Author: Gilbert Verdian, Founder and CEO of Quant
Blockchain technology has long been lauded for its promise of decentralisation, security, and scalability. But despite these lofty ideals, adoption has been slow. The complexity involved in implementing blockchain solutions has proven to be a significant obstacle, particularly for small and medium-sized firms (SMEs).
There are currently hundreds of blockchains in existence: some public, some private, each with their own programming language, intricacies, strengths, and weaknesses. Assets or smart contracts created on one chain are ‘native’ to it and (until recently) could not easily be moved to another. Each blockchain also demands niche knowledge from developers. These specialists – who are often only fluent in one chain – cost hundreds of thousands of pounds per year to employ.
This scenario has created major challenges for smaller businesses and start-ups, who find themselves excluded from the blockchain economy due to the exorbitant costs and complexity. In the finance sector, major blockchain projects have primarily been the domain of large, well-established institutions with ample budgets. This financial barrier stifles innovation and prevents promising young companies from exploring the potential of blockchain technology.
At the heart of this issue is a lack of standardisation, common language, and ‘interoperability’ – another way of saying that digital assets tend to only work on one chain. The situation can be likened to the creation of the barcode, which was invented in 1948 but languished under ‘interesting idea’ status until the 1970s, when the scanning of a pack of Wrigley’s Juicy Fruit chewing gum in Ohio marked a check-out revolution. The catalyst? The creation and agreement of the barcode’s universal product code (UPC).
Much like the adoption of the UPC in the 1970s, the blockchain ecosystem has now established standardised protocols, common frameworks, and interoperability. More organisations will be able to access this tamper-proof record of transactions. We are approaching an era where the opportunities for blockchain-based innovation can be democratised, enabling companies of all sizes to leverage this transformative technology.
Blockchain technology can streamline processes, reducing the need for intermediaries and manual reconciliation. Smart contracts, for instance, can automate tasks, eliminating paperwork and reducing operational costs. For SMEs with limited resources, this can be a game-changer. Blockchain can also help ensure data integrity and security. For firms dealing with sensitive customer information or intellectual property, blockchain can offer robust protection against data breaches and unauthorised access, bolstering their credibility and trustworthiness. Blockchain’s traceability and transparency capabilities can also be a boon for businesses involved in supply chain management. From monitoring inventory levels to verifying the authenticity of goods, blockchain streamlines the entire process, leading to better efficiency, reduced fraud, and more trust from customers.
On the other side of the balance sheet, blockchain can offer an alternative to traditional funding models, democratising access to capital for SMEs. Through token business models firms can leverage a new form of value to enable innovative ideas to come to life.
The key to unlocking these benefits lies in simplifying the adoption of blockchain technology. The aim must be to empower SME technology businesses by offering a unified platform that bridges various blockchains, eliminating the need for specialised developers. This approach encourages experimentation and promotes innovation across industries.
As we venture into this new era, embracing blockchain’s transformative potential can redefine the landscape for SMEs, propelling them towards success in a decentralised and interconnected world. With the emergence of initiatives and protocols that enable interoperability and bridge various blockchains, the adoption of digital assets on blockchain is gaining momentum.
Just as the barcode’s slow adoption was transformed by the universal UPC code agreement, blockchain’s is experiencing a positive shift around common standards and protocols. The potential of blockchain technology to revolutionise how we manage and transfer digital assets is now truly coming to prominence, enabling firms of all sizes to issue chain-agnostic digital assets, connect them to other networks, and develop multi-chain applications quickly without compromising on security.