Getting Started with Product Managing Crypto and Blockchain
Cryptocurrency and blockchain are newer technologies that are increasingly finding their way into products. In this blog post, I will talk about what a product manager needs to know in order to manage a product that uses cryptocurrency and blockchain technologies.
What do you need to know as a product manager working on cryptocurrency and blockchain?
Managing a product that uses cryptocurrency and blockchain is different from managing a web or mobile product because these are newer technologies and therefore not as widely understood.
As a product manager, it’s essential that you know what these technologies are and how they work, and know the different applications of those technologies to stay competitive.
What is cryptocurrency?
Cryptocurrency or “crypto” is a virtual currency that relies on cryptography to secure online transactions. These currencies are typically issued and regulated in a decentralized fashion, as is the recording of transactions. The top two most popular cryptocurrencies as of November 2021 are Bitcoin and Ethereum. Each of these cryptocurrencies can be bought or sold in exchange of fiat currency such as the US dollar. In other words, cryptocurrency is equivalent to paper money or coins except that everything is done digitally. Moreover, transactions are recorded and secured so illegal activities can be prohibited.
Cryptocurrencies work using a technology called blockchain.
What is blockchain?
Blockchain is a decentralized technology spread across many computers that manages and records transactions. It’s a chain of blocks that contain information. Part of the appeal of this technology is its security and its decentralized nature.
A good way to understand blockchain is by using crypto payment as an example. Let’s say person A wants to send money to person B. To do so using traditional currencies, person A and B need to trust a third party (a bank) to make sure transactions are valid. With blockchain, the bank is removed from the process to complete the transactions.
It is also important to be familiar with Web3 in order to understand blockchain. Web3 is the next generation of the internet that lives in blockchain. The idea is to make data decentralized and remove any third party such as Amazon Web Service that stores user information. Instead, services are operated and owned by communities of users.
For more information on how blockchain works, watch this YouTube video.
You can also go here to read more about how Bitcoin payment works.
What type of skills do you need?
Financial technology, or fintech for short, is a great example of the use of cryptocurrency and blockchain. Fintech can apply to any innovation in how people transact business, from the invention of digital money, to peer-to-peer online payment. Fintech refers to the integration of technology into offerings by financial services companies in order to improve their use and delivery to consumers.
Having a finance and/or technical background certainly is a big plus since you will have a foundational knowledge on a topic which will help you in building products. This background will help you earn the trust of your team, as they will see you as an expert. There are many courses you can take online or articles you can read to educate yourself.
Of all the new innovations around fintech, cryptocurrency and blockchain are two of the most popular and disruptive ones.
There are many real-life uses of crypto and blockchain. Here's an example application of cryptocurrency and blockchain. Currently, Starbucks accepts cryptocurrency as a form of payment. Starbucks started accepting Bitcoin in April 2021. In order to complete a transaction, one needs to use Bakkt, an application which converts bitcoin into USD so users can load funds onto Starbucks cards. Starbucks, meanwhile, does not accept Bitcoin directly as a payment method.
As a product manager, it is important that when you build a fintech product like the Bakkt app, you consider the entire user experience.
Here are some of the things you need to consider:
- Compliance and regulations
- Copy or message used to connect with users
- Gamify to make it engaging
- Friction to avoid unwanted errors
- Visualize as you deal with lots of numbers
Cryptocurrency is simply a virtual currency that can be used to buy items online or offline. A product manager can build a product that accepts a cryptocurrency such as Bitcoin or Ethereum as an alternative to fiat as a form of payment by partnering with a third party vendor such as Bakkt.
On the other hand, blockchain provides a decentralized, open database of any transactions involving value, including money, property, goods, etc. with math and cryptography. It creates a record that can be verified by the entire community. For that reason, third party trust organizations may no longer be necessary. Blockchain has many uses in business, including but not limited to supply chain management, healthcare, real estate, media, and voting. A product manager needs to understand why and how businesses can use blockchain as more and more companies adopt this technology.
Scalability, Ease of use, and Trust
When building a product that uses cryptocurrency, you must consider scalability. You must expect that you will have many users and therefore many transactions happening at once. Failure to do so will surely impact the user experience.
Scalability has been one of the biggest issues in blockchain due to its energy-intensive mining and the way the proof-of-work approach works. As the number of transactions grows, it becomes increasingly difficult to maintain a balance between decentralization and accurate recording. The good thing is some solutions such as increasing the size of the block have been introduced.
Cryptocurrency trading is super easy. With just simple clicks on your app, you can buy and sell crypto. However, you should invest with caution just like any other asset.
John Santos is a volunteer with the BPMA blog team. He is a PM who has nonprofit experience and is passionate about making an impact on people's lives.
