How are small businesses adopting blockchain technology?
Since its original inception in 2008 to serve as a public transaction ledger for Bitcoin, blockchain technology has come a long way, evolving into something that is useful beyond just cryptocurrency exchanges. Today, blockchain technology – which tremendously increases security and transparency – can be applied to everything from cloud storage to business contracts to payment methods to supply chain management. Individuals, businesses and large enterprises alike are jumping on board to take advantage of the innovative technology and its incredible benefits.
In fact, there is a particularly large uptick in blockchain adoption among small businesses looking to reap the benefits of the technology to help protect and advance their companies – all without breaking the bank. Blockchain has truly become a coveted technological tool for small businesses spanning every industry including finance, real estate, healthcare, education, medicine and more. Since blockchain technology allows for increased security and transparency, this uptick in adoption makes perfect sense. But, before we dive further into specific blockchain applications for small businesses, let’s take a quick look at how the blockchain actually allows for increased security and transparency:
The blockchain is inherently decentralized, meaning there is no central holding system – in other words, data is not controlled by any single entity. Instead, data is distributed to different computers around the world, making it nearly impossible for data to be manipulated or deleted through a cyber hack. The authentication process behind the blockchain is simply too advanced, leading to impressive security benefits that centralized platforms just cannot compete with.
Much like leading to increased security, blockchain technology also leads to more transparency. Since the blockchain serves as an open and public ledger, it is innately transparent, with every transaction publicly recorded and documented.
Now that we understand two of the major benefits of blockchain technology, let’s go on to explore its practical applications and how small businesses are using it to improve their business models. Specifically, blockchain technology can be applied to various verticals and services that many businesses need, from cloud storage to supply chain management. Let’s take a closer look at some examples of these practical uses:
1. Cloud storage
Cloud storage is necessary for practically all businesses to store data, and small business owners are increasingly turning away from traditional cloud storage solutions such as Amazon Web Services, Google Cloud Platform, and Oracle Cloud, as these platforms are typically extremely expensive and provide limited security and transparency. In fact, major cloud hacks have disrupted many credible companies that use centralized cloud platforms – the Tesla hack being a recent and problematic example of this. As a result, small business owners are skeptical of centralized cloud platforms and are searching for new and innovative ways to store their company data. In turn, a small number of blockchain-backed cloud storage solutions are stepping up to the plate, assuring small business owners of data security at a lower price than centralized options.
2. Smart contracts
Similar to cloud storage, practically all businesses need contracts at one time or another. Blockchain technology allows for “smart contracts” – or self-executing contracts – that permit the avoidance of third parties, like lawyers. This is especially appealing to small businesses because it significantly lowers costs while increasing traceability, accountability and security. Smart contracts continuously gain more and more popular among small business owners looking to alleviate the burdens of contracts.
Small businesses are often recipients of large amounts of cash, which can cause major problems – from banking concerns to an increased risk of theft. Blockchain-backed payment solution platforms offer cryptocurrency an alternative to cash through the option to transfer funds directly, securely and instantly with practically no fees and no intermediaries.
4. Supply chain management
Since most items are not made by one single entity, a blockchain-backed supply chain means that each transfer of hands is documented, from manufacture to sale. Aside from increased transparency and visibility, the benefits of a supply chain with blockchain include reduced fraud, improved inventory management, reduced delays and more.
Essentially, these practical blockchain applications – four major applications are listed above, but many more exist – can significantly help small businesses by increasing security and transparency across the board, while simultaneously decreasing financial costs and other risks. Even though many small businesses are currently turning to blockchain-based solutions, mass adoption among individual users and large enterprises may take longer. Specifically, large enterprises often opt to use permission private blockchains, but small businesses have the unique opportunity to skip this step and implement public blockchains that provide more transparency.
Blockchain technology will undoubtedly continue to grow as it has done since its inception in 2008, further facilitating and improving business operations for those who are ready to accept decentralization as the future of business and embrace this innovative technology. It is now a matter of when, not if, all businesses will make the move to the blockchain.