5 Reasons Startups Should Care About Blockchain
Blockchain – the shiny new object in the technology toolkit has taken over the headlines. The market is buzzing over the long-term implications of Blockchain, decentralized systems, and cryptocurrencies. The promise is to disrupt industries such as banking and finance, retail, real estate, and healthcare. The global spending on Blockchain technology according to an IDC report, in 2018 alone, is expected to be cross $2.1 billion.
The report also says, “The year 2018 will be a crucial stage for enterprises as they make a huge leap from proof-of-concept projects to full Blockchain deployments. As a leader in Blockchain innovation and integration, the US will continue to invest in Blockchain throughout the forecast, spending heavily in financial services, manufacturing, and other industries.”
While all this is very exciting, is this only a “big enterprise” story? To my mind, NO. I feel startups should take a close look at evaluating this technology and the benefits that it brings to the table. Given that the world of Blockchain is yet to mature completely, startups have the opportunity to become early adopters and proponents of this technology. With a first-mover advantage, startups can create a strong Blockchain ecosystem and build a competitive advantage before this space becomes saturated. Here’s my take on why startups should care about Blockchain
Blockchain is, as most know, a Peer to Peer (P2P) network. The power to manage and manipulate the network rests with multiple stakeholders. This means that no one person can hack, close chains, manipulate or shut down the blocks, making the Blockchain network guaranteed free from any frauds or hacks.
Blockchain systems are poised to become the defacto method of storing enterprise data owing to the incorruptible digital ledger of transactions (DLT). The DLT stores all data in an automatic ledger and is encrypted automatically using the latest cryptographic methods. Blockchain systems are also decentralized. This distributed nature of the systems reduces security risks greatly.
Data is the most valuable currency today. And with that comes the concerns over data security. With the spending on information security standing at $86.4 billion in 2017 and expected to exceed $1 trillion cumulatively from 2017 to 2021, startups with innovative solutions in the space stand to gain.
- Transaction and Record Transparency:
Transparency is ingrained in the DNA of Blockchain. It also provides a high level of privacy since the transaction details are only shared with the defined set of participants involved in the transaction. This technology eliminates third-party interventions. Irrespective of what is the use-case, be it personal details storage, storage of enterprise data, transactions, currency exchange etc., every transaction detail can be clearly tracked.
How? Well, Blockchain systems employ completely audit-able, unforgeable, indelible, and trackable ledger of transactions. An entry can only be made in the ledger if it is validated by the system using an algorithm. In these GDPR days, startups could benefit from incorporating Blockchain into their products and solutions to assure security and privacy.
- Easier Global Partnerships and Low Transaction Costs:
Blockchain is a technology built with collaboration in mind. Now using Blockchain, startups can propel their growth story by collaborating with offshore partners, and even employing foreign workers. As Blockchain utilizes a global network that is distributed across the world, organizations are no longer restricted by borders to fuel their growth story. Transactions using Blockchain technology also becomes much simpler. There is already the use of smart contracts using Blockchain.
Here, a 3rd party, also interacting with the registry, validates the transactions. This means startups and SMEs can transact with contractors, employees, and even customers without turning to (or having to pay fees to) the PayPal types. This means that Blockchain transaction costs are negligible.
- Disrupting Storage:
Decentralized storage also drives constant availability creating a new Cloud paradigm that may be cheaper and easier for startups to access and use. Since this type of decentralized cloud storage is supported by computers and require no manual interventions, there is 24X7 data access and almost zero downtime, without compromising on security.
PR Newswire estimates the cloud storage market to $88.91 billion by 2022. As the decentralized storage industry is growing rapidly, Blockchain has the potential to completely disrupt both Storage Marketplaces and Storage Infrastructure. While cloud has become central to optimized data storage, 2017 was full of stories of data breaches bringing the issue of third-party dependencies into the light. Blockchain technology gives the cloud the extra edge by giving organizations the capability to centrally manage workloads while the data remains distributed. A number of new startups are utilizing the Blockchain storage marketplace where the “hosts sell their surplus storage capacity and renters purchase this surplus capacity and upload files.”
Also, as the cost of computing increases incrementally, Blockchain emerges as the leveler for startups. As Blockchain employs pre-existing servers, the decentralized platforms do not need a large investment and thus take the ambiguity out of storage capacities and the associated costs. This cost saving can’t hurt!
- Reduce the Cost of Doing Business:
Blockchain technology and DLT brings improved efficiencies, business flexibility, and the capability to respond to market changes with speed. Startups can implement automated Blockchain networks to address issues like antiquated infrastructures, manual processes, and pen-and-paper systems, and implement digital systems with ease. I mentioned smart contracts.
These programmable smart contracts can eliminate bureaucracy and lawyers. Here codes are stored on the Blockchain network and can be executed automatically on meeting certain specific conditions. This eliminates the need for third-party interventions like those in banking transactions or legal agreements. By relying on these algorithms, startups can reduce their cost of doing business by streamlining their end-to-end funnel, the supply chain etc.
Clearly, Blockchain is more than Bitcoin and cryptocurrencies. Blockchain technology is accelerating us to a future that is more secure, transparent and fair. It will be interesting to see how the startups leverage this.