By: Jim Verdonik – Securities Lead, Ward and Smith, P.A.; Counsel to Causam eXchange
[This blog was originally published in Aug 31, 2017.]
We’ve all seen the cartoons about a person holding a sign: “Repent: The end of the world is coming!”
It would be nice if earth-shaking events were always preceded by clear signs, wouldn’t it?
Actually, the history of signs is that most people ignore them.
After economic bubbles burst, the pundits all point out the signs most people ignored. Most signs are clear only in hindsight. Even clear signs tell you what will happen, but not when.
So, here are some warning signs you will probably ignore:
In July, the SEC declared that many blockchain-based artificial currencies may be securities.
On Aug. 1, Delaware changed its corporate law to permit corporations to use blockchain technology to keep stockholder records.
These are warning signs, because most people think of blockchain as the basis for shady crypto-currencies. Drugs, terrorism and tax evasion come to mind.
But blockchain is becoming an important finance and business tool that extends far beyond its original uses.
That’s the reason two of the most important corporate and securities organizations decided its time to address blockchain technology.
The SEC knows that leaving blockchain financial instruments unregulated would create huge holes in its securities and capital-raising regulatory structure.
The Delaware legislature realizes that stock certificates and traditional stock ledgers remain the most inefficient part of the system that keeps track of ownership interests and wants to keep Delaware’s lucrative business of being home to most major corporations.
In effect, both institutions have put the world on notice that they don’t intend to let a new disruptive technology make them irrelevant. To avoid irrelevancy, the decided they need a blockchain strategy.
That raises a question: Does your business need a blockchain strategy to avoid becoming irrelevant?
Before you answer “no,” remember that much of the brick-and-mortar world relished the dot-com stock market crash that occurred at the turn of the 20th century. Hundreds of dot-com companies crashed. Fortunes disappeared. By 2002, it seemed the brick-and-mortar world was safe from the dot-com barbarians.Yay!
Fifteen years later, the brick-and-mortar world’s relief over the dot-com bust was premature.
Will we see something similar with blockchain technology?
Initially, we will see a boom and bust cycle. Over-enthusiastic investors often create bubbles. But bubbles only kill investors. Bubbles don’t destroy disruptive technology, and blockchain technology has many disruptive capabilities, including:
- replacing paper with digital information
- cost reduction
- eliminating human error
Eventually, people find ways to use disruptive technology that no one imagined before. With new uses, people refine technology to minimize weaknesses. What seemed like dead ends become super highways.
It’s happened before and it will happen again.
So I repeat my earlier question: Does your business need a blockchain strategy?
If you want to know more about blockchain, let me know. I coordinate the Research Triangle Blockchain Working Group.To read more blogs from Jim on this topic, go to Gateway Capital X.