Executive Guidance

Get to Know
Blockchain
Unlock the value for your
business, now and tomorrow

© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_I_705610
Foreword by David Furlonger and Christophe Uzureau

The promise of blockchain various participants of the real estate value chain. Buyers,
sellers, mortgage lenders, real estate brokers and agents,
Digital advances have enabled businesses to law firms, property developers and private buyers will have
streamline a plethora of interactions between their interactions with the agency streamlined. The goal is
to reduce the time delays and information security issues
customers and value chain partners. Yet many that breed fraud and high processing costs in the real estate
information-heavy processes still require multiple sectors. The Lantmäteriet estimates a potential annual savings
entities to exchange private documents, and the of $106 million.
methods for doing so remain unsecure, error-prone Immature solutions are temporary
and fraud-ridden.
Real estate is just one industry among dozens looking to
As a real-world example, consider the information required blockchain as a solution to the challenges and opportunities
to allow a piece of real estate to change hands from one of doing business in digital environments. The technology
owner to another. From the buyer’s mortgage and insurance promises to allow any individual or commercial entity in
documents to the property’s inspection report and title the world to safely transact with any other, without needing
review, these details contain personal information about a bank, insurance company, logistics provider or other
high-value assets — some of it redundant and some of intermediary between them.
it unneeded by certain parts of the value chain. And yet
these documents, which are reviewed manually, are
passed around via email or placed on a third-party portal
outside the control of the buyer and the seller. Blockchain allows any individual or
Sweden’s Lantmäteriet, the government agency responsible
commercial entity in the world to
for regulating real estate, believes there is a better way. safely transact with any other without
The agency is building a blockchain solution to connect the an intermediary.

Get to Know Blockchain 2

When this promise is realized, it will enable dramatic For readers who plan to wait until blockchain evolves
expansion of markets; it will provide better tools to manage further along the Gartner Blockchain Spectrum, we urge
expensive and opaque processes; and it will enable trade in you to reconsider. Blockchain is not a way station on the
a broad range of assets that, until now, couldn’t be effectively road to increased digitalization. It is a paradigm shift in how
represented, priced or traded with existing means. The businesses, customers and partners interact and exchange
technology could generate as much as $3.1 trillion in new value. The time to develop the in-house skills needed to build
business value by 2030. and manage blockchain platforms is now. Equally important
are the additional organizational and leadership capabilities
needed to engage in this new way.

 artner predicts blockchain could

G Those who wait until the later phases of the Gartner
Blockchain Spectrum to engage will be shut out of
generate as much as $3.1 trillion in new opportunities to learn, earn value and influence blockchain’s
business value by 2030. development in the value chain.

To help you understand blockchain and how to unlock your

share of its value, this Executive Guidance will clarify what
The current practice of building and using blockchain is blockchain is, what it enables businesses to do that can’t
immature, however. Many solutions called “blockchain” on be done with other technologies and how it will continue
the market today only incorporate some of the elements of to evolve over the next 10 years.
the technology, and therefore only realize some of its value.

The dominance of these immature solutions is temporary.

Blockchain will quickly mature and evolve along the Gartner
Blockchain Spectrum — from the current-day blockchain-
inspired solutions that include only some elements, to
the fully realized blockchain-complete solutions we expect
to see beginning in 2023, and the enhanced blockchain
solutions by 2030 that will incorporate the Internet of
Things (IoT) and artificial intelligence (AI).

Get to Know Blockchain 3

Contents

CHAPTER 1 CHAPTER 2 CHAPTER 3

05 10 15
What Is Blockchain? The Gartner The Blockchain Society
Blockchain Spectrum
What Is
Blockchain?
 What Is Blockchain?

Blockchain as a paradigm shift Blockchains create this trusted digital environment by

combining existing technologies and techniques to form
In its simplest terms, blockchain makes it possible for two a distributed digital ledger that captures and records the
or more people, businesses or computers that may or information needed by participants in a network to interact
may not know each other to exchange value in digital and transact. The blockchain confirms who the participants
environments without having an intermediary like a bank are and validates that they own the assets they want
between them validating and protecting the transaction. to exchange. It then records the transaction information
to the ledger, a copy of which is independently updated
and held by each participant. Records are unchangeable,
time-stamped, encrypted and linked to each other in blocks.
Blockchain will move the world economy
away from the slow, expensive, analog Making digital processes both safe and transparent
methods used since the 19th century to Consider how valuable this could be for a task as universal
mediate financial transactions. and mundane as filing taxes. In the U.S., a quarter of a million
taxpayers in 2017 had their refunds stolen when fraudulent
returns were filed in their name. Such a breach is possible in
part because the Internal Revenue Service relies on Social
The potential impact on business volume is massive. Security numbers — which it issues and controls — to identify
Imagine all the business deals your firm won’t or can’t do taxpayers. Those same Social Security numbers must be
today because you don’t know who is on the other end of shared with employers, payroll processors, banks and other
the transaction and can’t be sure they own the assets they third parties. This critical key piece of identifying data lives in
want to trade. For millions of potential trading partners, the databases of dozens of companies unknown to the owner.
asset types and transactions, that uncertainty will cease
to matter. The blockchain will identify participants and A system that operates on a blockchain would, by contrast,
ensure all elements of a transaction are valid. It will enforce use more sophisticated and secure methods for identity,
its rules and ensure everyone holds to them. If its potential such as tokenized credentials or a self-sovereign identity
is realized, blockchain will move the world economy away technology. Using these methods, a blockchain is able to
from the slow, expensive, analog-based methods we have confirm the identity of a participant in a way that doesn’t
relied on since the 19th century to establish identity and require the participant to show their ID to the entire network.
legal status in financial transactions. Nor does it require the recipient to keep their own copy. All
they need is for the blockchain to confirm that the ID exists.

Get to Know Blockchain 6

 What Is Blockchain?

That same technique could make a range of activities machine-to-machine transactions made possible by digital
less susceptible to fraud, including insurance claims, platforms. This is true both of the volume of total transactions
credit access and voting. Financial institutions are and the size of the individual transactions that are now
already leveraging a version of this self-sovereign identity possible as a result of digital transformation.
capability to streamline trade finance documentation,
“know your customer” accreditation and other costly, Single units of data, cryptocurrency, reward points or pieces
redundant and fraud-riddled processes. of an asset (as opposed to the whole) are a few examples of
assets that are or soon will be tradeable over digital networks.
The units could be worth less than $0.01, but they can be
traded by the millions or trillions. Current payment systems
Blockchain identity solutions make can’t cost-effectively and securely process transactions
below a certain value, and they can’t handle the volume made
a range of activities less susceptible possible today by the proliferation of mobile devices and
to fraud, including insurance claims, networked things.
credit access and voting. Businesses need a different way to deal with new digital assets
and interactions without involving an intermediary that can
collect data on every party in the transaction and take a piece
of the value. Enter blockchain.
Why blockchain?
Identity authentication as an enabler of safe trade Blockchain not only makes new markets possible, it can also
is just one of the benefits of blockchain. Equally redirect existing value flows by reducing the control that large
important is blockchain’s ability to enable more diverse multinational corporations, digital platforms, intermediaries
transactions — in both type and size — than is possible and governments have over data.
with traditional centralized systems.

For generations, businesses have relied on centralized

infrastructures — such as payment systems, insurance, Blockchain not only makes new markets
delivery and logistics services, and governments — to possible, it can redirect existing value
execute commercial transactions and manage risk. But
these systems weren’t designed to handle the kinds of
flows by reducing the control that
centralized systems have over data.

Get to Know Blockchain 7

 What Is Blockchain?

How blockchain works

Blockchain enables trusted interactions between unknown Immutability. Completed transactions
participants by combining five design elements to authenticate are cryptographically signed, time-stamped
users, validate transactions and record that information to the and sequentially added to the ledger.
ledger in a way that can’t be corrupted by a single participant Records can’t be changed unless the
or changed after the fact. participants agree to do so.
The five elements are:

Distribution. Blockchain participants

Tokenization. Value is exchanged in the
are connected on a distributed network.
form of tokens, which can represent a wide
Participants operate nodes, which are
variety of asset types, including monetary
computers that run a program to enforce
assets, units of data or a user’s identity.
the business rules of the blockchain.
Tokenization, or the creation of tokens,
Nodes also keep a full copy of the ledger,
is the way a blockchain represents and
which updates independently when new
enables trade in its native value.
transactions occur.

Decentralization. No single entity

Encryption. Blockchain uses technologies controls a majority of nodes or dictates
such as public and private keys to record the rules. A consensus mechanism
data securely and semi-anonymously verifies and approves transactions —
(participants have pseudonyms). eliminating the need for a central
intermediary to govern the network.

Source: Gartner

Get to Know Blockchain 8

 What Is Blockchain?

The five elements together make a blockchain

All five elements together define and make a blockchain.
All five are needed to create new forms of value and safely
trade them without centralized oversight.

Blockchain ledgers can’t be read, Blockchain

written, deleted or changed as databases
can — and they aren’t controlled by
a central administrator.

It’s also important to understand what blockchain isn’t. For

one, it’s not a database — although vendors sometimes Most importantly, blockchains aren’t controlled by a central
falsely describe it as one. Blockchains aren’t general stores administrator. By definition, the fifth blockchain element
for information. Blockchain ledgers can’t be read, written, of decentralization enables consensus-driven governance.
deleted or changed as databases can. A centralized architecture would leave any solution open to
the same issues to which every central system is vulnerable.

Get to Know Blockchain 9

The Gartner
Blockchain
Spectrum
 The Gartner Blockchain Spectrum

Blockchain is on an evolutionary path Still, blockchain-inspired solutions are useful experiments

on the path to solutions with all five elements. In time,
Blockchains require all five elements, though early experiments blockchain will evolve toward solutions that enable a wide
coming to market incorporate only three of the five. Early range of new digital transactions.
adopters are leaving out tokenization and decentralization,
as these are the least familiar and mature from an enterprise The Gartner Blockchain Spectrum illustrates the evolutionary
perspective. Gartner refers to solutions incorporating only path that Gartner sees for blockchain — from the late 2000s,
some elements as blockchain-inspired solutions. when many of blockchain’s enabling technologies reached
mainstream awareness, to the current-day blockchain-inspired
Blockchain-inspired solutions can still add value by digitalizing solutions and blockchains of the future that will operate over
manual processes, such as real estate purchases, or by networks supported by AI and the IoT.
enabling more efficient information exchange in multiparty
transactions, such as insurance claims. Without all five
elements, however, their value is limited.

Internet 2010 Internet 2020 Internet 2030

of Information of Content of Value

Enabling Blockchain Blockchain Enhanced

Technology Inspired Complete Blockchain

Get to Know Blockchain 11

 The Gartner Blockchain Spectrum

Blockchain inspired
The Swedish Lantmäteriet’s real estate blockchain is one
example of a blockchain-inspired solution using only
three of the five elements — distribution, encryption
and immutability. Tokens are occasionally included in
blockchain-inspired solution designs, but in a limited way
and under centralized control.

Blockchain-inspired solutions often aim to reengineer

existing manual processes specific to an individual
organization or industry.

Because blockchain-inspired solutions are developed

for use inside an enterprise or between known parties,
they are by definition centralized in design. Their owners
describe them as “closed,” “private,” “permissioned,”
“enterprise” and “proprietary.”
Libra coin — the Facebook-led digital currency that is
Some blockchain-inspired solutions, like Sweden’s expected to go live in 2020 — is another high-profile
Lantmäteriet, have the potential to evolve over time to example of a blockchain-inspired initiative that plans to
incorporate tokens and decentralization as design elements. evolve over time toward decentralized governance. Libra
Many enterprises, however, intend their blockchain-inspired is a rare example of a blockchain-inspired solution designed
solutions to remain under central control. This includes some with tokens. Facebook has formed a consortium of technology
of the blockchain solutions developed by consortia or third leaders including PayPal, Square, Lyft and others to be part
parties for use by multiple members of a value chain. Alibaba, of the Libra nonprofit association that governs the blockchain.
for example, developed a blockchain platform to allow The way the consortium describes its blockchain indicates
customers to trace the origins of imported foods, such as there will be equity among the members. Despite that, both
New Zealand milk products, sourced from third-party suppliers. the general market and regulators are discussing Libra as
if it were a proprietary Facebook service.

Get to Know Blockchain 12

 The Gartner Blockchain Spectrum

Blockchain complete
Blockchain-complete solutions employ all five elements,
including tokens operating in a decentralized environment.
They will begin to have market impact in the mid-2020s.

To illustrate their potential, consider the solution evolving

at SWARM fund. The nonprofit startup wants to allow
individual investors to access investment opportunities that
are usually only available to institutions or ultra-high-net-worth
individuals. The SWARM fund model allows users to buy
SWM tokens, which the organization combines into a pool
of capital large enough to purchase an institutional-sized
stake in the specified fund or asset class. Though the SWARM
nonprofit currently governs the network, the idea is that
the network will ultimately operate with a higher degree
of decentralization.
One benefit of blockchain-complete solutions derives from
As SWARM fund demonstrates, the presence of tokens
the way they expand commercial participation and access.
enables blockchains to create new native digital assets or
Anyone or anything can interact or transact in a blockchain-
to represent existing assets in new digital forms so they
complete network as long as they adhere to the shared rules
can be traded. Decentralization drives the use of consensus
of the network. In a sense, blockchain-complete solutions
to authenticate users, assets and transactions, and ensures
are realizing the promise of equal access that was part of the
that no single participant can control the underlying
World Wide Web at its inception.
mechanisms of trade or the value produced.

Get to Know Blockchain 13

 The Gartner Blockchain Spectrum

Enhanced blockchain
As blockchain evolves along the spectrum, a number of
parallel technology trends are likewise making commercial
inroads. Most important among them are the IoT and AI.

Within a few short years, organizations will have embedded

billions of devices and sensors in their products and
infrastructure. Concurrently, engineers and data scientists
are translating decisions into algorithms to execute
autonomously. IoT and AI don’t need blockchain to
develop, of course. Yet blockchain, IoT, and AI complement
each other and could provide shared benefits in the form
of more reliable data, more secure transactions and auditable
AI capabilities.

The result will be an enhanced blockchain in which

smart, autonomous things join people as participants
available parking are examples of the kind of information that
capable of identifying, creating, transacting and
can be passed between sensors. An enhanced blockchain
negotiating for digital assets.
network could facilitate commercial interactions using that
Consider how an enhanced blockchain could function information. A blockchain could reserve and pay for parking,
in the context of autonomous vehicles. Within a decade, or draw electricity to charge the car’s battery. Further into the
the intelligent sensors in a car will be able to communicate future, an enhanced automotive blockchain could coordinate
with sensors located along a driving route to exchange movement of autonomous self-driving vehicles between
information. Driving conditions, distance traveled and multiple owners or within a ridesharing network.

Get to Know Blockchain 14

The Blockchain
Society

15
 The Blockchain Society

Blockchain benefits go beyond business Blockchain solves societal challenges

The benefits of blockchain are not exclusive to business. Just In an early example of a blockchain ID solution with societal
as the internet, mobile technology, social media, AI and big benefit, the United Nations World Food Programme ran
data have individually and collectively driven changes in the a pilot in Jordan to allow Syrian refugees to use food credits
way humans, things, businesses and society interact, so too at local grocers. Inspired by the program, the city of Austin,
will blockchain. We call the culmination of these technology- Texas, later proposed a blockchain ID solution for homeless
driven changes, when governed and enabled by blockchain, people to access social services. The same idea of creating
the blockchain society. a multipurpose digital proof of identity is in testing in various
municipalities to enable blockchain-based voting.
Consider the issue of identity as an enabler of societal
engagement. Identity provides the foundation for
participation, as citizens and as economic contributors.
Current systems rely on methods such as driver’s licenses or
Blockchain’s impact on the way humans,
passports, which are easy to lose or steal, and can be easily
copied by identity thieves. things, businesses and society interact
will rival that of the internet, mobile
Long before blockchain, digital identity proponents argued
for a digital ID that is portable and secure, and which will
technology, social media and big data.
allow citizens to access public services, perform civic duties
or provide credentials to possible employers. Blockchain
solutions provide the added benefit of allowing participants
Community finance is another area of avid society-driven
to maintain sovereign control over their personal ID so they
experimentation. The blockchain startup PotholeCoin, for
can prove who they are without exposing personal data to
example, allows motorists to register a needed road repair
third parties to use for commercial gain.
and put up a token-funded “bounty” to pay for the fix. When
enough tokens have been saved, the blockchain deploys
a designated repair organization to fix it, and pays when
the repair is done. This approach enables local community
members to fund repairs that otherwise may not be a priority
for their local governments.

Get to Know Blockchain 16

 The Blockchain Society

Blockchain and the organization The London-based startup Colony offers an aspirational
example of a blockchain that reimagines the nature of the
As with societal communities, blockchain’s consensus- organization. Using the Colony blockchain, participants can
driven operations will also lead to a reimagining of the establish their own “colony” (i.e., organization) and define
traditional organization — and the way in which its members work categories (e.g., finance, marketing) and the tasks
participate. Top-down hierarchy will no longer be the dominant that need to be done for each. Participants opt in to become
organizational model. Instead, organizations will adopt a member of a colony and to complete certain tasks. The
structures that better reflect the collaborative and collective more tasks a participant completes at a requisite level of
ethos of blockchain. quality, the better their reputation and the more managerial
responsibility they can take on. Participants receive fair
compensation and promotion based on the quantity and
quality of their work.
Blockchain society offers a wide array
Returning to the subject of identity, a blockchain-enabled
of people, businesses and things fair ID can allow participants who gain reputation with one
access to resources and fair opportunities organization to capture a record of their work and share
to engage. it with others. Such a mechanism could revolutionize how
human resources professionals validate employee credentials
or recruit talent to participate in high-priority projects.

Society-oriented solutions will help drive citizens toward

a blockchain society running on decentralized systems that
offers a wide array of people, businesses and things fair access
to resources and fair opportunities to engage.

Get to Know Blockchain 17

Conclusion

The impulse to wait and see how any new Where to start
technology evolves is strong. But the rapid adoption To begin to explore what blockchain means for your
of AI algorithms and IoT should make clear that organization, leaders should:
there is no time to wait. These technologies both
• D
 evelop a vision of how blockchains designed with the
produce and depend upon massive volumes of five elements could benefit your organization today. What
our personal and business data to operate. As time intractable challenges involving access to, exchange of
passes, our data assets are increasingly under the or sovereignty over data could they address? What simple
administrative decisions would you leave to an algorithm to
centralized control of a few powerful actors, who make today? How could those initial experiments progress
then use it to generate value for themselves at the to more complex managerial and leadership decisions? How
expense of the larger economy and society. might you create incentives and reward structures using
tokens to encourage participation?
Business leaders who want a future programmable society
in which they can form partnerships and do business with • D
 efine the organization’s blockchain development
fairness and privacy need to lay the groundwork for a new strategy. What are the priority use cases? How will you
economic and social model now. pursue them — independently, as part of a partnership
or as part of a consortium? If you’re already involved in
The platform leaders that currently control the lion’s share blockchain pilots, proofs of concept or full implementations,
of digital value flows aren’t waiting. The financial institutions are the solutions inspired? If so, where does the network
that manage the flow of money aren’t waiting. The largest data reside? Who has access to it? Who defines the rules?
insurance companies aren’t waiting. As a result, no business
or societal leader who hopes to influence the terms of
engagement for their company or society can afford to wait.

Get to Know Blockchain 18

Conclusion (continued)

• Monitor launches of new blockchain solutions. Startups The stakes are high in defining a new economic and social
are emerging with new blockchain-complete solutions model for the blockchain future. Businesses need a system
to disrupt incumbent players in various industries. that can enable trade in the new forms of value made possible
Incumbents are doubling down on centralized solutions by digital advancement, and they need a way to break up the
while experimenting with decentralized models. And monopoly on data and value currently controlled by a handful
blockchain infrastructure vendors are driving maturity of central actors. That is the real business of blockchain
of the technology components. The market is moving available to leaders who are willing to grab it.
fast, and its points of convergence highlight veins of
opportunity to mine.

• B
 ecome an advocate for blockchain-enabled IoT and
AI transparency. As IoT and AI continue to gain traction,
there is increased backlash by customers and employees
concerned about privacy, security and transparency.
Commit your business to protecting privacy and pursuing
transparency, and leverage the immutability and auditability
features of blockchain to show stakeholders that your
actions are appropriate.

• Explore how your organization will evolve its blockchain

culture. When decisions are made automatically and
by consensus, it changes how leaders lead and how
team members participate. It invites different rewards
and incentive mechanisms with an eye to how well
they encourage collaboration. Make sure you have
multidirectional feedback mechanisms in place to improve
outcomes and accountability.

Get to Know Blockchain 19

A Leader’s Guide to Understanding Blockchain and Enabling Digital Business
Discover insights, tools and templates to support your technology initiatives. Visit gtnr.it/blockchain to access resources for your
function.

Assurance Leaders R&D Leaders

Article: Understand what assurance leaders need to know about Research: Understand the impact of digital shifts and how to help leaders
blockchain define digital ambitions

Research: Learn proven tactics for structuring idea generation and

enabling a culture of innovation
Financial Services Leaders
Article: Gain insight into digital strategies and the state of change within
the financial services industry Strategy Leaders
ThinkCast: Hear a Gartner strategy expert discuss winning business
models for the digital era
Government Leaders
Article: Understand how governments can unlock blockchain’s potential
Supply Chain Leaders
Article: Discover five lessons from early blockchain pilot efforts for
HR Leaders supply chain
Article: Discover 5 ways that blockchain will affect human resources
Article: Avoid wasting time, money and resources on potential blockchain
initiatives that will not progress

Information Technology Leaders Research: Understand blockchain’s principles and potential, and how to
navigate the hype
Book: Cut through the hype and focus on the core value proposition that
blockchain may unlock

Research: Understand when blockchain makes sense and the critical

factors to consider to capture its value

Research: Access insights that help CIOs determine when to accelerate

blockchain investments

Get to Know Blockchain 20

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