Blockchain is commonly known for buying and selling of cryptocurrencies. Having said that, however, what might not be as common knowledge is that small businesses can really benefit from blockchain. This is because businesses can use blockchain to enjoy several really important features. Below we are providing you with an overview of how blockchain works and how it can provide your business with distinct advantages.
You can think of blockchain as a “digital leader” in which to store the records and sensitive data of your business. The technological makeup of blockchain consists of storage block structure to hold this data and a chain linking interested parties to the block.
Once the data is loaded onto the ledger, only authorised “keyholders” to the block are able to access the data. Therefore, forward-thinking small businesses owners should introduce the blockchain ideas to their stakeholders in order to help and build a secure ecosystem.
The ones participating in the chain can view the ledger – but it’s watertight and cannot be altered. Therefore, the small business owner could be the only one who is authorised to operate the ledger, making the security of the transaction of the business protected.
Besides the safety that comes with blockchain, there are also several advantages:
1. Saving Money and Improving Cashflow
The use of blockchain in a small business cuts down on many of the initial infrastructure costs associated with establishing a business. In turns, this releases cash for operational expenses instead of burying it in an expensive system that would be amortized over several years. This additional money for operational expenses can be crucial for small businesses living from day to day.
Secondly, using blockchain to share and hosts information with clients is also a cost-effective way to share information with stakeholders. Blockchain can hold inventory, insurance as well as payroll records which can be shared with all involved parties. As an example, smart contracts, which can be loaded onto the blockchain are very easy to authenticate, enforceable and simple to design and therefore eliminating the need for expensive software.
Thirdly, not having to file, verify or get tied up in unnecessary legal issues is not only time saved but also money on the bottom line. By eliminating the need for additional staff combined with reducing the requirement for supporting software and subscriptions is an added advantage.
2. The Secure Ecosystem
The importance of security in business cannot be overstated. The use of a public and private key system and cryptography eliminates the need to provide personal information during verification. It is a huge benefit for a small business to not have to divulge private information in the process of doing transaction.
Companies based on Blockchain already use Blockchain’s identity tools. Companies rely on Blockchain’s decentralised nature and security features to obtain better and more transparent identification tools.
Businesses using Blockchain provide a way for customers to identify themselves and gain access to certified documents and notaries, as well as a marketplace for customers to purchase services and products. Through its cryptographic systems, the security blockchain offers all conventional data protection mechanisms traditionally used in companies
3. Improving Funding Avenue for Small Businesses
Establishing a small and stable business relies on being sufficiently capitalised. Coupled with the current challenges of the economic climate, the high cost of market entry as well as the difficult challenge small businesses face. Additionally, smaller companies also face greater funding challenge and have to find a more creative way of financing the start-up and blockchain could be the answer.
Initial Coin Offerings (ICOs) is a recognised and useful fundraising method for start-ups who have innovative products or services to offer. By participating in the cryptocurrency and blockchain environment, investors may be stimulated to provide venture capital.
The principle is like an investment in stocks and is mostly returns based. For a small business with a good business plan and an innovative idea, blockchain is an ideal way of getting investors to help raise the necessary capital needed to adequately fund the business. As the business grows, so does the value of the investment units, so it is a mutually beneficial arrangement for investors and small business owners alike.
By using blockchain in your small business, you can increase your competitive advantage by establishing a business service more rapidly and at a lower amount of costs. With the advantage of not having to worry about high costs or a breach of security, small businesses have time to spend on growing the business rather than always protecting it.
Contact us now to find out more about blockchain and how to effectively set up your IT infrastructure.