Blockchain technology. According to the pundits it is meant to be the biggest advancement since the launch of the internet. But then again, they say this about everything and let’s face it most small business owners are too concerned about getting customers through their doors. The question is whether small business owners need to care about blockchain? The answer (yes!) might be surprising.
More Than Bitcoin
While cryptocurrencies and ICOs get much of the attention when discussing the blockchain, there is actually much more to the technology. In its simplest terms, the blockchain represents a distributed ledger. This is an accounting ledger shared thousands of times over a network. However, the entire ledger isn’t copied over these networks, just the bits pertinent to the user.
Many big businesses have been looking at the technology to help with almost everything where a ‘transaction’ takes place. This could include security medical records or energy grids such as the Brooklyn Microgrid, to smart contracts and machine-to-machine (M2M) payments.
How can the blockchain help a small business? Well, read on.
Get Rid of the Middle Man
Let’s face it, its hard for small businesses to get by without dealing with intermediaries. Especially when sending money or accessing markets. While the blockchain might not make it easier for businesses to sell their goods, it can help owners track and verify their transactions. In doing so, they can reduce the time and cost it takes to sell products and services.
Many of the largest businesses in the world today started as small businesses. These aren’t just the Silicon Valley startup that has changed our lives but also old-school companies such as Ford.
That is great but how can the blockchain help a small business go global? The answer is that blockchain networks don’t know national boundaries. As such, small businesses are not constrained in the way many small business payments and accounting systems are today. Sure, there might still be a need for a small business accounting firm but that doesn’t mean not working with partners from halfway around the world.
Eliminate Transaction Costs
Bank fees and credit card processing fees really add up for a small business. But blockchain technology promises to eliminate billions in these charges every year. Why shouldn’t small businesses want to get involved in this?
Besides cutting out intermediaries, using the blockchain gets rid of the fees tied to these entities. As such, transactions processed through the blockchain can cost next to nothing. While some charges might remain, especially in the case of priority verification, even these cases cost much less than what credit card companies and banks charge today.
No More Waiting to Get Paid
Platforms such as Ripple are helping small businesses do something which was once impossible – getting paid immediately and at low cost. Try doing that with ACH payments. One other thing to know is that many of these systems allow for instant payments across borders and this cuts down on the exorbitant fees that eat into profit.
Contracts That Are Smart
Maybe this should be higher up on the list but transactions on the blockchain represent what is known as ‘smart contracts’. These agreements are encrypted and provide a way to secure the buyer and seller in almost every transaction.
Not only are smart contracts secure, they also eliminate the costs and delays of involving lawyers at every step of the way. This is a big win for small businesses as it will allow them to conduct transactions quickly and at a lower cost. Beyond this, smart contracts are also transparent, and this helps to guard against fraud.
No More Data Breaches
Even today companies large and small keep their most important information in large, centralized databases. They might as well be welcoming hackers as these large databases are like catnip to those who love to test for vulnerabilities.
With the blockchain, the answer is to break large data sets into bite sizes and then store this information in multiple locations. The plus is that even if the network is compromised, a hacker can only gain access to a small portion of the data on it.
For small businesses, this is a big plus as many have already been targeted by hackers not only because they are less secure than big companies but also because their data might provide a backdoor into larger targets.
So the blockchain can help small businesses reduce costs, get paid faster, ensure contracts are enforced and keep their data secure. Do small business owners need to care about blockchain? The answer is obvious – yes.