Decentralized Platforms in Supply Chain

Dynamo Dispatch (02/17/18) Commentary

Originally from Issue 17 of the Dynamo Dispatch.

The Chris Dixon piece got me thinking about the future of platforms. I think it laid out the wide-scale benefits of blockchain and associated crypto technologies well. It allowed us to cut through the noise of “what is BTC at?” or “what about the Telegram ICO.”

I’ve spent the early part of this year looking at a few blockchain-based products that are raising capital. I like many others believe in the benefits of such technology but are skeptical as to whether the timing is right and what the path for such applications might be. I am increasingly spending more time at the foundational services level before worrying about the application layer.

The supply chain is decentralized by definition and as such, makes sense to have a decentralized, uniform, digital “OS” underlying it. We’ve seen how decentralized structures can become concentrated around players who accumulate certain critical mass. That has resulted in competing interests that unfairly can push certain relationships to a zero-sum dynamic with hundreds of millions if not billions of dollars at stake. Some examples include detention/demurrage fees for truck drivers/ports; the oligopolistic structure of steamship lines vs their customers; transparency around warehouse operations. If the rules exist on a uniform platform that by virtue of it’s underlying architecture, is also the indisputable system of truth, there could be a lot of efficiencies and stakeholder-centricity gained.

The trend of decentralization must occur from the root, up — it will be hard to slot in or rearchitect what already exists. This itself is a much deeper point to make but alluding to Chris’ points, the incentives and construction of interactions makes it difficult to “retrofit” an existing centralized platform. In fact, the economic value of such platforms would fight against such an effort.

In supply chain, we need to think about the uniform architecture and protocols that dictate trade. This must occur before we spend too much time building applications or tokenizing aspects of the technology. In a multi-party environment with large and small players as well as a notorious deficiency in technology, this will take time. Chris could not have put the path to product/market fit better — 1) developer/platform and only then 2) platform/end users. This trend is here to stay and is much deeper than the price of BTC at any given second. I am looking forward to learning and thinking about this further in the realm of global trade.