Have you ever heard of the term “blockchain?” Experts predict that it will have a major impact on the global economy; indeed, some say it’s the biggest technological breakthrough since the internet. Everyone both in the financial and non-financial industries is buzzing about it. So what exactly is blockchain?
What is blockchain?
According to the Harvard Business Review, “With blockchain technology, the core system that underpins bitcoin, computers of separately owned entities follow a cryptographic protocol to constantly validate updates to a commonly shared ledger. A fundamental advantage of this distributed system, where no single company has control, is that it resolves problems of disclosure and accountability between individuals and institutions whose interests aren’t necessarily aligned. Mutually important data can be updated in real time, removing the need for laborious, error-prone reconciliation with each other’s internal records. It gives each member of the network far greater and timelier visibility of the total activity.”
Often equated to digital spreadsheets that can be shared amongst many, blockchain technology can provide several benefits for small businesses. We have enumerated them below.
Improve security of transactions
For small businesses, the beauty of blockchain technology is that it is a distributed ledger – that is, there is no middleman or company who owns the data set. Instead, information is listed across a distributed network, whereby everyone in the network can validate the accuracy of the central ledger using their own copy. Users are in complete control of all their information and transactions and there is no central point of failure, therefore it makes it easier for you to avoid malicious attacks.
According to Nasdaq, “Even if a hacker is able to penetrate one network and attempts to steal funds, there are multiple redundant copies of the same ledger stored around the world. If one is tampered with, the others could be used as a backup to prove what funds actually belong in each account.” Forbes says blockchain is a technology which “offers a built-in mechanism for trust” for small businesses. In other words, blockchain keeps your business transactions secure.
Streamline businesses processes
Another benefit blockchain provides small businesses is that it can help streamline business processes. The process of clearing and settling a bank transaction can take days, but with blockchain technology, since the middleman is absent from the equation, transactions are able to move more quickly. This enables more transactions more quickly, allowing you to access your money more rapidly.
Smart contracts, for instance, are a type of blockchain technology that controls the transfer of digital currencies. According to Blockgeeks, they help you in several ways. “[You] exchange money, property, shares, or anything of value in a transparent, conflict-free way, while avoiding the services of a middleman…You’d ordinarily have to spend chunks of time and paperwork to manually process documents. Smart contracts use software code to automate tasks, thereby shaving hours off a range of business processes.”
Ultimately this means that you are not only able to make your organization more efficient, but also cut costs in the long run.
The benefits that blockchain technology can provide for small businesses are quite impressive. It can help you and your small business improve the security of your digital transactions, optimize operations and cut costs. If you are a small business, it’s certainly a technology worth investigating, particularly if security is a priority. If you’d like to learn more about blockchain, check out this Blockchain Technology whitepaper from UC Berkeley.
Commercient can help you optimize your business processes, as well. Contact us today to find out how,