— September 25, 2018
Blockchain, the technology created to support Bitcoin transactions is becoming more exciting than the currency itself. The global spending on blockchain-based projects is expected to reach $ 2.1 billion by the end of 2018 with the US to deliver more than 40% of the worldwide spending.
While it’s too early to state that blockchain technology use is widespread, it is certainly growing and even entering the realm of small businesses. In fact, blockchain can easily become SMEs’ not-so-secret weapon to overcoming the sumo-sized competitors. Increased transaction and data transparency; top-notch security and tamper-proof contract management are just among the few advantages enabled by this technology.
1. Smart Contracts Eliminate Complexities in Enforcing All Clauses
If you are not familiar with the concept, a smart contract is basically a self-verifying, self-enforcing contract. Think of a computer program and contract combined. These are stored within a blockchain ledger.
Image Source: Blockgeeks
With traditional contracts, there is often a third party who must create the contract, ensure that everyone involved abides by it, and determine which actions are allowed or not. Smart contracts automate all those processes.
Here’s a simple example: imagine that you operate a coffee shop. You might have business relationships with some supply firms, local coffee roasters, and with consumers if you lease your space for events and catering. Within those relationships are a lot of agreements. Smart contracts simplify all of this. For example, you can create a smart contract that allows you to pay your coffee roaster a premium if they are able to source a rare varietal of coffee beans just for your business.
With a traditional contract, you would need to prove you had funding, probably with documentation from the bank or your investors, and lawyers would need to scrutinize everything. With a smart contract, everything would be automated. The project funding would be tracked, and when you reached the dollar amount required could be sent to you automatically. This video further explains the concept using the example of crowd-funding, but the possibilities are quite broad.
2. Supply Chain Management Can Be Simplified Allowing Small Businesses to Remain Competitive
Current supply chain management systems tend to employ EDI, paper contracts, or a combination of both. Even in relatively simple industries, this is a setup that is complex and error prone. These errors can result in needed supplies being held in ports, on warehouse floors, or lost in transit.
Now, many companies are exploring the possibility that blockchain ledgers to gain more visibility into the supply chain and optimize the common roadblocks. One startup, Provenance, leverages blockchain to store and exchange data about the origins and histories of different products. The company’s end-to-end traceability protocol allows businesses to show customers where their product has come from, who it was sources, handled and distributed. For small businesses such transparency can become a huge advantage in terms of winning over consumers’ trust and backing up their ethical practices and commitment by hard data.
Another, highly successful use case so far is the use of IoT gadgets, paired with blockchain, for improved supply chain traceability. This way businesses can monitor the conditions of transportation, and automatically contacts insurance companies and those impacted if something goes wrong. By incorporating blockchain into the process, paying out claims and refunds is simplified.
3. Crypto Payments Can Reduce Bank Fees
Do you accept Bitcoin? What about Ethereum? If you’ve not already fielded questions like this, it might only be a matter of time. In 2017, use of cryptocurrency in retail increased by just a bit more than 30%. And more businesses are expected to jump on the bandwagon as crypto payments come with a number of advantages:
- Pay less for payment processing. Credit card processing fees are progressive and can add up quickly, whereas cryptocurrency payments assume paying a low flat rate fee.
- Potential fraud and chargebacks are reduced.
- No currency conversion fees and unfavourable FX rates.
And incorporating crypto as a payment method has now become relatively easy. Ibinex, for example, offers a ready-to-use white label solution for businesses, already compatible with current industry regulations.
4.Gain Valuable Insights With Direct Data Commerce
Small business owners often rely on data for valuable insights. This information is often purchased from major vendors like Amazon and Facebook, and they are typically seen as the monopolists in the space. Blockchain can be used to disrupt this.
Rather than paying the cost of information that is established by big name vendors, small business owners can purchase blockchain-verified data sets. Because an immutable ledger will be attached to each set of data, any changes made to that data will be transparent. In addition to this, the source of the data will be clear. This will make it safer for small business owners to obtain data from boutique sources without fear of obtaining information that has been corrupted or manipulated.
Andrew Ma points out that blockchain can enable small business to purchase very specific data directly from other business that possess it. For example, a digital marketing agency who plans to target female consumers aged 60 and above, residing in the NYC metropolitan area, would be able to send direct queries and purchase that information from companies who store such data, bypassing the “middleman” companies.
5. Notary Services for Digital Products
To be clear, blockchain based notarization is a bit of a misnomer. The process bears little resemblance at all to having documents stamped and authorized by a notary public. Still, there is one similarity. The purpose is to create trust by providing proof that something is valid. Stampd.io, for example, offers verification of information that is stored wholly online. This includes certifying website content, time stamping data, certifying ownership keys, and more options for protecting your digital products and content.
This won’t eliminate the need for human notary public entirely. These blockchain based services will provide similar verification and certification that standard notary services simply don’t address.
Blockchain technology is no longer bleeding edge. It may be just what you need to ensure that your business remains competitive, and that your back office tasks run smoothly and securely