How Start Ups Are Adopting Blockchain
As one of a handful of Title III FINRA-approved funding portals, we meet and assist many entrepreneurs looking for funding. As part of our due diligence process, we look at their products and services, their technology, and their business opportunities. More and more, blockchain is starting to affect how these start ups operate and how they think about financial transactions with their customers.
Understanding blockchain and its effect on start ups is the first step toward adoption. Below is an excerpt from a blog we just created about the value of blockchain for startups and the areas of possible application:
Understanding Blockchain
Earlier this month, in his article “How Blockchain is Reshaping Business,” Pat Bakey, the President SAP Industries, does an excellent job of defining blockchain. He writes: “Blockchain is a globally distributed ledger of all the information pertaining to a digital transaction. It runs on millions of devices, is open to anyone and can be used to securely move and store anything of value, including money, art, intellectual property and even votes.” And, as the Harvard Business Review put it, “it’s the first native digital medium for value, just as the internet was the first native digital medium for information.”
The analogy that blockchain is to currency what the internet is to information is a good one. It also hints at the inherent value of blockchain to companies of all sizes, including start ups.
Blockchain’s Effect on Start Up Businesses
1. Perhaps the most notable way that blockchain is affecting the start up world is in the sheer number of blockchain-related investments by VCs.
According to CoinDesk, as of Q1 2016, the total venture capital investment in bitcoin and blockchain startups now exceeds $1.1 billion. The first quarter of 2016 was also the first time blockchain and hybrid startups raised more money than bitcoin startups.
The other ways that blockchain affects start ups are as different as blockchain is itself. On SAP.com, Pat Bakey writes: “While considerable debate has emerged over the merits and prospects of public (or open) and private (or permissioned) blockchains, the ability and flexibility of blockchain technology to serve many different purposes is one of its most powerful qualities. Blockchain’s innate versatility means that it truly has the ability to reshape nearly any industry if put to use correctly.”
2. The ability to generate more revenue is one of the biggest reasons companies of all sizes are taking a look at blockchain.
Bakey believes that the industries that have the most to gain by implementing blockchain technology today are “those that may believe they’re years away from even considering how it can be rolled into their strategic business ecosystems.” Bakey encourages start ups to be purposeful in implementing blockchain and to do so “as an extension to their current business.”
Likewise, in his insightful and thoroughly honest article, “The 9 Mistakes I Made When Bringing Blockchain to My Startup,” John Rampton, the founder of the online payments company Due, suggests that start up CEOs proceed, but with caution, in adopting blockchain.
Here are the 9 top blockchain mistakes Rampton warns against... Read more about blockchain and start ups here.
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