In 2013, the one-time $5bn company, Blockbuster Videos, went into liquidation as it bowed to pressure from online streaming sites such as Netflix and Hulu. Blockbuster did not see the threat that Netflix posed in 1997 when it launched and made the mistake of passing up the opportunity to buy Netflix in 2000. Its inability to envision how people would view content in the future was ultimately its downfall. The lesson here is that even a successful and established brand can fall if they do not evolve in line with what people want.
Could cryptocurrencies herald the end of financial institutions?
It does not need to be as dramatic as that, nor will it more than likely be. It would certainly never happen overnight, or maybe, even in the next decade. This does not mean that it is outside the realms of possibility.
Let’s circle back to Blockbuster. Imagine a world where they had decided to act, seeing the future potential of Netflix (and online streaming) services. Maybe, they would still be around today and competing with newer entrants to streaming like Disney+.
I will admit that there is a world of difference between potential and its realization. Cryptocurrencies have not realized their full potential, yet. It seems, at this point, unlikely that they would ever be able to take over all the functions currently performed by financial institutions. I will even acknowledge there is a possibility that cryptocurrencies may never be adopted by the masses.
However, can institutions afford to take the risk of ignoring cryptocurrencies entirely and sticking to the traditional investments that they know?
For example, as people want to transact, and send money quicker and more cheaply than ever, new blockchain technologies will continue to proliferate. Traditional financial institutions, quite frankly, cannot afford to be left behind.
“Blockchain is the tech. Bitcoin is merely the first mainstream manifestation of its potential.” — Marc Kenigsberg
Bitcoin is just the beginning.
As an institution, it pays to educate yourself now. Where and how you can do it is at your leisure, but it is wise to stay ahead of the curve, or at least even acknowledge the road is curving.
As On Yavin, Founder & CEO of Cointelligence, mentioned in our Iconic Blockchat, any person in power should try and understand the aspects of technology in general, and then blockchain and cryptocurrencies, as part of that. Refusing to acknowledge the industry as a possibility simply trivializes the importance of rapid progressions of technology and the 4th Industrial Revolution.
What can financial institutions do at this time?
1. Understand more about the ‘original’ cryptocurrency, Bitcoin. When you understand the value drivers behind Bitcoin, it starts to make more sense to consider crypto, as a whole, an asset class, especially in the troubled Covid-19 waters that we find ourselves in. Read more in our article, Bitcoin’s Perfect Storm.
2. Do your own research and due diligence — there are a lot of cryptocurrencies to choose from. It pays to know what options are out there. There are also many different ways to become invested in the space — from direct investment into blockchain companies to investing in the crypto asset itself to crypto active trading funds to diversified passive funds.
3. Find trusted sources that can help you guide you through the blockchain and crypto-asset ecosystem and tell you what you need to know. We, at Iconic, come from a traditional finance background. We understand where you are coming from, and we want you to understand blockchain’s potential.
Interested? Learn more about Iconic complimentary online and in-house workshops for family offices and financial institutions who are ready to learn more about blockchain and the crypto-asset ecosystem.
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