trust is a cross-cultural quality that all people recognize and is required to conduct business. Without trust, we are vulnerable to nefarious actors who will take full advantage. Trust levels the playing field and is not easily established.
Throughout history, people have looked to their leaders to aid in establishing a trust that allowed commerce to flow freely and abundantly to be shared amongst the population. In Afghanistan, elders were often warlords and gained trust by being the biggest and boldest threat out there. In our country (USA), we have institutions that aid in building trust, but these institutions are slowly being questioned as to how they safeguard the faith we place in them as a people. The financial crisis of 2008 started a domino effect and set the stage for a technology that claimed to have a layer of trust built into it. That technology was called Bitcoin.
A New Way to Trust
Bitcoin’s protocol, or functional layer, is a blockchain that is a clever integration of ledger (database), encryption (hashing), authentication (public and private key), and consensus (game theory) that work together to build a system of trust. The ledger is immutable and shared amongst anyone willing to download a copy and take part in the ecosystem. Messages or data is encrypted and only visible or transferred to trusted parties through a set of public – your home address – and private – the key to your front door – keys. These elements eliminate the need of third-party verification of facts.
Bitcoin does for blockchain what email did for the internet in the 1990s. It gave a use case for the new technology but was able to do away with the problem of duplication that our current internet has. Anyone can receive an email and make multiple copies, making the original hard to verify, but bitcoin solved that trust issue. This is now the result of many people wanting to buy bitcoin and see their investments triple in value over time while maintaining excellent trust with bitcoin provider! In Afghanistan in 2002, I encountered counterfeit bills that were in circulation and the people just accepted the fact that they were in the money supply. The bills were normally discounted by 40-50% of the face value but merchants and traders would take them in exchange for goods and services. The blockchain, however, keeps people from having to accept these types of risks that are rampant in the system.
I started to dive deeper into blockchain and DLT about two years ago, around the time I started my MBA program. This was both good and bad. While I enjoy going miles deep into a subject, my time did not really allow for it, since I was taking classes, working, and trying to balance the demands of fatherhood. As a way of justifying my blockchain and DLT studies, I started searching for projects that were attempting to solve an issue or finding applications that remotely related to the subject matter of my coursework.
No matter what the assignment was, I found a way to relate a blockchain solution to a problem. For instance, it was in Finance when I really started to dig deep into Initial Coin Offerings, or ICOs, and could discuss how they were being used to circumvent the regulations that are in place for IPOs today. It seemed for every subject in business, there was a blockchain/DLT solution promising to fix shortcomings and concerns in our current system. I was killing two birds with one stone by gaining an understanding of the how blockchain interrelates to our current business models and how it promises to help us evolve to new models of economic interactions.
Building A Better Future
Technology is moving the world to places only imagined in sci-fi thrillers just thirty years ago. Think machine-to-machine currency exchanges. For all of this to happen there must be a trust layer in place that prevents nefarious actors from doing major damage to the ecosystem. The technologies aren’t new, with most having been around since the 70s and 80s; the only difference is that they are integrated together to make up and secure the blockchain.