What is Blockchain Technology? and How Can it Help Your Small Business?
If you’re familiar with Bitcoin’s revolutionary cryptocurrency then you’ve already been introduced to an innovative technology known as “blockchain”.
A blockchain is a transparent digitised public ledger – in essence, an unhackable record of transactions – maintained by the blockchain’s users, hosted on each user’s computer. A truly transparent system, everyone involved has access to every blockchain transaction in real time.
As a small business owner the value of secure financial transactions may be obvious – but blockchain technology offers much more than a safe option for data transfers. Once you can imagine the variety of applications blockchain technology has to offer, you’ll understand why some are calling its development more important than the internet.
1. Easier access to capital.
One of the great benefits of blockchain technology is it opens up opportunities for anyone to access funds minus the costly banking fees and endless paperwork. Using a blockchain, lenders can authorise financial agreements with another party, sidestepping the administrative hassle that comes into play when “middlemen” are involved. Some financial institutions are already working with blockchain technology to offer small enterprises attractive financing solutions at much lower fees. Moving to this type of technology benefits all parties as accountability is improved and transaction tracking is streamlined.
2. Save money on payment transfers.
The use of blockchain technology to transfer money to employees, vendors and suppliers anywhere in the world also offers businesses significant cost savings. With the blockchain there’s no need to transfer funds between financial institutions, so you can avoid incurring big bank transaction fees. Small business owners who operate internationally know all too well how quickly banking fees can add up. A simple wire transfer, for instance, typically includes an origination fee, transfer fee, receiving fee, and a percentage on the foreign exchange fee.
3. Sign smart contracts.
A blockchain “smart contract” allows two parties to enter into a binding agreement without the need for a notary or registration authorities. Smart contracts can help small companies move forward on their business plans more quickly while lowering costs on legal fees and documentation. It’s expected that smart contracts will revolutionise the financial and real estate industries by simplifying and automating agreements, eliminating legal and accounting costs while lowering the risk of fraud.
4. Protect intellectual property.
Blockchain technology, including smart contracts, can also be used to help protect a small company’s IP. In addition to easily registering and clearing IP rights and tracking the distribution of unregistered intellectual property, small business owners can use the blockchain to establish and enforce agreements and licenses, making it much easier to collect on royalties and payments.
5. Improve customer loyalty.
By tapping into the blockchain’s secure digital verification capabilities, small business owners can streamline their loyalty rewards program. Businesses and customers can interact through a smart contract using digital wallets and social media. This streamlined execution of what can be a time-consuming project for a small business owner can result in hours of saved admin time and personal costs.
Now that you understand the power of the blockchain, how might you use it to increase efficiency and improve your bottom line?