Blockchain — Why CFOs need to know
As the Director for technology recruitment at Page Executive I am hearing more and more about Blockchain. The opinion is that Blockchain could change the way every business operates in the future, much in the same way, the internet completely revolutionised commerce 20 years ago. It is the topic on all technology leaders’ lips at the moment and it won’t be long before company boards will be quizzing CFOs on what their Blockchain strategy is. While practical applications might be some time away, it’s vital that CFOs know the potential of this exciting technology now.
So what is Blockchain?
Blockchain is probably best known as the technology behind Bitcoin. Whilst the long term value of Bitcoin is uncertain, the underlying technology has enormous potential. Blockchain is essentially a central ledger or distributed database that is owned by everyone and yet owned by no-one.
As the Blockchain ledger is distributed across a network of computers, it is able to store a tamper-proof record of transactions, and since it distributes control across a network there is no single entity that controls the data. Blockchain technology authenticates all data through a digital signature to provide user verification and prevent user impersonation. It is widely regarded as un-hackable.
What does this mean?
The real advantage of Blockchain is that because no single entity is in control of the data that control is distributed, every entry is authenticated and confirmed by the network and can never be altered. This means that CFOs will have access to “one version of the truth”.
The CFO can look at all transactions between parties laid out as they happened. This means that companies can work more closely together, improving efficiency and acting with a heightened sense of trust. The central ledger has the potential to reduce costs and speed up settlement times which can improve liquidity. Many executives will be excited by that prospect.
What to do next?
While it may be too early for many businesses to think about practical implications for their day-to-day business operations, this is a technology that will be exploited for commercial gains in the future. As with many things, first move advantage is useful but also a pragmatic approach is required. CFOs should take it upon themselves to understand the possible implications to their business. Seek advice or set up a future tech working group to brainstorm potential opportunities for your business.
Just think, if you’d known about the internet a few years before your competition, imagine the head start you could have made with your own business.