Due to its decentralized nature, blockchain could pose a threat to internet giants Facebook, Amazon, Netflix and Google (FANG), according to a report.
Oppenheimer analyst Tim Horan said in a report to clients that the rise of blockchain technology would be as important as the internet was to economic and social change in the past 25 years. In particular, blockchain could be a disruptor to Facebook, Amazon, Netflix and Google's dominance of the internet.
"Even though the Internet started as a highly decentralized compute platform, it has become dominated by the FANGs, which represent 70% of network traffic and have captured virtually all the value creation," Horan wrote in the report. "Blockchain has the potential to correct this imbalance, as it is structured for more P2P interaction and entrepreneurs are launching hundreds of innovative business models where collaboration is rewarded."
Horan noted that with blockchain, the community of users owns and pays for the servers instead of having centralized organizations, such as the FANGs, driving innovation.
Blockchain, which was developed for Bitcoin, is a digitized, distributed ledger that tracks transactions as statement of facts that can be used in a digital economy by businesses, regulators, operators and their customers.
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Horan wrote that blockchain was the "fourth wave" of computing, which he defined as being more decentralized, intelligent and edge-based.
"This is an application on cloud infrastructure that will increase decentralization and demand for cloud infrastructure to support enterprise deployments," he wrote.
Of course, the FANG companies also see the potential of blockchain. Endgadget reported last month that Facebook was looking at how it could implement blockchain across its products while Amazon Web Services (AWS) announced blockchain templates in April. Google is also working on blockchain technology to support its cloud business, according to a story last month by Bloomberg.
Horan singled out Microsoft as the current leader for blockchain as a service, but he noted that AWS and other system integrators were making investments.
"Microsoft missed most of the value creation of the last compute cycle, but has made an impressive turnaround and we believe it is looking to use blockchain to be a leader in the next compute cycle," Horan wrote.
Current enterprise use cases for blockchain include supply chain (tracking for IoT and digitalization), finance (for trading, settlements and insurance) and healthcare (digital lockers). Horan wrote that decentralized consumer applications would eliminate the middlemen, which will disrupt websites and services, but that will take time.
Smart contracts, which support web-like applications, and improved security tokens will also drive blockchain adoption, according to Horan.
"Smart contracts on blockchain will drive unimaginable use cases that will forever change the tech landscape," Horan said.
Smart contracts could enact rules that drive data to the most efficient or best processing or storage infrastructure in the cloud or at the edge for a specific application, according to the report.