Blockchain Technology Benefits for Small Businesses

What is Blockchain Technology?

Blockchain is a shared and immutable ledger that can only be accessed by its network members. Network members can control what each organization or the organization's members can see. Data is encrypted and cannot be altered, helping to prevent fraud and unauthorized activity. In an earlier article, we provide a broad overview of blockchain technology.

How Can Blockchain Help Your Business Succeed?

Partnerships and business go hand in hand, however there is a caveat, trust. Many businesses fail because partners, founders, and employees don't trust each other. However, with blockchain whether business partners trust each other to share information or not becomes irrelevant. Times where mistrust and systematic differences got in the way of business are over. The reliability and efficiency provided by blockchain technology reduces redundancies and lowers operational costs for businesses. 

Blockchain reduces paperwork and manmade errors, which reduces transaction costs and overhead. The need for third party middle men tasked with auditing and verifying transactions is also removed. There is no need for businesses working together to maintain their individual ledgers or databases. In the world of blockchain, documentation and transaction details are stored on the blockchain, making clearing and settlement a much quicker process. Since blockchain uses a distributed ledger, data is stored identically across multiple locations, providing safety and security. 

Blockchain creates an audit trail for every asset for the duration of that asset's life. Each transaction is recorded as its own block of data which can not be altered and each block is connected to one preceding it and one after it; without the possibility of adding a block between two existing blocks. This removes the possibility of malicious activity. 

Smart Contracts

Pre-set rules called smart contracts can be stored and automatically executed on the blockchain once the conditions are met. The need for human intervention to verify that the correct terms of the contract have been met, to then go and execute the contract is not needed.

Cryptocurrency: A New Form of Payment

Traditional credit card companies charge consumers and businesses fees for processing each financial transaction. It can be in the form of an annual credit card fee for the user, and a processing fee for each transaction for businesses, usually being 0.05% to 10% of the entire transaction. The costs add up and can become a headache for both consumers and businesses. 

Paying with crypto has little fees associated with it. Businesses would need to set up a digital wallet or merchant gateway to accept crypto from customers. Crypto transactions are also permanent and irreversible. One potential issue is n the case of customers requesting refunds, as they would have to contact the business directly. Although this does provide protection to businesses from customers dealing in bad faith. Cryptocurrency ensures both sides of transparency and unalterable records, incase of any disputes. 

Cheap and Secure Cloud Storage

Businesses and consumers spend billions of dollars each year on cloud storage, with centralized cloud storage providers granted unlimited access and control over their data. Blockchain provides access to safe and secure cloud storage at a reasonable price, and gives individuals control of their data. 

Gift Cards and Loyalty Programs 

Blockchain allows businesses to issue gift cards and administer loyalty programs without having to deal with middle men. Given the verification capabilities that blockchain provides, building a stronger relationship with your customer by having loyalty programs has never been cheaper or easier. 

Digital Identity Verification

Cyber attacks primarily target small businesses because they can't afford to maintain or place high-end cyber-security systems and personnel to protect their businesses' online presence. With blockchain, system security is taken care of and businesses can focus on their growth. Eventually all ID’s, passports, certificates will be on blockchain, to protect user data and assets. Digital signatures based on public key cryptography provides irrefutable authentication of identities. 

Connecting Small Business to Global Markets 

For businesses, the biggest priority is uninterrupted growth. However, given the trend towards globalization and the costs associated with it, many small businesses find it difficult to expand internationally. Since smart contracts automatically execute once certain conditions have been met, blockchain technology can ensure contracts made with international entities will be upheld, executed, and compensated as agreed. 

To Wrap it All Up

Blockchain technology can help small businesses save money, remove third-party costs, provide digital security solutions, and much more. As with every new technology there will be some trial and error involved, however, the benefits listed above are several ways blockchain can benefit your business.