This week’s questions: What is blockchain in simple terms? How does blockchain fit into Product and how can women get into the field early on? What examples are there of products in this domain and how can we get involved in early stage startups that are not ready for a product role yet?
Editor’s Note: This week, Karmel Elshinnawi, Katie McCann, and Kinjal Shah team up to create this introductory compilation of frequently asked questions that Product Managers may have about Blockchain technology.
- What is Blockchain in simple terms?
- What kind of products would benefit from the use of blockchain technology?
- When a product claims to use blockchain, how do I tell if it’s just hype or if there’s substance?
- What’s the best way for a product manager to get up to speed and stay updated on blockchain technology?
- What’s the best way to get involved in early-stage startups that are not yet ready for a product role?
- What challenges should Product Managers expect to tackle?
Have your own Product Management question? Ask Women in Product.
1. What is Blockchain in simple terms?
Kinjal Shah (Consultant): The term Blockchain refers to a digital database, which creates a permanent record of an *event* (e.g., value transfer) that is distributed across a network in a decentralized manner.
Blockchains are a way to store information that is identical across all participants of the network. This information is recorded in a database that is irreversible once an event has occurred.
Blockchain technology is revolutionary because it offers access to a wide range of participants, where no single entity is in control. Additionally, it offers unprecedented transparency and security through its design, a feature that has been missing in traditional financial services.
2. What kind of products would benefit from the use of blockchain technology?
Kinjal Shah (Consultant): To understand where we can use blockchain technology, it’s important to understand its strengths and weaknesses.
Some of the benefits of using blockchain technology include:
- Speed of execution. When scale is achieved, blockchain enables the ability to almost instantaneously transfer value — an advantage over our current financial intermediaries and systems.
- Transparency. Blockchains offer transparency through the ability to view transactions publicly.
- Increased security. This benefit comes from having a decentralized network where transactions have to be validated by multiple nodes in the network.
Some of the biggest disadvantages include high transaction costs and inefficiencies when scaling blockchains. As we consider products, we want to make sure we are solving problems that require the use of blockchain technology, instead of some other technology.
As we consider products, we want to make sure we are solving problems that require the use of blockchain technology.
While different industries have been exploring the use of blockchains, we see obvious efforts in the realm of financial services. In this domain, public blockchains can be used as investable assets or as a digital store of wealth. It’s in this space that the most popular implementation of the blockchain, Bitcoin, fits. As a digital store of wealth, bitcoin and other crypto assets provide benefits and advantages that traditional gold or real estate can’t always achieve. Other products and services within the financial services ecosystem include exchanges — both decentralized and centralized — as well as microtransactions. This ecosystem map, although a little dated, does a good job of displaying the various categories that are emerging.
Non-financial products have also begun to emerge across a wide range of industries such as supply chain management, energy, and healthcare. While blockchain technology can certainly help to solve challenges in these industries, it is critical to first understand the tradeoffs and what problems they are solving.
Moving forward, the financial services industry is expected to remain a major focus area for blockchains, but its use continues to permeate many industries.
3. When a product claims to use blockchain, how do I tell if it’s just hype or if there’s substance?
Katie McCann (Startup Advisor/Consultant & Co-Founder of Unblocked Collective): Like evaluating any product, evaluating a blockchain product starts with understanding the problem the makers are trying to solve. With all the hype surrounding blockchain, beware of “solutions in search of a problem”. If a company can’t clearly articulate the problem they’re trying to solve, run. Don’t look back.
If a company can’t clearly articulate the problem they’re trying to solve, run. Don’t look back.
A good framework for evaluating a blockchain project is to ask “Is this a problem that is uniquely solved by blockchain?” Note that this sets an intentionally higher bar than just asking “Could this problem be solved by blockchain?”
So how do you assess whether a problem is uniquely solved by blockchain?
- First, and maybe most important, consider whether there is something specific about the problem at hand that is solved by decentralization. Is trust an issue in current solutions, and would the problem be better solved with a shared, immutable ledger? Or would a centralized database be just fine (and likely faster and more scalable)?
- Is there a need for smart contracts? Not all blockchain projects need smart contracts, for sure, but in some cases this is a very valid reason for using blockchain in a product.
- Do the tokens serve a purpose, or are the founders just looking for quick way to raise money? There’s an argument to be made for a new token-based fundraising model, but it’s currently being taken advantage of by inexperienced founders trying to make a quick buck.
- Does the team have a history of successfully delivering blockchain projects? Again, this is not an absolute requirement — every person in the space was once a first-time user of blockchain, after all — but this can be one way of weeding out people just jumping on the bandwagon.
The Token Economy Canvas provides a good framework for evaluating blockchain companies — it’s based on the Lean Canvas, which product people reading this may be familiar with.
A word of advice — be careful when reading the opinion of the “hivemind” on a blockchain product. You can pretty much ignore what random strangers on Telegram/Reddit/Twitter say about a product — they very likely have a vested interest in the products they’re hyping. Instead, turn to more trusted research and rating sites such as Smith & Crown or ICORating.
4. What’s the best way for a product manager to get up to speed and stay updated on blockchain technology?
Karmel Elshinnawi (Senior Product Manager): The challenges of working on a product that uses blockchain are the same as with any new technology. So I would recommend approaching it like any new role you are interested in and do a lot of research!
One thing to note: the tech is still evolving, so the documentation on the web can be really confusing. (If you’d like to nerd out and dig deeper, you can always read Satoshi Nakamoto’s original bitcoin white paper.) Your research is best focused on understanding what is possible with blockchains. Once you grasp its benefits, you’ll be able to think of use cases for products in different industries such as healthcare, retail, supply chain management, energy, etc.
Here are some resources that I’ve found very helpful:
- Unchained Podcast. Hosted by Laura Shin, this podcast that talks about the impact of blockchain from financial services to identity to the Internet of Things.
- The Medium pieces of Linda Xie, who is Co-founder of Scalar Capital and previously a Product Manager @Coinbase.
- The Blockchain Basics. This guide is designed for anyone who is looking to wrap their head around blockchain technology, how it works, and how it could affect the world around them.
- Blockchain Curated. A project by Zach Segal that aims to make the best blockchain-related content more accessible to the world.
Finally, I recommend engaging with some of the leaders in the space. You can also attend meetups or conferences to expand your network.
5. What’s the best way to get involved in early-stage startups that are not yet ready for a product role?
Katie McCann (Startup Advisor/Consultant & Co-Founder of Unblocked Collective): One of the great things about being a product manager is the sheer breadth of skills you develop. So even if an early-stage startup isn’t (or at least doesn’t think they are) ready for a full time “product person” in the traditional sense of the word, there’s a whole slew of things that every startup, blockchain or not, can benefit from.
- Competitive analysis. How are other companies trying to solve the same problem? What is their business model? How are they marketing themselves to customers?
- UX Design. User experience may be one of the biggest opportunities in the blockchain space — it’s going to be critical to getting mass adoption of blockchain/crypto products. If you’re not sure what I mean, ask your least tech-savvy relative to buy some cryptocurrencies (particularly one you can’t buy on Coinbase) and watch how they fare.
- Go-to-Market strategy. How is a company going to get the product to its target customers? This is especially critical in blockchain products where the early community may only be hoping for an increase in token price — once they’re gone, how will you actually get long-term customers?
- User research. Is the company solving the right problem? What are the target users’ biggest pain points, and will the proposed solution meet their needs?
You’ll need to consider whether you’re willing and able to take a part-time or project-based role if you can’t convince an early stage startup to bring you on full-time.
With all the money being poured into blockchain companies in the last year, I predict we’re about to see a day of reckoning where companies are not delivering on the roadmaps they promised during the fundraising process. Once that happens, the notion that a company doesn’t need product chops is going to disappear into the, ahem, ether (pun intended).
6. What challenges should Product Managers expect to tackle?
Karmel Elshinnawi (Senior Product Manager): The true potential of Blockchain is yet to be fully realized. Regardless of how the technology evolves, I believe that ethical concerns will rise to the fore as we build new products and services using blockchain technology. As Product Managers think of market fit, competitive analysis, growth predictions, and such, we will need to give ethics considerations the same weight.
For example, ask questions like: Two years from now, will people regret using our services or products? How will lives be affected when records cannot be modified or deleted? What impact will this product have on society?
I think the generation being birthed while I write this will have full custody of their data and might laugh at us for what we gave up.
Blockchains will influence almost every industry you can think of. The internet provided us with ways to connect with each other, ways to share and collect data. In turn, blockchains will help us manage many aspects of these relationships. Blockchains have the potential to be used everywhere to ensure data integrity, and the future may well be devoid of middlemen! I think the generation being birthed while I write this will have full custody of their data and might laugh at us for what we gave up.
Thank you to Alice Rose Little for editing this piece.
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