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Top 5 reasons why blockchain-enabled businesses operate in a level playing-field (over competitors)

January 22, 2020

Blockchain this, blockchain that. Sure you’ve heard about it - blockchain will disrupt, transform, and simply revolutionize everything on the market. Just a magical touch of blockchain and things will suddenly become glorified… While we wholeheartedly believe in the potential of this technology, we also try to stay critical enough to see what’s really under the hood. 

 

So before we get started, let’s bust a few myths first:

 

Myth #1 Blockchain is everywhere

 

No, it really isn’t. Although there is hype about blockchain being used for virtually anything, we are still very much a niche of a niche of a niche, as Alex Partin here kindly reminds us. This means that most businesses today have not even thought about getting involved just yet. We are still very much in the space of frontier tech, which also means that you can have level competitive advantage as an early adopter.

 

Myth #2 It’s too early for Blockchain technology

 

On the other end of the spectrum, we also hear this. It is not uncommon to doubt anything that is new and alternative, especially when it has not been adopted by the mainstream yet. While the industry itself is just emerging, it is important to point out that blockchain is already operating full speed across multiple sectors, within established frames and jurisdictions with full legal compliance. Is the user experience at the ideal point yet where users don’t know they are using blockchain technology? Certainly not, but that doesn’t mean the tech itself isn’t already changing the way businesses operate. 

 

So against this backdrop of not-there-yet and already-there, should you, as a startup, corporate, entrepreneur or professional jump in the bandwagon? If so, what’s in it for businesses today? 

 

Top 5 advantages of blockchain over existing systems

We are not just pulling these benefits out of our hats. In a recently published study, the most significant advantages of blockchain were identified followingly across 12 different countries. We will run through them and explain why they can elevate your business. Let’s dive in! 1.

 

1. New business models and value chains

 

“A business is simply an idea to make other people’s lives better.”
- Richard Branson

 

This tops our charts across the +1300 companies surveyed. Those who understand how blockchain works also understand its potential in fundamentally shiftings entire systems cutting through borders, sectors and functions. The ability to do things without a third-party interference doesn’t only cut through middlemen, but it enables us to redesign value chains that were impossible before.

 

At Korporatio, we enable Smart Companies on Ethereum. This means your business structure, management and data runs on code, automated for you in the form of a digital dashboard. What this also means is that your corporate shares can be converted into ERC-20 tokens modified for security laws, practically giving all your liquid, illiquid, tangible and intangible assets a real-world value.

 

From ride sharing to selling fine arts, film production and real estate investment, the ability to chain up all relevant stakeholders in a decentralized way streamlines the processes you need to make things happen. It gives you access to fractional ownership and distribution of IP rights. This will ultimately redefine how value is created, priced, exchanged and distributed. Gemstones benefit from authentication, luxury brands can get into the 2nd hand market, art collectors get visibility of previous owners (which directly impacts the price of the arts sold), and insurance companies with real-time transparency over commodities can recalculate their risk.

 

And this is us barely scratching the surface. In a nutshell, blockchain-enabled models can give you the silver bullet to operate and trade in ways your traditional competitors simply cannot. This is what we call a level playing-field.

 

2. Greater security/lower risk

 

“Companies spend millions of dollars on firewalls and secure access devices, and it’s money wasted because none of these measures address the weakest link in the security chain: the people who use, administer and operate computer systems.” - Kevin Mitnick, White Hacker

 

One of the main differences of the blockchain compared to our existing systems is how data is stored. While our legacy systems stores and processes all data on a single server, blockchain distributes this over tens of millions of computers across the globe.

 

In Ethereum, smart contracts are self-automated programs that can carry out the terms of any real agreements. In other words, your blockchain-enabled Smart Company virtually governs itself bypassing legacy structures.

 

When talking about security, many think about hacking. While theoretically blockchain is almost impossible to hack, all digital systems, including blockchain, also have their loopholes. That said, compared to our existing systems, blockchain does significantly reduce the single-point vulnerabilities we currently have.

 

Think bigger. Think customer databases that will only increase in importance in the future. Think legacy institutions and manual errors that simply happen due to human mistakes. Remember Marriott’s Starwood database hack of 500million customers with stolen passport and credit card information last year? We can think of better ways for you to end up on the front pages than that.

 

3. Greater speed compared to existing systems

 

“Time is what we want the most, but what we use the worst.”
- William Penn, Founder of Pennsylvania Colony

 

One way to think about blockchain and speed is like thinking traditional mail post compared to email or instant messaging. While both of these get your message delivered, the mail post goes through multiple manual steps whereas email packs it all up into algorithms and performs in fractions of seconds.

 

For blockchain-powered Smart Companies, the technology also packs all processes of corporate governance into seconds rather than several weeks and months often required via traditional methods. Shares transfer, for instance, conventionally requires the manual issuance and transfer, record keeping, registration, transfer coordination, repository and treasury management.

 

In Smart Companies, all this happens with a few clicks in real-time, verified and validated with immediate legal effect. This also applies for board voting, treasury management, due diligence, communication and even trading.

 

With both startups and Fortune 500s strapped in the most valuable resource and measure we have, time, shall we not use it wisely, dear friends. 

 

4. Greater transparency

 

“Today, power is gained by sharing knowledge, not hoarding it.”
- Dharmesh Shah, CTO of Hubspot

 

Think user data, privacy, tracking and supply chains. Fueled by a powerful ground-up movement over the past years, users are demanding new type of responsibility from businesses handling data. From banking to auditing, elections and KYC-identity recording, these are all areas where transparency would benefit the end user and make fraudulent attempts more challenging.

 

But how would this benefit businesses? With increasing demands from both the user and regulatory side, businesses that are agile enough to adapt, change and transform are those that pivot and win. Wouldn’t improved trust benefit any online marketplace out there? Wouldn’t KYC-proved members comment differently on your vlog? Wouldn’t you rather provide an online game where rules and incentives would be shared fairly with all gamers?

 

These are real value-adds many customers would appreciate and therefore, pay prime for in terms of price, loyalty, engagement and community. 

 

5. Lower costs


“Sell me this pen.”
- Jordan Belfort, The Wolf of Wall Street

 

Finally - the money talks. Because of the ability to cut through middlemen, institutions, bureaucracy and inefficiencies, blockchain-enabled solutions result in lower costs. In the case of Smart Companies, we end up being 99% more cost-effective compared to our global average in corporate governance. If you think about it.. scratch that, you don’t really even need to think about it. What speaks louder than costs when running a business?

 

Since 2000, over half of Fortune500 companies have been wiped out due to digital disruption. Nearly every significant disruption comes with a significant reduction in costs. As long as we’re operating in a capitalistic system, pricing is a powerful language that is understood by your customers, suppliers, shareholders and competitors. When you’re operating in a different cost bracket, it elevates to you to different value models. As every startup surely knows, resourcefulness trumps resources at any given day.

 

So there, top 5 advantages of how blockchain-enabled businesses operate in a level-playing field over existing systems. You can think of it as a car race where your vehicle gets to drive a completely different route than your opponents. Or you can think of it as a game in Overwatch when your download speed is double that of your competitors.

 

Now, is blockchain technology applicable for every type of business? Certainly not. There are many cases where offline experiences are still valued more over digital transactions. Physical books and book stores still exist although e-books have disrupted the market a long time ago.

 

But will blockchain-enabled Smart Companies be applicable for every type of business? Certainly yes. Smart Companies are a blockchain-enabled company type, not a function. The model is as versatile as any limited company type today. Therefore, any business that requires corporate governance, and that is all businesses, will benefit from the blockchain-powered model of Smart Companies.

 

Want to learn more? Always happy to help. Join our bandwagon - and don’t get disrupted by your blockchain-enabled competitors ;)

Lu Ying is the Chief Operating Officer of Korporatio. Lu has a diverse background from business strategy to C-level execution and startups to Fortune 2000s and intergovernmental organizations. Wildly curious about human behavior, macro trends and future, Lu explores systems shifts in the space of circular economy and decentralized models through blockchain governance. Interdisciplinary and nonlinear, Lu is also a World Economic Forum Global Shaper and sits on the Board of Entrepreneurs Organization Shanghai.

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