Blockchain technology has become a byword for industry professionals and those in the know-how. It’s application is not limited to Banking and the Fintech space, but across the board in all segments of the economy and in organizations ranging from Government sectors, Insurance and the Healthcare industries to the Energy sector and interestingly, even NGOs operating in third world countries recently. We are in the midst of a technological revolution that has excited the imaginations of our greatest minds: the thinkers, the innovators and the risk takers.
A simple way to understand Blockchain technology and its endless potential is to think of it as a framework built on top of the internet that allows for an exchange of assets or information, and is based on a series of programmable ‘smart’ contracts. The applications of blockchain technology are as varied as that of the internet itself.
Like any good visionary, you must consider not just the immediate consequences of on-boarding to Blockchain, but instead course out a long-term map of its potential benefit to your business and its customer base.
What industry are you in?
Being a Fintech business is reason enough to explore Blockchain technology or Digital currencies and its application to suit your objectives. This month’s NTF talk ‘Leveraging Bitcoin and Blockchain technology for Fintech’ focuses on the technology’s application by Fintech experts in different verticals of the Financial industry, and is testament to the broad application of this technology within the space. The infographic (above) shows a detailed breakdown of the Bitcoin payment process. Do you notice the differences and similarities to existing payment processing or trade infrastructure? Can you substitute an existing process with one using blockchain or digital currency?
While almost all industries have the potential to benefit from blockchain technology, some key questions to consider in the absence of an industry precedent are: Does your business facilitate or manage a transfer of assets or accept payment for goods and services? Do you collect or manage data? Does your business require authenticating its customers? Does a process get repeated based on the end user’s instructions (i.e. contracts)?
Who are your customers?
In similar light to the previous point; while some industries are rapidly adapting new technology, individual businesses within the industry must reflect upon the demographics of their customers and their willingness to adapt to new technology when deciding on whether to continue with status quo or experiment with alternative technology. Bitcoins and other digital currencies have made several headlines over the last few years for the wrong reasons, and are still deemed untrustworthy by many in the general public.
Will Blockchain be effective in improving existing processes?
Sometimes embracing a new technology might not bring about any added level of utility or benefit to existing processes. It is important to understand that a fear of missing out or the desire to beat the crowd are not reasons enough and may not be in your best interest. This was increasingly evident, for example, in recent news showcasing the failure of the much hyped R3 blockchain consortium set up by major Financial Institutions.
Is it a cost-effective decision for your business?
Even if you have decided your business will benefit from blockchain technology; have you considered the projected costs versus returns on investment of this implementation? For startups and early stage businesses with limited funding, or established business with tight budgets, many cheaper and reliable alternatives still exist.
Do you have the resources?
As most entrepreneurs and business leaders may know only too well; money is only one of many scare resources. Availability of cutting-edge technology, human capital and business know how (for example: IT, compliance and legal expertise) are all resources that are often difficult to obtain and are the lack of which are valid reasons for you to reconsider or postpone your decision.
Where is your business headed in the long run?
Like any good visionary, you must consider not just the immediate consequences of onboarding to Blockchain, but instead course out a long-term map of its potential benefit to your business and its customer base.
While this piece is by no means designed to discourage the use of blockchain technology and digital currencies, most successful business strategies involve considering several factors, asking difficult questions, and thinking outside the box. The answer may not always be a simple ‘Yes’ or a ‘No’. A good approach might be to simply postpone the decision and wait for changes in technology and cost, public perception of bitcoins and blockchain technology, or easier access to programmers, developers, and project managers. A highly effective strategy, and one being increasingly used, is working in collaboration with, or outsourcing to an existing technology provider with a proven track record or specialized resources. Finally, as a decision maker in today’s fast paced environment, make sure to keep yourself informed by reading topical books and listening to podcasts, following Influencers on Twitter, LinkedIn, and other social media, by attending seminars, meetups and industry conferences, and not missing the opportunity to ask relevant questions of someone more knowledgeable than you. Luckily, there is no shortage of opportunities available to the tech entrepreneur of today.
Chief Compliance Officer at Zoompass Inc.