Bitcoin and others are calling fundamental aspects of business into question
If you’re anywhere near the tech industry, you’ve likely been unable to escape the buzz surrounding cryptocurrencies and their offshoots. And the hype may be real.
Cryptocurrencies and blockchain technologies like Bitcoin and others could be at the horizon of business innovation because they are calling fundamental aspects of business into question. While blockchain is redefining security and opening possibilities for all sorts of applications, cryptocurrencies are challenging some of our fundamental assumptions about value and how it can be assigned. These are heady times. Faced with these bold advances, entrepreneurs would do well to consider how they could apply what cryptocurrencies and their offspring are bringing back from the frontier.
Many of these lessons aren’t necessarily technical, either. More than anything, they point to a true spirit of innovation that is often lacking from the world of entrepreneurship. Sure, you or whoever’s doing your content might label you as an innovator — but are you, on a regular basis, actually redefining what’s possible in your field? These companies are, and it’s super exciting. While Bitcoin and its ilk continue forging ahead, I want to stop for a minute and think about the sorts of horizons that are being opened up for the rest of us.
It’s all well and good to talk about the exciting possibilities of cryptocurrencies and their progeny. But for many of us, it might be important to define what we’re talking about first. What exactly is a cryptocurrency? And where did this idea come from?
The answer to this question lies in the origins of Bitcoin. Originally conceived in 2008 as a peer-to-peer, decentralized digital cash system, Bitcoin’s story reads like a great, nerdy drama. Anonymous, possibly fictional genius Satoshi Nakamoto invents a digital currency that is secure and beyond the control of governments and banks. The concept causes a stir on a number of forums frequented by coders and outcasts, and these same misfits begin to experiment with Bitcoin. Then, Nakamoto disappears.
The fallout of his invention is truly staggering. Its implications are huge, but two central ones relate to authority and security. Without a centralized authority, nobody can control how somebody else’s currency is spent, invalidate a transaction, or freeze anybody’s funds. As Eric Voorhees, a cryptocurrency entrepreneur puts it, Bitcoin is ushering in “the separation of money and state” — a currency free from political interference. Moreover, Bitcoin transactions are astonishingly secure, running on powerful encryption techniques. The transactions are published on a blockchain, a digital, decentralized, self-auditing, and public ledger.
All these innovations represent gigantic leaps forward in the way we think about currency, security, financial regulation, and much more. And each deserves a more thorough explanation than I’m able to provide in this short blog. While these advances started with Bitcoin, they have since branched out into bunches of new cryptocurrencies and extrapolated applications of its underlying concepts. Some of these look like they might change the world. Others are mere pale imitations of Nakamoto’s original work. And just like any other burgeoning industry, there is a fair share of hucksters and charlatans looking to fleece any Johnny-come-latelys out of their real dough. Nevertheless, with an exchange rate of $2,500 to 1BTC, it’s clear that at least some of the hype is real. For those of you who’ve slogged through all this technical mumbo-jumbo, I have good news — it’s very relevant to you and your business.
Here’s the deal. Everybody wants to be a thought leader. And some of us with some sort of polished LinkedIn profile have probably toyed with the idea of plastering some inspirational words next to a picture of our dopey head and putting it there to see whether the world responds to it.
To me, cryptocurrencies are valuable in a primal way as provocation to actually invent something meaningful. They are lighting a fire under the butts of wantrepreneurs, and pushing those of us with something real to offer to even greater heights of invention. Seeing the unquestionable genius of cryptocurrencies and their offshoots is damn inspiring.
But the quality of the innovation also needs to be talked about. The success of Bitcoin is driving a larger conversation about what is truly valuable. For those of us in the traditional business sector, money, and specifically the US dollar, has been a, if not the, driving force and most universally accepted representation of value. But if digital currencies continue to pose a robust challenge to the dollar (as they’re projected to do), then the business world may find its arm twisted into reconsidering this assumption and others, such as scarcity, that underlie it. And as security continues to migrate its solutions over to digital and fascinate the public eye, from the home to huge financial infrastructure, the innovative precedents set by Bitcoin and blockchain will point the way to new systems of keeping information secure. Already, at such a nascent stage of development, many financial institutions have onboarded a team dedicated to exploring the potential of blockchain and digital currencies.
I can’t end this article without talking about the decentralization aspect as well. Before anybody jumps down my throat, let me say resoundingly — of course, regulation in any business is necessary and desirable. Without it, despotism merely changes hands from government to industry. But cryptocurrencies are challenging our tacit social contract that these regulations should be governed by humans, subject as we are to error, fallibility, and impulse. Bitcoin opened the floodgates for regulation overseen by pure mathematics, which don’t discriminate against or favor any particular individual or groups. What might be most exciting about cryptocurrencies is that they have made room in the world for a more equitable and just economy.
How each of these philosophical ideas might come to shape even small-scale business remains to be defined. But even now, cryptocurrency and blockchain startups are springing up, recognizing smaller fields of applicability and innovation from these broader concepts. One thing is for sure — even if the Bitcoin buzz turns out to be one big bubble, the challenges it has posed traditional business are very real. And exhilarating.
The views expressed are of the author.
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