How to improve a business using blockchain
Despite all the hype around the profit from the sale of digital tokens, there is a growing misconception in society about the true purpose of creating a business. Entrepreneurs should consider this if they want to leave aside the cryptocurrency turmoil and use blockchain technology to solve real problems. Here are five tips for executives who want to improve their business with the blockchain.
1. Think about customer management
SAP, a software manufacturer, is an example of a company focused on design thinking. SAP Leonardo platform helps entrepreneurs build an ecosystem that takes into account the customer life cycle. Companies such as Deutsche Telekom and Benjamin Moore are working with SAP to create innovative blockchain-based solutions. Senior Vice President Global Solutions & Marketing SAP Penny Delgadillo says:
“Blockchain is changing business processes, and we are considering this process in terms of a complete customer management cycle.”
2. Token issuance should not be an end in itself
The popularity of cryptocurrencies has allowed blockchain technology to grow. Its role as a digital public transaction base has proven fundamental to Bitcoin’s success. However, a transparent peer-to-peer network and a timestamp server are not at all the same as cryptocurrencies. The first is a database, the second is a form of money.
Nobody creates a company focused solely on issuing their own money. In other words, a token is a blockchain function, not a standalone product. It is impossible to build a successful business without a specific product. There are many examples of companies that offer a partial rather than holistic solution to a problem.
Tokens, like Bitcoin, can be used to pay for goods and services sold by companies, but it is also necessary for the business to deal with a specific problem. Unfortunately, most often entrepreneurs join the blockchain fever in search of quick profit and forget about the actual construction of the business.
They must be well versed in the blockchain and the specifics of cryptocurrency markets before entering them and offering their tokens.
3. Create a business in which tokens will perform a specific function
Instead of focusing on hype, entrepreneurs should focus on solving real problems. You should not try to make money on ICO. If a businessman at least once used such a scheme of quick enrichment, investors will remember this and in the future will not want to have anything to do with him. Instead, a blockchain-based business should focus on problems for which the specifics of distributed databases are excellent.
Blockchain systems consist of blocks with unique timestamps. Each subsequent block is associated with the previous one in the chain of events. This is especially useful in areas where information is tracked by time and type. A good example of applying blockchain technology in the real world is supply chain management. Once the data is entered into the block, it cannot be changed.
This ensures the accuracy and reliability of the information. For example, in the pharmaceutical industry there is a problem of counterfeit products. Increased demand, supply disruptions and other market factors open the door for fakes, while both original products and generic drugs suffer. Counterfeit components produced for pennies in third world countries often end up in final products. Since the pharmaceutical industry lacks reliable methods of controlling the supply chain, the blockchain in this case is the ideal solution.
Although pharmaceuticals is one of the most heavily regulated sectors of the global economy, it still suffers from this shortcoming. Blockchain-control of product authenticity will allow pharmaceutical companies to cope with the influx of counterfeit products, reduce the number of fakes on the market and, therefore, eliminate the adverse consequences for the end user. Drug data can easily be entered into the blockchain for each particular delivery and checked for compliance with the instructions provided by the manufacturer.
4. Do not try to replace the initial rounds of financing with ICO
Tomasz Tunguz of RedPoint Ventures writes:
“The initial offers of tokens – a mechanism for raising funds using cryptocurrencies – have turned the world of venture capital investments upside down. During the ICO, the startup Filecoin raised $ 250 million, Tezos received 232 million from investors, Bancor – 153 million. These are huge amounts. I recently wondered how much ICOs have penetrated the world of investments and whether they can replace venture capital.
” Primary placements should not be seen as an alternative to the early rounds of raising capital. Many venture capitalists consider ICOs an alternative way to finance startups, but the reality is that in many cases the business model does not match the potential of blockchain technology, and the company simply creates another version of virtual money.
Bitcoin is not a business, but a protocol. If you want to build a business on the blockchain, focus on design thinking and creating an innovative company in the parameters of the blockchain.
5. Think more about real business, less about ICO
You yourself will understand when the time is right for an ICO. Until then, try to learn as much as possible about blockchain technology.