Jim Verdonik founder of Innovate Capital Law
This article was originally published by Triangle Business Journal in September 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 – just like we ignore the End of the World signs we see in cartoons.
After economic bubbles burst, the pundits all point the signs that 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 2017 The SEC declared that many block chain based artificial currencies may be securities.
- On August 1, 2017, Delaware changed its corporate law to permit corporations to use block chain technology to keep stockholder records. But block chain is becoming an important finance and business tool that extends far beyond its original popular uses. Remember, the first people to make real money using the Internet were porn websites. Porn is still a big Internet business, but now people buy everything over the Internet.That’s the reason two of the most important corporate and securities organizations decided its time to address block chain technology.
- These are warning signs, because most people think of block chain as the basis for shady crypto currencies. Drugs, terrorism and tax evasion come to mind.
- The SEC knows that leaving block chain 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.
- That raises a question: Does your business need a block chain strategy to avoid becoming irrelevant?Much of the brick and mortar world relished the Dotcom stock market crash that occurred at the turn of the 20th Century. Hundreds of Dotcom companies crashed. Fortunes disappeared. By 2002, it seemed the brick and mortar world was safe from the Dotcom barbarians. Yay!Will we see something similar with block chain technology?
- Probably. Initially, we will see a boom and bust cycle. Overenthusiastic investors often create bubbles. But bubbles only kill investors. Bubbles don’t destroy disruptive technology and block chain technology has many disruptive capabilities, including:
- Fifteen years later, the brick and mortar world’s relief over the Dotcom bust was premature.
- Before you answer No, let’s look at another Internet example.
- 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 block chain strategy.
- 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 block chain strategy?