Most of us are familiar, to some degree, with blockchain. Starting life in 2008, as a public transaction ledger, it has developed considerably since then. It’s now far more than ‘just’ a tool for cryptocurrency exchanges. Hailed for its ability to improve security, traceability and transparency, it’s being used in a plethora of ways. We see blockchain used in cloud storage, payment methods, business contracts and even supply chain management. These are just four of the most useful areas for blockchain for small business.
It’s like the latest playground craze. Everyone is jumping on the bandwagon and you’d be square not to be there. It’s billed for its enormous benefits, so why miss out?
Small Business and Blockchain
New technological advancements are often considerably harder for smaller businesses with steeper barriers to entry. However, blockchain doesn’t quite fit the usual pattern here. In fact, a broad range of smaller businesses are rapidly adopting blockchain simply because it offers excellent returns for minimal initial outlay.
Blockchain has its place in a broad range of small businesses from finance to healthcare, education to estate agency and more. These businesses all stand to benefit from improved transparency, traceability and security so it makes perfect sense that they would adopt blockchain.
How Blockchain Increases Transparency, Traceability and Security
It’s important to understand and emphasise the transparency and security issue. After all, it is precisely why blockchain is so sought after and desired. Small businesses covet this but they also need to understand why it happens.
With blockchain, we have an inherently decentralised process. There is no central holding system which controls or affects data. No single person, machine, business or entity can control the data. In fact, the data sits on various devices all across the globe. The result of this is that it is virtually impossible for this data to be manipulated, hacked or used nefariously. It cannot even be deleted. It acts as a permanent record.
This relies on the authentication process which forms the bedrock of blockchain and which is hugely advanced. This is why it is so praised for its heightened and impenetrable security. Centralised platforms, which we have been previously used to, simply can’t even begin to match blockchain for this.
Security is one element of why blockchain is so sought after. There is also the issue of transparency. This is hugely desired by supply chains who are seeking to gain visibility over their entire process. Blockchain, by its very nature, is a public open ledger. Every single transaction that occurs is recorded and documented publically.
So, how can this actually work within a small business framework? How can it be practically applied across different functions and needs? Let’s explore some of the different uses for blockchain in small businesses:
(1) Cloud storage
With the vast amount of data we are all now processing, cloud storage is essential for a broad range of business functions. Typically, small businesses relied on cloud storage solutions which were both expensive and fraught with security and transparency problems.
This style of cloud storage has, understandably, got a bad rap in recent years. Hacks have caused disruption on a huge scale and discredited previously reputable businesses. For example, we saw this with the Tesla hack whereby vehicles were actually hacked and could be controlled by the hacker. Although the hack was more about showing it was possible, rather than for nefarious purposes, it’s understandably worrying that cloud storage can be hacked in this way.
The result of hacks on cloud storage, like with Tesla, is that small business owners are now incredibly wary. They are seeking other ways which are both more secure and transparent when they are storing important data.
This void in the market is being filled by blockchain incorporated cloud storage systems which are both more secure, and more cost-effective.
(2) Smart contracts
Just like small businesses everywhere need cloud storage, the vast majority will need contracts from time to time with different suppliers, and other parties. At the moment, these are costly and involve the intervention of a third party, particularly of a legal nature.
‘Smart contracts’ are effectively self-executing contracts which eliminate the typical problems contracting causes small businesses. Costs are reduced and with it accountability and traceability.
(3) Payment solutions
Small businesses are somewhat hindered compared to their larger counterparts when it comes to handling payments. Their economies of scale limit their ability to demand what they need. Furthermore, they are vulnerable and less able to absorb, even temporarily, any security issues where payments are concerned.
Blockchain, which of course was originally designed with cryptocurrency at its core, provides a payment solution for small businesses. It offers a safer alternative to handling vast amounts of cash, which is often the case for small businesses. Instead, funds can be transferred securely and directly, in real time. Third party fees are also reduced.
(4) Supply chain management
One of the ongoing conundrums in supply chain management is simply how many different parties have a finger in the pie. Very few items are made by one single entity. Instead, different parties play their role contributing to a whole. This makes for a huge number of vulnerabilities.
Every time a component or item moves from one pair of hands to another, problems can occur. This has traditionally proved to be problematic because it’s then nearly impossible to trace the source of any issues.
Blockchain for Small Businesses
These four practices which are typically problematic areas for small businesses are just some of the ways that small businesses can typically benefit from blockchain technology and applications. What’s more is that not only are problems eased, but risks are reduced along with costs. That’s great news for small businesses.
At the moment, we’re typically seeing small businesses using blockchain applications in a piecemeal way which is directly easier. They can use public blockchains to effect what they need, whilst larger enterprises are hindered by needing to use permissioned private blockchains.
There’s no doubt that we are still in the early days of blockchain. It looks set to continue making business easier, more cost-effective and secure.