When you think about blockchain technology “picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.”
“When it comes to digital assets and transactions, you can put absolutely anything on a blockchain.” It’s the invisible technology that’s changing the world, according toPC Magazine.
Blockchain was originally devised for Bitcoin, but its application has moved far beyond cryptocurrency alone. Along with banking, prediction markets, and social trading, blockchain gradually keeps disrupting many non-financial industries. Big businesses in retail, car leasing, education, healthcare and, well, nearly every industry are on their way to testing the waters of blockchain technology.
But how about small and medium-sized businesses? Well, thanks to blockchain technology, they stand to gain even more and engage competitively with larger companies, which have already implemented blockchain.
Here’s a look at seven ways small businesses can leverage blockchain technology.
1. Run a business without intermediaries
A blockchain is a decentralized public network which has no central authority or middlemen between participants. This kind of a distributed network of ledgers independently work together to track, verify, record, and enforce transactions on a blockchain. It leads to an increase in transaction speed and decreases costs.
Besides, decentralization allows small businesses to set their own terms, including prices and terms.
Brooklyn Microgrid is one example of a decentralized network. This project strives to increase the amount of clean alternative energy. Their business model is based on a decentralized network independent from any authorities.
2. Build global partnerships, transcend national boundaries
Since blockchain networks are distributed worldwide, companies are not restricted by national borders. Instead, even small businesses or startups can collaborate with foreign partners, employ foreign workers, and grow globally.
Apart from transcending national borders, blockchain technology guarantees authenticity across institutional boundaries, which, in turn, provides evidence of the authenticity of records, content, and transactions in new ways.
3. Pay no-to-low transaction costs
As a decentralized ledger, blockchain technology provides a significant benefit for small businesses by means of more efficient transactions.
Besides, as there are no intermediaries or central authorities within the blockchain model, there are no third parties to pay high fees for transactions. Therefore, blockchain transaction costs are typically little to none. Most cases in which blockchain network participants do pay fees are when priority verification is crucial. Still, even in such cases, transaction costs are low.
4. Perform monetary transactions in real-time
Another significant benefit for small businesses is not only low cost transactions, but also instant transactions.
While traditional payments that involve banking intermediaries may take several days, a settlement through a blockchain network is nearly instant. As soon as a transaction is verified, the transfer is performed. Besides, money operations are borderless.
A famous example of a real-time settlement system is Ripple, which allows currency exchanges and remittances to be performed on a platform of the same name.
5. Sign digitally secure smart contracts
A blockchain provides businesses with a new secure way to execute agreements or smart contracts. Smart contracts are unique and unbreakable encrypted digital agreements. They guarantee the delivery of outcomes and ensure all predetermined conditions will be met.
Smart contracts eliminate the need for lawyers and bureaucracy. Smart contracts are publicly accessible, yet safely stored. Publicity helps ensure all terms are fulfilled. That aside, the technology behind digital agreements prevents alterations and fraud.
6. Store business data securely
Decentralized cloud storage based on blockchain technology is another advantage for small businesses. First of all, compared to existing storage providers, blockchain technology offers significantly lower costs.
Secondly, blockchain enabled data storage ensures better security. When you store data in decentralized networks, it is exponentially harder to destroy or hack the data. That aside, stored data is encrypted and requires access only through a cryptokey.
Meanwhile, decentralized storage offers constant accessibility. As this type of storage is supported by computers, there are no downtimes and 24/7 data access.
7. Experience transaction and record transparency
Transparency is within the very DNA of blockchain technology. “Blockchain technology provides a high level of privacy by ensuring that transaction details are shared only amongst the participants involved in those transactions. With blockchain transactions there’s no need for a third party.”
Whether it’s a deal, personal record, purchase detail, or currency exchange operation, each item can be easily and clearly tracked. “Blockchain systems include a fully auditable and valid ledger of transactions. This ledger is indelible and unforgeable. Entries into the ledger can only be made if they are validated by the system.”
It is impossible to predict whether the blockchain will work for small businesses in the same way they currently work for large corporations. However the blockchain opens massive potential, applications, and solutions which will make business partnerships as well as financial and agreement settlements easier, better, and safer.
This article has been edited.
Tania Horda is a copywriter at RubyGarage. She’s passionate about investigating winning business strategies for startups and monitoring the development of new brands. She enjoys writing about high technologies for business and entrepreneurship. Connect with @rubygarage on Twitter.