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How Blockchain might boost European innovation

There is no European equivalent to Google, Apple, Microsoft, Facebook or Amazon – all are American companies. There is also no European equivalent to emerging Chinese giants such as Alibaba, Huawei, Tencent or ByteDance (the publisher of music social media service TikTok). Rather than wondering why, we might want to take a look at what a worldwide tech innovator from Europe might build on if it wants to play to win in the global economy.

A May 2019 report by consultancy firm Deloitte polled over 1,000 companies on their vision on the Blockchain and how they use it or are planning on using it in their business. Most of these companies came from the United States and China, but European countries such as Germany or the United Kingdom were included, too.

Deloitte survey indicated that American and Chinese companies are the furthest along their trajectory to implement the Blockchain into their business, whether for smart contracts, data security, payments or validation. However, the survey further notes that respondents from Germany, Luxembourg and Switzerland are all planning major investments in the Blockchain, outplanning the US and China by an average of 15% in the segment that plans to invest $10 million or more. This is a positive sign.

Blockchain standards can’t be rolled out globally – or can they?

Since there is no single Blockchain technology or application, as the proliferation of different crypto-currency platforms proves, achieving benefits of scale with the Blockchain can be hard. Especially because, at a basic level, a Blockchain-based application requires the users’ will to keep it alive. There is no power at a macro level that can make a business ecosystem choose one application, as we have also noted in our paper ‘The case for Innovation Managers and the Blockchain’.

Even clear and direct business benefits don’t guarantee direct user adoption. Technology’s graveyard is filled with innovations that were ahead of their time or intrinsically superior to then-competitors, such as the Betamax video standard or Xerox’s first graphical user interface, yet didn’t catch on. However, a compelling case for ‘soft power’ creating standards by multi-lateral decision-making could be made by the European Union.

Mediating the interests of the ecosystem

The American and to a lesser extent the Chinese economy operate on more of a zero-sum basis than the European economy, meaning there is a greater inclination towards monopolization of niches and much fiercer competition. European legal frameworks, along with their attendant more distributed power structures, actively inhibit such events.

In fact, while no European Google exists, plenty of European companies that are at once competitors and cooperators can inhabit the same economical ecosystem, e.g. the large European car manufacturers that are sometimes allies, sometimes enemies. European organizations have experience in mediating the interests of their constituent members to satisfactory outcomes or may sometimes band together when their collective interests are being threatened, e.g. in the ongoing tug-of-war between Boeing and Airbus, or the bleak realities faced by the United Kingdom in its Brexit.

Governance as technology

This type of governance is a technology in its own right, with best practices, expertise and insights. And it could be put to good use in a bid to roll-out global Blockchain standards in some economic sectors. Early December 2018, seven EU countries – France, Italy, Spain, Malta, Cyprus, Greece and Portugal – made a joint declaration to boost the Blockchain. From the declaration: “[the Blockchain may] result not only in the enhancement of e-government services but also increased transparency and reduced administrative burdens, better customs collection and better access to public information.” The paper further notes the Blockchain could improve economic efficiency, long considered a problem area for Mediterranean economies.

This joint intent could be the starting point of a consortium, something only 35% of the responding companies in Deloitte’s survey has done. Deloitte’s report further notes: “Joining consortia – arguably may be the blockchain’s largest barrier to entry. Primarily, consortia require a shift in mindset: You must ally within your ecosystem – whether direct competitors or not – and work toward some greater good. Getting to that place can be difficult to reconcile.” That seems like a perfect fit for experts in governance.

Cooperation and investment

It seems unlikely that Microsoft, Google and Facebook would agree on, say, a joint crypto-currency (especially seeing as that Facebook is planning its own, set to debut on June 18, 2019 ). With the trade wars heating up between the US and China, cooperation in that field looks very uncertain, too.

However, if the German, Swiss and Luxembourgian investment booms in the Blockchain, coupled with the Mediterranean countries’ declarations of intent are anything to go by, it would seem Europe is perfectly positioned to mediate one or several Blockchain standard practices and applications to the benefit of its entire economic sphere. The willingness to find compromises and to keep investing in innovation could prove to be a very fortunate combination.

Categorized: Government