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Bitcoins: Are You on Board For The Future of Finance?

Alternative currencies have been with us for some time now. Most are local currency schemes which generally aim to stimulate economic activity locally by implementing a payment mechanism (often including actual vouchers) that can be used to buy goods and services from local businesses.

If you haven’t come across Bitcoins, bear with me for a moment. They’re a fairly new virtual currency which came to prominence in the wake of the recession – largely because they have no central bank to (mis)manage them.

Bitcoins are really online ‘tokens’ which, according to the BBC, “have value because enough people believe they do and there is a finite number of them.” Each Bitcoin is represented by a unique online registration number which is created through a process called "mining". This involves a computer solving a difficult mathematical problem with a 64-digit solution, and then the computer owner being rewarded with Bitcoins. The online addresses Bitcoins are sent to have no central registry, so transactions are fairly anonymous. The addresses act like privately-run bank accounts so owners have a great deal of control over their savings – unless the data is lost.

So what does this have to do with the average business? Well, George Osborne thinks Bitcoins could be useful, and is commissioning a study into how they could help the City of London in the first instance and also business as a whole. No-one really knows whether Bitcoins will stand the test of time, but they have made enough of an impact in a short time that people want to find out. They have the advantage of being much less centralised. A Conservative MP once making a speech about he wanted to ‘privatise money’ to harness its real potential. It seemed unimaginable – until now.

Whether Bitcoins really take off or not remains to be seen, but it is clear that the recession has caused people and businesses to look to other sources for finance than the traditional banking system. With banks taking a great deal of time to approve loans these days (however sensible that may be),it is no surprise that SMEs and the Treasury are exploring other options like peer-to-peer lenders (P2P).

The traditional methods may still seem attractive to many, but the speed with which Bitcoins and P2P have risen to prominence and already penetrated government policy shows the importance SMEs need to place upon having a creative financial team.

As business strive to bolster competitive advantage in a complex global environment, smart business leaders are using the profusion of new technology to accomplish their goals. Technology has changed the business world fundamentally. That rate of change is likely to stay. Can you imagine business without computer technology now?

Just as it impacts on all aspects of the business, technology flows into all aspects of HR, from recruitment inwards. It brings great advantages, but can also create risks. The courts are full of cases about dismissal following incautious Facebook remarks. Do make sure that you prepare employees for the changes that technology brings, including the provision of training. Identify risks and create policies to provide guidelines and permissions for dealing with them. Communicate the policies, including the impact of a breach.

We can’t stand in the way of progress and nor should we. But we do have to make sure that progress – whatever form it takes – is implemented in a structured and sensible way.

Russell HR Consulting provides expert knowledge in HR solutions, employment law training and HR tools and resources to businesses across the UK.

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