Looking beyond the clickbait title of Wired’s article, “The Blockchain: Boon for Bankers—or Tool for Tyrants?” are some real-world insights regarding blockchain for average business startups.
Joi Ito, director of the MIT Media Lab, highlights the idea of businesses raising money through blockchain instead of bank debt. Ito notes how small- to medium-sized businesses form the bulk of our economy. However, for many banks those same businesses don’t offer the economics that banks desire for profitable investment. Of course that doesn’t even take into account the reality that business debt to banks can not only represent a burdensome load on a small business’s bottom line, but can be the factor that forces some into bankruptcy.
The idea of using blockchain to facilitate transparent equity and trading of local business interests represents an opportunity that could be mutually beneficial to business and its supporters. If anything, at least the cost of the investment would be less. Of course each business would still need to succeed for everyone to benefit. However, providing local patrons an opportunity to take a stake in local businesses could establish a built-in vested interest in continued patronage. Although it does not guarantee business success, it could establish a virtuous cycle for future sustainability.
We’re not at the point where blockchain is a ready solution for most businesses and there does exist a possibility that banks, via regulation, might become blockchain gatekeepers. The latter point is not an insignificant possibility, since the very nature of blockchain represents a force that can make banks less relevant in the future. Hence, you can be sure that any way they can circumvent blockchain from making banks less relevant is being reviewed.
Regardless, blockchain represents a fundamental opportunity for local businesses and communities.
