Over the past few months, blockchain has taken over the headlines. Industry specialists, serial entrepreneurs, and influential technologists have not stopped buzzing over the long-term implications of cryptocurrencies and decentralized systems. Though many predict an imminent bubble, there are a number of tangible, actionable use cases for blockchain that will significantly affect the greater startup ecosystem.
For a company founder, or even a professional who works in and around the technology space, there is perhaps no better time to invest in understanding the fundamentals of blockchain and bitcoin. Here are three reasons that startups should care about blockchain and cryptocurrencies:
1. Startups Have an Opportunity to Become an Early Adopter
Similar to the early days of the internet, the blockchain world is extremely underdeveloped. There are still many critical components of this budding ecosphere that need to be built before it is accessible to the masses. As a result, there is a prized opportunity for startups that are willing to take a chance on this fledgling technology and serve as early adopters of blockchain and bitcoin networks.
In doing so, these first movers gain an immense advantage over slow-moving competition. Following the plant-the-flag strategy, these startups will be able to cultivate a strong blockchain community long before the space becomes too crowded and saturated to differentiate. Investing time and resources early is a great way to build a competitive moat around product and brand.
2. Startups Can Replace Antiquated Processes With Digital Systems
Many startups, even today, operate on top of legacy software and antiquated infrastructure. This drives up the cost of doing business, as pen-and-paper systems often perform inefficiently and inconsistently. Furthermore, a number of these vital processes are very manual, meaning they are subject to the all-too-common risk of human error.
Startups can implement highly automated blockchain networks to solve for a number of these issues.
“A key aspect is the programmable smart contract: code stored on the blockchain that automatically executes when certain conditions have been met,” says Paul Levy, a senior researcher in innovation management at the University of Brighton. “In uses that involve a financial transaction, it makes sense to use bitcoin or some other digital currency for the same reason — by doing so, transactions can be automated and guaranteed without recourse to third parties, such as a bank.”
As Levy describes, startups can leverage the power of blockchain to supplant the need for costly intermediary parties. Third-party brokerage services plague some of the world’s most important and value-generating industries, including health care, finance, and freight. Relying on algorithms over people, startups can expedite supply chains and dramatically streamline their end-to-end funnel.
3. Startups Can Secure Their Data
Cybersecurity is a growing point of concern for companies of all sizes. According to Gartner, the rising tide of cybercrime pushed information security (a subset of the larger cybersecurity space) spending to more than $86.4 billion in 2017 alone.
Yet it does not stop there. Global spending on cybersecurity products and services, such as automotive and internet of things, is predicted to exceed $1 trillion over the next five years. Clearly, this is a major point of interest for companies needing to secure and track their most important information.
Given their incredible security features, blockchain systems are likely to soon become the de facto method for storing and organizing enterprise data.
“The blockchain is an incorruptible digital ledger of transactions that can be programmed to record not just financial transactions but virtually everything of value,” say Don and Alex Tapscott, authors of Blockchain Revolution.
All of the data stored into a ledger is automatically encrypted using the latest and greatest cryptographic methods. These data warehouses are also only accessible via a key-value mechanism that validates and authorizes identification before granting access. This greatly diminishes the power of hackers, who have no entrance point to steal information.
Further, the decentralized nature of blockchain systems greatly reduces security risk. Most obviously, distributed systems cannot be manipulated by a single entity. Rather, they can only be changed via a consensus majority among the network. This protects against corruption and restores control back to the end user. It also expedites interactions among nodes in the network, as no central authority is needed to approve transactions.
Emerging blockchain startups, like TrustToken, are extending these inherent features of blockchain to extend digital security to real world assets.
Specifically, TrustToken has developed a platform, in collaboration with many of the world’s top trust law attorneys, that connects the beneficial ownership and control of a physical asset to a smart contract. This means that businesses, finance managers, and real estate owners can securely trade those assets on global exchanges the way that people currently trade bitcoin.
Bringing the security benefits of blockchain to real world assets, like real estate properties and small businesses, TrustToken is accelerating a future vision of the world that is more fair and more secure.