Blockchain or Bust

When Bitcoin rose to new record highs at the beginning of 2021 a lot of bystanders outside the crypto and blockchain communities were shocked and appalled that a digital asset could reach a market cap of close to a trillion dollars.

While a lot of discussions were focused on if Bitcoin would skyrocket to 100K USD and the question of the feasibility of so-called meme or shit coins such as DogeCoin or Shiba, little was said about the underlying technology of the crypto-world – the blockchain and Web 3.0.

Different from a traditional database, information in a blockchain is stored in blocks that have a limited storage capacity and when full, are linked to the previous block. As the blocks are linked into a chain in a decentralized manner a tamper-proof and irreversible timeline is created.

Every new block needs to be confirmed via a so-called hash, a mathematically generated code that turns digital information into a string of numbers and letters, by a network of decentralized nodes. This ensures complete redundancy, transparency, and the aforementioned irreversibility.

The combination of these features made blockchain the underlying technology for the famous cryptocurrencies and recently NFTs (non-fungible tokens). The impact of this technology can be compared with the Hypertext Transfer Protocol (HTTP) for the internet.

Similar to HTTP in its infancy, blockchain technology has yet to achieve its full potential. Even so, the decentralized ledger technology is already turning several sectors such as banking and supply chains on their heads.

However, unlike HTTP or Web 2.0 (YouTube, Facebook, etc) the exploration of Blockchain’s potential rests not solely in the hands of technology or banking behemoths like Google, Microsoft, or JP Morgan but all willing to explore it, as the technology is driven by decentralized development.

This makes it suddenly possible for small and flexible companies and developers to disrupt incumbents in decades-old oligopolies like banking.

Take the recent NFT boom as an example. An NFT digitally represents ownership of another digital or real item. In financial terms, it can be described as the digital securitization of a digital (or real) asset. However, it cannot be translated 1:1 to an existing securitization process which is maybe one of the most important facts to realize for 30+-year-olds.

There are (not yet created) solutions for problems of which some of our and older generations are not familiar with but are common to players and streamers on platforms like Twitch, for example. This includes NFTs and Web 3.0 applications. While we may not be familiar with this, we can learn from these challenges and derive solutions for our “old-world” problems.

This, however, poses a serious challenge and even a threat to established and currently profitable enterprises. Different from the last revolutions of HTTP and Web 2.0 the speed of transition and acceptance of new technologies has significantly increased which is poison to the often slow change management process of incumbent players in the market.

To survive and even thrive in this new technological landscape that we are already in, companies need to experiment with blockchain. This may be a difficult task as already scarce resources, like developers, need to be allocated to uncertain projects and the involvement of top management is necessary both to start understanding the concept of blockchain and to envision possible applications.

In SCF Brazil we opted to create a startup within the company to facilitate experiments with blockchain solutions and try out market traction. This can be a flexible solution for other traditional companies that will maximize positive impact on the core business without creating disruption.

To conclude, established companies need to quickly start understanding, experimenting, and utilizing blockchain technologies to stay competitive over the coming years. Smaller companies can make use of blockchain technologies to make their way into markets with traditionally high entry barriers such as banking and supply chains, and disrupt the incumbent players.

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Far away from home entrepreneur

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Armin

Armin

Far away from home entrepreneur

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