With the arrival of crypto currencies such as Bitcoin, everyone around the world can trade with each other without any involvement from traditional third parties such as banks, notaries, accountants, and governments. Trade is a fundamental pillar of our economy and society, and traditional trusted parties play a crucial role in this.

The technology behind Bitcoin making all this possible – the Blockchain – ensures that the essential functions of the “trusted third party’, are fully automatized through the internet. This way, these functions are as freely available, accessible, and programmable as the internet itself.

Infuential developments

Specific developments make clear that the volatile value of bitcoin (the currency) so far is most definitely not a measure for its relevance and impact:

The above-mentioned developments are easily comparable to the developments of the internet during the early to mid-1990s; it is all still in its infancy, as is people’s trust in the technology.

It also took a few years for people to gain trust in online payment through web shops, and the same was the case for people’s trust in the information offered by websites such as Wikipedia. By now, however, all of that has become accepted and part of our everyday lives.

Innovation, disruption, and cooperation with start-ups

Those who go into the matter of this technology find out that it offers far more opportunities than threats, even for mitigating risks. Essentially, knowledge of the Blockchain’s possibilities is the key.

The genie has escaped from the bottle. Matters such as the amount of liquidity in the economy and the monetary rules of the game have thus far always been decided by governments and (central) banks, but their position has definitively been changed by Blockchain technology.

Let’s compare it to the traditional media situation. These still have their value, but because of the internet and social media, we are no longer dependent on them for our supply of news. Similarly, mail service companies are still of value, but they no longer play a major role in our written correspondence. Did TV networks develop YouTube? Not quite...

Todays motto is therefore as follows:

invest in that which might turn out to be your own downfall, or risk someone else doing it instead.

This requires an open, research-minded, critical, and entrepreneurial attitude. Not only with regards to new technology and financial players, but especially also regarding to companies’ own business and systems.

Of the existing parties, this will require them to cooperate with start-ups much more intensively rather than letting innovation emerge from within the confines of their own companies. Do not make the mistake of confusing start-ups with starters. This type of organization increasingly attracts experienced people and can have significant impact with increasingly few means. Traditional organizations are quite often plagued by legacy and tedious, costly innovation processes. A start-up, on the other hand, per definition has a clean slate and an open mind to the world (a beginner’s mind), has no legacy, and can fully focus on innovation and solving (business) problems. This offers great prospects for the future.

The traditional players from the financial world that have recently gotten involved with Coinbase do this not only for its prospective gains but also to learn from new technologies and approaches. These players realize that their own organizations are not capable of innovating at the same speed and with the same level of impact as the earlier mentioned kind of start-up companies. Through such investments, the respective traditional players will learn about the ways in which new technologies work in practice and how they can be integrated into their current systems much sooner than their competition. As a result, they will be among the first companies to find solutions for issues deriving from legacy.

The combination of experience and knowledge of existing players with the innovating capabilities and vision of start-ups in a culture of more open-minded cooperation and innovation (wikinomics) opens doors to meaningful solutions, improved competitive positions and new growth.