As of August 25, 2017, the total market capitalization of blockchain-enabled cryptocurrency was over USD $153 billion dollars. Thousands of startups are actively focused on how to disrupt their industries using blockchain technology.
If your Board of Directors has not yet called for a briefing on how blockchain will affect your business, it will soon.
What to Share with Your Board of Directors About Blockchain
What is blockchain and why is it unique?
Today, business transactions are dependent upon our ability to store and retrieve data from a central database. In contrast, blockchain technology treats the database as a network that anyone or anything may join.
Blockchain experts call this “decentralization,” the promise of friction-free collaboration between members of complex networks without central authorities or middlemen.
One example of decentralization is the use of “smart contracts,” which:
- Manage agreements between users
- Execute commands once the requisite parties agree
- Store information and execute commands at some later time
Smart contracts effectively eliminate the need for trusted fiduciaries (e.g., attorneys, brokers, etc.) to facilitate a digital transaction. It has been predicted that these digital contracts will reduce necessity for financial audits by 50% over the next 10 years.
Frictionless Markets and the Web of Trust
A decentralized ecosystem democratizes trust. As the number of connections within the market scales, the value of members within that network is magnified. And as this “web of trust” grows more reliable, so too will the rise in new digital business models.
Business Impacts of a Natively “Smart” Ecosystem
Blockchain technology has the potential to revolutionize the world economy in the following ways:
- Faster Transactions
- Interbank transactions, for example, can take days for clearing and final settlement, especially outside of working hours. Blockchain transactions can reduce transaction times to minutes and are processed 24/7.
- Two or more counterparties are able to make an exchange without the oversight or intermediation of a third party, such as an escrow agent or attorney.
- Fraud Reduction
- Changes made to public blockchains are publicly viewable by all parties in the blockchain, creating transparency and reducing or eliminating risk of corruption.
No one knows for sure how these impacts will unfold, but one thing is certain: We have only scratched the surface of what blockchain can accomplish.
How to Get Started
Gartner recommends the following three actions:
- Conduct a scenario-planning exercise to map out how blockchain technology will affect the business climate of your organization.
- Take a hard look at how blockchain technology may be used to propel your organization’s value chain and sustainability.
- Conduct a fresh business and competitor analysis by taking into account the business dynamics and risks that blockchain technology and smart contracts make possible.
If you're considering the benefits blockchain technology could bring your organization, we encourage you to contact us about our Blockchain Jumpstart Experience. We have been working with blockchain technology since its inception, and our software engineers have practical, real-world experience with its implementation.
Contact us today to find out how blockchain technology could revolutionize the way you do business.