Earlier this month the Dutch central bank DNB issue a warning to banks across the country about the potential pitfalls of dealing with Bitcoin-related businesses. The issues raised are regularly expressed, with DNB’s concerns founded on the integrity risks
posed to banks that involve themselves with Bitcoin and the problems associated with anonymity and anti-money laundering rules.
Anonymity is one of Bitcoin’s unique selling points. But it’s also one of the main reasons why the cryptocurrency may fail to be adopted by mainstream society. Verification is fundamental, as I discussed in my
last blog centered on the lack of security hindering Bitcoin’s growth. However, verifying users also brings a whole set of benefits to businesses, who will then be able to build on this data
to better understand and serve customers and satisfy investors.
In addition to security risks, unregulated industries are missing a trick by failing to embrace the more robust approaches sought by regulators. The inherent value of having a verified user base full of authentic customers cannot be ignored. Not only can
the business better serve its customers but future investors or acquirers will not fail to be impressed when due diligence reveals a customer base of genuine people, regularly trading in a fully compliant fashion.
The value of data knows no limits. Reliable databases form the basis of loyalty schemes and customised marketing, increasing chances of repeat custom. Analytics that predict future customer behavior and allow businesses to tailor their operations accordingly
provide the competitive edge Bitcoin providers will need as the market grows.
Having outdated, false or even no customer data can be costly for a business. Data decay remains one of the biggest challenges for businesses, with poor data draining the average company about £4.9 million annually. It’s time to move the discussion regarding
regulation on. The Bitcoin market can take inspiration from the online gaming experience. Regulation there brought the opportunity to start building tangible value out of customer knowledge. And it was one that the City and future investors noted.