So, what is Bitcoin and how could it possibly impact my business? Well to understand, let’s go on a short journey of discovery and education.
The technology that enables Bitcoin is called Blockchain, a type of distributed ledger technology. Blockchain is basically a database of information (often called a ledger) that is maintained by many different unrelated parties (which in its simplest form is a network of computers/miners). Each of the computers in the network validate transactions and maintain a record of “blocks” (A batch of transactions) in the network which is why people refer to the blockchain as decentralised, there isn’t one party that maintains the integrity of the network. Its strength and innovation are therefore being able to record transactions between anyone quickly, securely and without the need of a centralised third party or middle man.
The technology itself has been getting increased attention over the last 12 months, most notably in the sport, music, and art world in the form of NFTs (Non-Fungible Tokens). The Australian Open Tennis Grand Slam even dipped its toe in the water with a release of 6,776 unique tokens to promote the tournament and the sport. Why is this important and what problem does it solve? The best example to illustrate the benefits of the blockchain is the art and music industry. For an eternity, artists have been held ransom to curators of their masterpieces, for the music industry, it was the record labels, for artists it was auction houses/galleries and the fact that once they sold their art, there was no way they could build in royalties for future sales of their work. The blockchain solves this by recording and maintaining a ledger of the origination of the piece of art and can automate a royalty (set by the artist) back to the artist on future sales, ensuring the artist benefits from the growth in their fame and popularity.
Okay, so Blockchain is real technology that has achieved at least some level of adoption. What does it mean for your business?
If Blockchain or the Distributed Ledger continues to attract mainstream attention, there is a good chance that your business will be impacted, either through competition, or the need to adopt new processes. Some of the disruption we are seeing is as follows:
– Banking/Lending/Borrowing
– Supply Chain Management
– Corporate Governance and the introduction of Decentralised Autonomous Organisations (DAOs)
– E Invoicing and utilisation of the blockchain
– The Metaverse (Virtual World) for Gamers, Collectors and Virtual Real Estate.
– Advertising / Brand / Community growth in the NFT Space.
Whilst change won’t happen overnight, history shows us that the speed of technology adoption has been increasing rapidly with each technological advancement, as evidenced below.
When it does eventually become mainstream, businesses that do not ‘move with the times’ may find it difficult to compete, just as with Kodak and the digital camera and music industry record labels and the big migration to streaming services.
Like the internet before it, Blockchain is now creating new opportunities for emerging businesses as well as the current players who remain agile. As always, the best way to leverage opportunities is to educate yourself and explore opportunities for you and your business.
Speculation/Scam Issues
In any early technology innovation, there is a perception that the value of Blockchain tokens or currencies are in a bubble and that there are bad actors in the market looking to fleece you of your hard-earned dollars. A similar issue happened during the .com or internet bubble – the potential of the internet was overvalued in the short term and the issue of scams over publicised.
Interestingly, some of the companies that survived have now far surpassed the speculation fuelled prices that they achieved at the height of the bubble. Those companies include Ebay, Adobe and Amazon. Note that many others failed miserably!
What now?
Bubble or not, the technology behind Bitcoin is real and it’s likely to have a large impact on many industries.
Now that you know about it, what are you doing to ensure your business will flourish in this new environment?
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This article was written by Dobbyn + Carafa, MGI Australasia’s Melbourne-based firm.
Disclaimer: The contents of this article are in the nature of general comments only, and are not to be used, relied or acted upon without seeking further professional advice. MGI accepts no liability for errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. Liability limited by a scheme approved under Professional Standards Legislation.