3 Ways to Use Blockchain for Business
Maybe you’ve heard of this thing called blockchain.
Since the introduction of the word bitcoin in 2008, blockchain has become a global phenomenon. It’s part confusion—what the heck is it, anyway?—and part eagerness to find value and opportunity in this exciting new technological horizon.
In order to extract the value this technology can bring, it’s critical to dig below its buzzword status. Blockchain technologies record transactions we never want to disappear. So, how can it be leveraged in a business setting? There are a lot of ways to hop on the blockchain train; here are three that only begin to scratch the surface of what’s possible.
Anyone can create cryptocurrencies. It’s a way to raise capital and fund a project that doesn’t involve venture capitalists, banks, or stocks. During an ICO, or initial coin offering, you offer tokens in exchange for money or another cryptocurrency. Investors can use the tokens you offer toward your product or service after launch.
On Last Week Tonight, John Oliver notes that one company raised $35 million in 30 seconds from an ICO. In 2017, ICOs raised $6.5 billion.
John Edmunds, professor of Finance at Babson College, sees this as a game changer particularly for entrepreneurs in Third World countries who may not have access to a traditional financial system. Enterprising youth, as he explains, have to borrow money from lenders that charge too much. The blockchain “can make crowdfunding and micro-lending much more efficient.” Reasonable interest rates will allow these entrepreneurs to grow their business ideas, and ultimately generate more economic activity in areas that need it most.
“The venture capital industry is going to be completely disrupted,” says John Hargrave, CEO of Media Shower and publisher of Bitcoin Market Journal. “It is being completely disrupted.” Hargrave talks with many businesses who say they have other, higher priorities than blockchain. Getting these major players to understand the opportunity they’re missing is one of his biggest challenges. “VCs are getting squeezed out of the situation and don’t know it yet because they haven’t felt the pain. It’s like record companies just before Napster went online.”
Blockchain can enhance your supply chain management, says Edmunds.
“If you’re starting a new part number and can have a blockchain saying this much came in and this much came out, inventory becomes a whole lot easier,” explains Edmunds. The result is an audit trail that’s “much cheaper than audit trails maintained by traditional methods like three-by-five cards or old-fashioned computers.”
It’s not just cheaper; it’s trustworthy. The reliability of blockchain—it’s resistant to modification of records—makes it useful for tracking all types of data.
Because blockchain is a type of accounting system, it offers protection for not only companies using the technology, but investors, too. Here’s an example: Lucara Diamond Corporation recently acquired Clara, a blockchain platform that stands to change the way diamonds are bought and sold. With the technology, you can tell if a diamond came from where someone says it came from, or if it entered the market through another channel.
“Find some area of activity where there is record keeping that is considered unreliable,” urges Edmunds. He recommends operating a blockchain system in parallel with your traditional system to quickly see the superiority of blockchain. It’s cheaper, more reliable, and eliminates time-sucking disputes or disagreements. “You don’t have to investigate something—you know.”
Posted in Preparing Entrepreneurial Leaders