How can small-to-medium-sized business use blockchain technology to their advantage? This new advancement is more than a buzzword or new kind of digital currency. In fact, it has countless implementations that businesses can utilize as the technology advances.
The obvious use for blockchain is through cryptocurrency. Businesses will need to consider the value of doing business in cryptocurrency. Payment processors take a significant chunk of transactions. Additionally, digital payments come with issues of theft and fraud. The reliance on a middleman makes digital payments expensive and inefficient. Cryptocurrency transactions can solve that problem.
The blockchain’s decentralized nature means that businesses can give less of their income away to payment processors. Instead of a fee paid to a payment processor, many cryptocurrencies require a tip paid to the node that processes the transaction. While this can vary based on network traffic, it is often less than what a credit card processor will charge. There are also fewer issues with making international transactions. Additionally, blockchain-based currency validates all transactions as part of a shared ledger. This makes transactions more secure and less prone to fraud.
However, the blockchain has value as more than a payment processor. Blockchain’s immediate strength for businesses is in its ability to validate information between two parties. The shared ledger ensures a digital paper trail with redundancy for any transaction made on the blockchain.
Businesses can use blockchain to handle agreements such as financial contracts and insurance policies. Every party on the blockchain has this shared ledger that cannot be changed. Clients can verify agreements added to the chain with ease. Smart contracts can utilize blockchain to verify that terms of the contract meet certain standards. Software utilizing the blockchain can handle this in a programmatic way.
Sharing data can become easier through the blockchain. Each side must authenticate their identity with blockchain transactions using their public and private keys. This can ensure that content is shared securely and only with the intended parties.
This can all help streamline regulatory process. Involving a middleman for regulatory and security purposes incurs costs. These cut into a business’ bottom line and can make operations more tedious than they need to be. The potential solution is to put the the tracking, verification, and enforcement meeting regulatory standards on the blockchain with its decentralized ledger.
Blockchain technology has immense potential for small-to-medium-sized businesses. The biggest question for them when it comes to working with blockchain in the future will be if it is worth their time to implement this technology. Blockchain technology is still in active development, and is iterating at a rapid basis. Businesses that want to utilize blockchain need to constantly learn and study the latest advancements.
The good news is that blockchain is a wide-open field, and the value of cryptocurrencies means many businesses are starting to develop and iterate on the technology. This is helped by the fact that many of the blockchain technologies are open source, such as Ethereum. Any company wanting to experiment in the field has powerful technologies at their disposal, making it possible for startups and established technology vendors to create tools that can target businesses, especially small-to-medium sized ones.
Businesses are already starting to utilize blockchain. As PJ Jakovlevic’s Demystifying Blockchain whitepaper points out, there are solar-powered microgrids that distribute power between neighbors with blockchain. Solar panel users can sell their excess generated energy directly to their neighbors. This is quicker and more efficient than selling back to electric utilities. Through blockchain’s efficiency and security, everyone in the grid knows which transactions were made and when, ensuring the system can work optimally to the benefit of buyers and sellers. This allows microgrid providers to disrupt electrical utilities in a way that benefits all parties involved
More of these examples of blockchain-based businesses will arise in the coming weeks, months, and years. Vendors are rapidly developing new products, and startups are finding innovative new ways to incorporate blockchain. Any business looking to stay relevant in the new economy needs to at least study the benefits of blockchain.
Join the conversation on March 22nd. Sikich is hosting a short 30 minute webinar to give your more insight into this growing technology topic. Register now at How Can Your Business Use Blockchain.