The relationships in the supply chain are increasingly under scrutiny as regulators and the public grows concerned about these firms' high levels of market concentration, impact on small businesses and Main Street, and potential to stifle innovation. In addition, emerging technology like blockchain and blockchain offers the opportunity to foster a more inclusive ecosystem of commerce. On the other hand, while everything is complicated bitcoin users can find detailed instructions for utilizing bitcoin exchange that can be found in articles online.
With its promise of greater transparency via distributed transaction ledgers, disintermediation may be achievable through integration with bitcoin or other cryptocurrencies. This paper discusses the potential synergies between blockchain, bitcoin, and financial services.
Introducing technology-based alternatives to existing supply chain models could disintermediate large, incumbent service providers and enable more minor market participants to compete as “order” providers. This role may not otherwise be attainable by these firms. It could result in a new ecosystem of commerce that is more inclusive and provides more excellent choices for customers and suppliers, who will have an opportunity for closer alignment on pricing, quality of service, and customer satisfaction.
DISINTERMEDIATION IN THE SUPPLY CHAIN ENVIRONMENT
The term disintermediation was first used in financial services during the late 1960s, when companies applied it to a firm that could transact instantly, directly, and frequently with clients. In the 21st century, the term is commonly used to describe a process by which consumers channel more transactions directly with each other rather than through intermediaries such as banks or other traditional service providers.
This shift is being driven by technology-enabled platforms that provide tools to link buyers and sellers, allowing them to exchange goods and services at prices they set themselves across a range of products and services. The rise of e-commerce has also increased the number of firms that engage in direct transactions with consumers by offering services like peer-to-peer lending, insurance, and crowdfunding.
Disintermediation has occurred in other industries, too. The decline in the manufacturing sector and the rise of outsourcing to China and other low-cost countries are examples of disintermediation in manufacturing. A once vibrant industry that employed millions of American workers has undergone significant change as companies have increasingly opted for alternative supply chain management and production models.
Blockchain and bitcoin technology are early examples of disintermediation, enabling direct transactions among previously unrelated parties, resulting in greater transparency and lower transaction costs.
THE CHALLENGE OF DISINTERMEDIATION IN FINANCIAL SERVICES
In financial services, disintermediation is expected to change the competitive landscape for industry players who are currently the linchpin of consumer transactions. For example, a firm that handles an investor's stock purchases may soon be outcompeted by a technology platform like blockchain that lowers transaction costs through smart contracts that are automatically executed when specific parameters like price or volume are met.
This platform may also offer investment advice and currency exchange services. Similarly, firms that provide financial services to large institutions, such as hedge funds, may soon be outcompeted by a new technology platform that provides greater transaction transparency and lower operating costs. In addition to the technology-enabled disintermediation of financial services, the new breed of digital asset exchanges will offer new ways for investors to transact through these platforms.
The direct nature of these transactions will also reduce market concentration and result in a more level playing field between large service providers and smaller firms with little chance of competing against them. These more open markets could also benefit consumers by providing more excellent choices and more information about the firms they do business with — as well as enhancing public confidence in markets. Emerging technologies like blockchain may also have far-reaching economic implications beyond the financial services industry.
For example, the technology could positively affect the retail sector by creating new market opportunities for online retailers who can offer convenient and secure customer transactions through blockchain and bitcoin. In addition to enabling consumer purchases, these platforms also provide platforms for crowdfunded retail businesses that could attract millions of customers without any need for traditional bank financing.
In addition to disintermediation in finance and financial services, regulators are growing aware that dramatic change is needed to protect consumers' interests. For example, regulators seek ways to enable greater transparency in markets where buyers and sellers do not enjoy equal access.
Future of blockchain and bitcoin:
The technology is evolving rapidly, adding features; Blockchain platforms can offer more products. For example, smart contracts enable peer-to-peer lending, crowdfunding, and initial coin offerings (ICOs). These developments in the evolution of blockchain will require thoughtful regulation that recognizes the technology's full potential. Although blockchain is not yet fully mature, it can help reduce risk in financial services, leading to a more stable financial sector that provides greater access and choice for consumers. In addition, blockchain provides direct business interactions between buyer and seller without an intermediary. The future of bitcoin and blockchain technology in the supply chain mechanism is exceptionally bright.