Please ensure Javascript is enabled for purposes of website accessibility

4 Companies That Could Be Left in the Dust By Blockchain

By Leo Sun - Feb 27, 2018 at 10:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Chipotle, eBay, Uber, and Airbnb could all be left behind this upcoming tech curve.

Blockchain, the technology that powers cryptocurrencies like Bitcoin, is one of the tech industry's favorite buzzwords. Tiny companies, including beverage and medical device makers, added "blockchain" to their company names to attract naive investors -- much to the chagrin of the SEC.

Larger companies launched headline-grabbing blockchain experiments, like the adoption of virtual pets, which mattered little to their core businesses. But if we tune out all of that noise, we'll notice that blockchain represents an important technological shift.

A graphical visualization of blockchain technology.

Image source: Getty Images.

What is a blockchain?

A blockchain is a decentralized ledger of data which is spread out across various network locations (called "nodes") instead of a central server. This data is secured in encrypted "blocks," which are accessed through a peer-to-peer (P2P) network.

Cryptocurrency transactions are recorded across this P2P network, which allows users to pay each other without going through banks. The creator of a cryptocurrency relies on miners, who use powerful computers to tally and verify the transactions on the blockchain network. Miners are then paid in cryptocurrencies for their services.

But if we look beyond cryptocurrencies, we'll see that blockchain technology can be applied to other industries which would benefit from a decentralized and encrypted P2P network. Companies that are slow to respond -- like Chipotle (CMG -5.23%), eBay (EBAY -4.22%), Uber, and Airbnb -- could be left in the dust by that shift.

Solving Chipotle's food safety issues

Chipotle has struggled with food safety issues over the past decade, with outbreaks of hepatitis A, norovirus, campylobacteriosis, E. coli, and salmonella sending diners to the hospital.

Chipotle's critics repeatedly stated that its insistence on only serving "naturally raised" meat and "locally sourced" non-GMO ingredients makes it hard to properly track food safety problems across its fragmented supply chain.

If Chipotle starts using a blockchain network to track its food supply, it could improve its safety record. Last year, Walmart food safety chief Frank Yiannas demonstrated that by using IBM's blockchain platform, the retailer could track the condition and origin of any food product within 2.2 seconds -- a process that would have taken almost a week with previous methods.

If restaurants follow Walmart's lead, they could experience far fewer food safety issues than Chipotle. If Chipotle doesn't apply blockchain technology to its supply chain, it could experience more food safety disasters.

Decentralizing eBay

As a customer-to-customer (C2C) e-commerce platform, eBay generates revenue by acting as a middleman between the merchant and the customer. However, several new start-ups -- including OB1, Listia, and BitBoost -- are creating decentralized blockchain-powered C2C marketplaces to cut big players like eBay out of the loop.

Physical ethereum tokens.

Image source: Getty Images.

OB1's OpenBazaar is a decentralized marketplace that lets customers pay in Bitcoin. Listia's Ink Protocol uses its own XNK cryptocurrencies for payments, while BitBoost's The Block uses ethereum.

These marketplaces all offer high privacy and security levels, no censorship, and low fees. Speaking to Coindesk, Listia CEO Gee Huang stated that his company's goal was to "decentralize peer-to-peer marketplaces, taking the power away from the companies that run them and giving it back to the buyers and sellers."

It's unlikely that these niche marketplaces will wipe out eBay, but the rise of smaller, decentralized P2P marketplaces could certainly hurt it over the long term. eBay is reportedly mulling the integration of Bitcoin payments into its platform, but it's doubtful it will decentralize its entire platform anytime soon.

Disrupting Uber and Airbnb

Uber disrupted the taxi industry by letting anyone become a paid driver, while Airbnb did the same to the hotel industry by letting anyone rent out a property. Like eBay, both companies generate revenue by acting as the middlemen for these transactions. However, their status as growing companies also leaves them vulnerable to government regulations.

A woman uses a ride-hailing app.

Image source: Getty Images.

Meanwhile, a blockchain-powered ride-hailing system could cut out the middleman and let drivers directly connect to passengers, while a blockchain-powered rental platform could do the same for landlords and tenants. Blockchain's high privacy and security levels could also shield these platforms from government regulators.

These start-ups are already appearing. Arcade City calls itself a "decentralized, blockchain-based Uber killer," while Rentberry and Stayawhile are taking on Airbnb with their blockchain-based rental platforms. Therefore, it could only be a matter of time before the disruptors become the disrupted.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
CMG
$1,252.89 (-5.23%) $-69.17
eBay Inc. Stock Quote
eBay Inc.
EBAY
$44.94 (-4.22%) $-1.98
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$122.43 (-6.79%) $-8.92
International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$132.94 (-3.92%) $-5.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
349%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.