The Business Blockchain by William Mougayar: the bottom line
The Blockchain is a big thing nowadays, but what is all the fuss about? What is the blockchain? How is it working? What will be the impact on business?
If you are trying to get a clear picture, here is a book suggestion. The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology by William Mougayar explains just that.
In contrast with other books such as Blockchain Revolution (also reviewed on I’ll Make You Think Smart), it is however a technical read. Mougayar’s Business Blockchain book goes into the details, and that’s precisely what you need if you are trying to understand the topic. Want to find out more? Read my book review!
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Book Suggestion & Review: The Business Blockchain – William Mougayar.
The blockchain is a trendy topic at the moment. Alongside financial technologies (Fintechs), regulatory technologies (Regtechs) and so on. The problem is… few people actually know about those issues. So, this book actually helped me understand who had a clue or not.
My story with this book started a week before a technology conference I went to. One of the speakers, a Fintech expert, acted as a moderator in one of the panels. And he asked me to help him figure out whether one of the panelists actually knew about the topic. I knew a couple of things about the blockchain, obviously. But I needed a little bit of help.
Knowing how fast I read and process books, he gave me Mougayar’s book The Business Blockchain to read.
170 pages later (Hardcover), I showed up at the conference. Not as an expert of course, but I had done my homework so I had a pretty good understanding of the subject matter. In fact, I’d made sure I was OK with the technical vocabulary and the major key concepts all blockchain experts ought to know about. Anyway, I attended the panel event. And you know what? The panelist I was asked to look at had most of it wrong… and eventually admitted it! He didn’t master the concepts, had the terms wrong…
The Business Blockchain by William Mougayar is definitely not a bedside table and I strongly advise that you take a pen and something to take notes on if you plan on reading it. Having said this, the book is a must-read if you are interested in new technology and Blockchain discussions. That guy should have tried the book… It’s as simple as that!
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Mougayar’s Business Blockchain: a brief book review (for starters).
So let’s review the book! In short, William Mougayar’s book The Business Blockchain is a very insightful book. And it is written by a recognized thought-leader in the technology industry! What else do you need?
William Mougayar is a general partner at the tech fund Virtual Capital Ventures. He sits in various tech company boards. And he is described as “the most sophisticated” business thinker on the blockchain topic. In other words, he is a recognized expert and leader in the disruptive technologies field. And chances were that the book would help me get things right.
The Business Blockchain is a medium-size piece (less than 200 pages) that anyone interested in new technologies should read. Interested in new economic sectors such as crypto-currencies and FinTechs? Dig in! The book discusses what the Blockchain is and it explains the forthcoming challenges and opportunities. It provides a complete overview of the subject matter, in a way approachable to experts and non-experts.
The style is… accessible. Mougayar focuses on a complex topic: technology developments and internet know-how. So he uses some technical terms and concepts at times. But the book aims at explaining the Blockchain issue and takes the reader by the hand. It gives examples and transforms a theoretical discussion into something practical.
Now, I’m getting into the details with a much more comprehensive book review below (keep reading!), but to finish the brief overview here is what the book is about:
Mougayar’s Business Blockchain: the comprehensive book review.
Simply put? A must read book if you’re trying to find out more (and understand) what the blockchain is about. I can’t make it simpler than that, really…
The book is separated into seven clear chapters. All deal with a specific and carefully treated topic, but I am going to look at the themes more than at the chapters in this book review.
The book in bullet points
Mougayar explores these major themes:
- The definition of the Blockchain
- The role it already plays and the role it will play
- The issue of intermediaries in a trust-based transactional relationship
- The challenges that will need to be faced, mainly in terms of implementation
He also asks a series of questions throughout the book, including:
- What is the Blockchain?
- Is it there already?
- Is this a new technology? A new internet?
- What is its purpose?
- Which differences between centralized and decentralized systems?
- What does trust have to do with Blockchain?
- Can the Blockchain be a solution? To what problem?
- What are the big challenges?
- Where are we so far?
- What is the impact for financial services?
Now, shall we look at the book’s main themes with a little more depth? Keep reading!
The Business Blockchain – Theme #1: What on earth is the blockchain?
The first theme of the book relates to a central question: what is the Blockchain? Mougayar explains that the Blockchain has already been there for some time now. He also insists that there is a major lack of awareness on the subject matter, though.
To him, most people have no idea about what the concept of Blockchain means. Most people have no idea about the role they play. And most people completely ignore what operations they perform! Oh, last but not least, most people, businesses and regulators have no idea about what role the Blockchain will play in the future either…
So, what is the Blockchain?
In Mougayar’s words, “Blockchain are not a product that you can turn on and use. Blockchain will unable other products that you will use, while you may not know there is a Blockchain behind them”. In sum, the Blockchain works as a fundamental sequencing logic.
Uh, okay… but.. wait, what on earth do you mean here?
Ok, let’s rephrase and explain. The Blockchain is a way of automating processes. Information is not handled by one central server that can be hacked. It is managed by a network which operates without central influence or interference. And the process cannot be hacked because the whole network performs surveillance. So? trust, trust, automation, and trust!
Decentralizing the system to solve a variety of security and trust problem is at the core of the Blockchain.
More explanation …
So far, our systems have been relying on what Mougayar and all the experts in the field call “centralized” mechanisms. A central server operates operations or transactions and manages data. But because all the data is “centralized”, whoever has a direct access to the system can interfere with it. Owner, or hacker.
For Mougayar, a centralized system is thus vulnerable. And it is unable to generate trust. Yet, trust remains the key component of any transaction! So what is the solution? Well, the Blockchain!
The Blockchain, in contrast, is a decentralized system. The Blockchain relies (and depends) on many computers, which contain and preserve the authenticity of data. How? All the servers and computers share the exact same data. So, while corrupting data in a centralized system is easy, data in a Blockchain-based system is trustworthy because the whole network guarantees the authenticity of every block of the chain.
Various perspectives.
Mougayar provides several definitions of the Blockchain. In fact, it all depends on the perspective you take. To technicians, the Blockchain describes a database and a transactional system. To a business, the Blockchain is a solution to automate transactions and exchange assets or values. Without having recourse to influencing or corrupting the intermediaries.
So, the Blockchain can also be seen as a trusted validation system that is nothing more than the “continuation of the history of the internet”. This point is a key argument for Mougayar, who insists that the Blockchain is a “new protocol that sits on top of the internet” and has the potential of reshuffling the cards.
But the Blockchain is not a new internet! The Blockchain is a technological development that already challenges past and current technologies. It is a new opportunity to control value flows without intermediaries taking over. But it is not a new internet!
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And how do we use it?
Mougayar gives many practical examples of how the Blockchain can operate. But one is particularly easy to understand: banking.
Banks are cash managers. They set up cash management strategies, of course. But their interaction with their online clients limits to giving them access to the database which contains their personal financial information. The Blockchain, in contrast, is not about managing cash. It is about providing a verification system to ensure and guarantee that transactions are safe and trustworthy.
Online banking requires manual operations by the bank. It entails a margin of error. In contrast, Blockchain operations are automatic. And they increase transactional safety by making intermediaries obsolete.
The Byzantine Generals?
As those familiar with Blockchain technologies will expect, Mougayar also describes the Blockchain system by referring to the issue of the “Byzantine Generals problem”.
Simply put, when planning a military action, a General needs to mitigate attempts by traitors to take over. He needs to send messages. And he needs to know that his messages will arrive on time and unaltered. The General needs to trust the messenger.
Think about a trusted messenger system applicable to any online operation or transaction.
From a more modern perspective? Well, the Blockchain plays the role of the trusted messenger! It is capable of transmitting information by hashing, certifying, encrypting and decrypting data blocks. Without forgetting, of course, the role played by signature when it comes to authenticity.
Thus, Mougayar describes the Blockchain as a large system that helps secure a variety of activities. Crypto-currencies, transactions, development platforms or computer infrastructures, peer-to-peer mechanisms… It is a trust layer which certifies that blocks of information are reliable. It is a trust mechanism which guarantees a trusted chain of transactions.
Want to know more about the blockchain? Stop thinking:
The Business Blockchain – Theme #2: Trust
Without much of a surprise, trust is the second theme of Mougayar’s book.
The second chapter particularly discusses trusts through a question. How can “decentralized” systems operating through numerous computers create more trust?
In a nutshell, the Blockchain systems “continuously and sequentially” records transactions. And it creates a chain of validated blocks of information. Hence, the chain cannot be altered without being flagged by the whole network!
In other words, transactional transparency is guaranteed because i) the verification process is automatic and ii) it is an integral part of the process.
Need an example? Mougayar uses AirBnB as a case study and writes that the system “lubricate the transactions” to make the whole booking process orderly, transparent and trustworthy.
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The Business Blockchain – Theme #3: The challenges.
The third theme flows from this: Mougayar discusses the challenges to overcome.
The main challenge is that the Blockchain system remains difficult for businesses to understand. Not to mention handling and implementation. The Blockchain also creates issues for regulators, who tend to fear the risks caused by changing technologies. In terms of fraud and money-laundering in particular.
So Mougayar notes that the Blockchain will meet resistance. But he also insists that sooner or later… “every company is destined to own or participate in a variety of Blockchain, whether they are private, semi-private or public”.
Consumers use more and more apps and online services because of their efficiency and ease of use. But these need trust, and the BLockchain will help. Only, so far the existing infrastructure isn’t sufficient Developers lack experience. The applicable standards and the best practices lack definition. And the whole system lacks understanding.
The Business Blockchain – Theme #4: Change in the financial industry?
Mougayar’s then explores how the Blockchain will transform the financial services industry.
Banks: following and coping vs innovating and setting the trends?.
In retrospect, he notes, banks have used new technologies since the 1950’s. But they have produced little innovation! Coping with IT progress over the past decades has allowed improving back-end operations, retail and payment functions in a more modern and time-efficient manner. Online banking is an example of that.
But the banks have refused to innovate. They preferred preserving their physical existence. They kept investing in physical retail branches. In sum, they adapted but never innovated.
Take PayPal. Banks never invested in the idea of facilitating electronic money transfers. They only reacted when Paypal couldn’t be stopped anymore. In other words? By refusing to innovate, banks missed an opportunity to create PayPal before PayPal!
>> Related reading: my summary of Zero To One by Paypal Founder Peter Thiel.
Now, the challenge is thus for banks to renew themselves and react. Consumers make financial operations on a daily basis, through a variety of financial services providers. But banks are lagging behind.
At the same time… banks are also facing heavy regulations for the sake of preserving financial stability. So they can’t innovate in the way non-bank financial services actors innovate! For instance, if banks decided to invest in the creation of, say… a better inter-banking system, they would need to face more rules. Anti-money laundering (AML) rules, Know-Your-customer (KYC) rules… But non-bank Blockchain players can focus on developing products without worrying too much about those…
Hence, Mougayar argues that innovation has become a major challenge for the historic players. He illustrates his arguments with numerous examples and graphs that will not be discussed here… get The Business Blockchain and see for yourself!
The Business Blockchain – Theme #5: Intermediaries.
The Business Blockchain also deals with the role of intermediaries and with the ability of the Blockchain to act as a game changer.
Let’s talk about trust again. As mentioned before, trust is essential when it comes to conducting transactions. But intermediaries and third parties make the system unreliable. So Mougayar explains that Blockchain infrastructures can reduce the need for many intermediaries. No notaries, no escrows, no clearinghouses…
As explained before, this is because the system is decentralized. Algorithms and networks allow precise identification of the parties to a transaction. They allow locating goods and making transactions automatic through smart contract… And they allow transferring ownership when conditions are met. Everything is automatic and verified. Hence, the Blockchain has the potential to become a genuine game changer… because it can guarantee safe transactions!
To some, technology is about ensuring that intermediaries provide safe services. To Mougayar, it is about killing the middleman. And about getting rid of untrustworthy intermediaries. Through an increased reliance on a trusted infrastructure capable of certifying processes.
This would have a wide range of effects. It would impact a large variety of industries. It would even help with interactions between individuals and public administrations…
The Business Blockchain – Theme #6: Implementing the revolution.
The Business Blockchain then discusses implementation.
Here, Mougayar insists on the idea that whilst the Blockchain is already present, we are not there yet. He discusses opportunities to implement the Blockchain as part of an internal strategy. In the case of the smaller structures, implementations is difficult due to a lack of means. For larger structures, the issue would rather be to adapt existing systems.
In both cases, nonetheless, implementation requires asking and answering various questions. How should operators organize themselves? What strategies should they put into place? For what goals and results? What key features should they consider? How long would that take?
Mougayar provides a great discussion on organizational models here. He discusses functional architectures and protocols, tells a lot and explains many issues. But again the point can’t be detailed here due to the level of complexity involved. If this is of interest to you, just get The Business Blockchain!
The Business Blockchain – Theme #7: The future of decentralization
The last theme in Mougayar’s book deals with the future of decentralization.
Again, the idea is that the current players will have to adapt. They need to shift from old centralization habits to future decentralized techniques. They need, also, to integrate the increasing development of crypto-currencies. In sum, they must enter a new era in which value is not about money but about transactions.
In short, the blockchain is all about effects and opportunities.
Overall, ‘Mougayar’s book ‘The Business Blockchain’ concludes with the following idea. While the Blockchain will have many effects, it will also create many new opportunities. Including the possibility of creating a new flow of value… thus making the Blockchain a “digital value leveler”.
The main conclusions
Mougayar overall comes to the following conclusions:
- The Blockchain is a sequencing logic that represents the future of internet.
- It is already there but most people have no idea they are already using it.
- Its purpose is to change the way transactions work, to increase security.
- Centralized systems are a danger because they cannot provide trust.
- Decentralized systems can however provide trust… because a network permanently validates the authenticity of the information.
- Trust is the heart of the Blockchain technology.
- There are many challenges in terms of awareness, implementation and adaptation.
- There are also numerous opportunities, but we are not there yet.
- Financial services will be one of the mainly impacted sectors.
Mougayar’s Business Blockchain: Food for Thought
So, let’s finish this book review with some food for thought!
The various points discussed in Mougayar’s book may seem very technical. But they are more practical than they seem.
When people talk about trendy topics, the ‘Blockchain’, FinTechs, AssurTechs or RegTechs always come up. As ‘disruptive’ technologies, these are some of those fashionable topics that one can evoke to look smart. Yet, as mentioned earlier in this book review, many actually struggle to explain those concepts with a clear and appropriate vocabulary, and to demonstrate … thought-leadership on the matter.
In reality, FinTechs are pretty much like the visible part of the iceberg. And the Blockchain is the hidden part of the technological iceberg. Yet, while the Blockchain is the most important evolution in the years to come, most businesses have no clue about what comes next. The consumer at the end of the chain does not care about how the system actually works either!
An insightful book.
Mougayar’s book The Business Blockchain is precisely about filling the gap. And that makes it a very valuable book.
Mougayar’s book is great for a technical introduction. Read it more than once, it’ll be much more than that…
The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology contributes to various discussions on modern technologies. The book is an introductory piece useful to get the basics right. But it also has the merit of taking the readers to the next level. And it does explain many subtleties essential to understanding the issue.
The Business Blockchain also shows the potential of the Blockchain technology for business and it gives a vision of how technology revolutions will shape our future. Mougayar talks about a revolutionary type of infrastructure. He simplifies a mechanism that nobody sees but which is already there.
The Blockchain isn’t only a matter of crypto-currencies. It is also a computing infrastructure. A platform capable of following the validation of successive transactions. And a development platform based on open source and peer-to-peer technologies.
Last (but not least), Mougayar points to an opportunity to create a valuable system. A system in which the role and influence of intermediaries is limited. That makes The Business Blockchain an eye-opening and challenging book. Totally worth my time and money. Most likely worth yours too!
Edit March 2018: If you are interested in Blockchain topics, you should also have a look at Blockchain Revolution, by Don and Alex Tapscott. In contrast, Blockchain Revolution is less technical that Mougayar’s book and largely focuses on giving practical examples of what our future will look like thanks to the Blockchain technology. It is my opinion that both books are actually very complementary and really worth reading together. Just saying!
In sum?
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Your turn now, get the book!
That’s it for now, but don’t stop here! My reading notes are meant to give you a very comprehensive overview of the books I read and some food for thought for the month. That’s why I’ll Make You Think SMART is the Kick-Ass Book Reviews blog after all!
Having said that, the next step for you is to keep digging! Remember, books are a cheap way to learn new things and to benefit from the experience of others at no cost. Not to mention the stories you’ll be able to tell after a good read!
So, if my book review picked your curiosity, you only have one choice: go for it! Get the book and READ IT! Don’t postpone or you simply won’t… Usual disclaimer: yes, this is an Amazon Affiliate link which means I’ll get a percentage of everything you buy on Amazon. That supports my blog, and it won’t cost you a cent! Thank you!
As always, I hope you enjoyed this book review! Please let me know what you think in the comment box down the page. Especially if you read the book, if you feel like buying it, or if you simply enjoyed my review!
Cheers!
I Will Make You Think Smart 