It has all the makings of a revolution: It began with a clandestine group of scientists releasing an anonymous document under the mysterious name, ‘Satoshi Nakamoto’. It works in a way that’s understood by very few people. Its technology has the potential to shift the power from big corporations into the hands of the people.
And like any good revolution, its plan is not to strike with an overt attack, but rather quietly simmer away in the background. Until one day, everyone is suddenly left looking back thinking, when did that happen?
That day is close. In 2017, ninety percent of major banks in Europe and North America are exploring Blockchain. Tech giants like Microsoft and IBM have deployed their own Blockchain platforms. The UN recently used the technology to distribute aid to 10,000 Syrian refugees. In Switzerland, you can buy Bitcoins from any of their train station ticket machines.
With such mass adoption taking place, Blockchain is already changing how society functions on a fundamental level. But unless you’re involved in the movement — or one of the fortunate early investors or a tech enthusiast — it’s difficult to see how it affects you and your business.
Digital currencies for digital businesses
First things first, what exactly is blockchain? In a nutshell, the blockchain is a decentralised public ledger that’s based on peer-to-peer networking and secure, private key cryptography.
If you’ve heard anything about the blockchain, you’ll have noticed it’s often mentioned along with digital or ‘cryptocurrencies’, particularly Bitcoin. Bitcoin was the first major innovation to run on the blockchain. In fact, it was only later that the underlying technology of blockchain was separated from Bitcoin and recognised for its capability in other applications.
Today — and most likely forever — blockchain’s primary and most exciting use is in carrying out digital transactions using cryptocurrencies. Although it also holds masses of potential in everything from data storage and digital identities to voting and notarisation. Some of the most popular cryptocurrencies are Bitcoin, the world’s first digital coin, Ether, the unit of currency on the Ethereum blockchain, and Litecoin, released by former Google employee Charlie Lee.
These are some of the names everyone will eventually come to know. But if your business is in IT and/or web-based products and services, then no time is soon enough for you to find out more and get in on the action. Here’s why.
All but a cashless society
What percentage of your business’s transactions are made in cash?
Working in the digital world, it may be as low as zero. But even for those that operate in the physical world — in areas like hospitality, retail, medicine, sport, entertainment — cash payments are making up an ever smaller amount of transactions.
And the trend is set to continue. The global world payment report found that electronic payments grew by a record amount in 2014, blasting the previous 12 years out the water. Sweden’s central bank expects only half a percent of all payments within the country will be made in cash by 2020. And innovations like Amazon’s checkout-less store and Stockholm-based Moby store point in the direction of an increasingly electronic monetary future.
But perhaps most convincing of all is the characteristics and behaviour of generation Z. The first to be born directly into the digital world, cash to them seems rudimentary and old-fashioned. They pay for meals and taxis with their phones, using apps and alternative payments like Venmo and Apple pay. When it comes to transitioning to cryptocurrencies, for them the move will almost be unnoticeable.
No more middleman
You run a business based in the digital world, but you still need to operate with traditional institutions and deal in physical currency. That means transaction fees, credit/debit card fees, purchase fees, chargeback fees… Basically whole bags of fees that either go straight into their back pocket or toward covering the high costs of labour and backroom systems and processing.
The result is both buyer and seller dishing out a healthy sum for a clunky and disagreeable service that can often take days if not weeks to complete.
As the blockchain works on peer-to-peer networking, each transaction is distributed and verified among a community of users. This means no central authority is required to control the process, approve transactions, set rules, and charge extortionate fees. And the transaction is completed instantly.
Using digital currencies on blockchain still costs money, however. But this is estimated to be around 1/10 of 1 percent — in comparison to the typical credit card fees of 2-3 percent. Bitcoin’s transaction fees recently rose and sparked concern in the media, largely because it was originally purported to be free. But transaction costs still remain at historical lows and are a smidgen of that of traditional currencies.
In finding new products and services, the internet has made physical location a non-issue. But as we’re still reliant on physical currencies, it’s still a huge barrier when it comes to paying for them.
If it’s not because of hefty fees like those mentioned above, it’s the worry about fluctuating exchange rates and the payment actually being fulfilled by the person on the other end. Digital currencies like Bitcoin are international currencies. Like the internet, they have no borders and so businesses don’t lose out when working with clients internationally over those based locally. One Bitcoin in England is worth exactly one Bitcoin in Australia, or wherever else the person may be. And thanks to a technology called smart contracts — self-executing digital contracts that run on the blockchain — it’s just as safe as working with a neighbour, too.
It may be a while yet until your clients start paying you in Bitcoin. But with new services and platforms being built on the blockchain every day — such as Bitclave and OpenBazzar — it won’t be long before the revolution makes its way into your life and business in some way or other. Jump on the blockchain bandwagon today and avoid being left standing looking puzzlingly at your pounds and pennies, as the rest of the world trades in bits and Ether tokens.
Joseph Pennington is a freelance writer and long-term traveller from the North of England. Find him on Medium exploring remote working, technology, spirituality, meditation, and everything in between.