Decoding Blockchain: Applications for Small Businesses

Blockchain is the latest disruptor in the world of technology. Many are already calling it Internet 3.0 and Cloud 3.0. But despite its fame, a lot of people are still unaware of what blockchain really means. Although many can ignore this technological milestone, small businesses can really benefit from this and should know what blockchain is all about.

For small businesses, the rules are different from the big corporations and only those that adapt to the latest advancements survive. Small businesses, thus, need to employ smart solutions to increase efficiency and cut costs whenever possible.

Right now, blockchain is that solution.

So what is blockchain?

Blockchain is a digitized, decentralized, public ledger. It operates on a peer-to-peer network. In a P2P network, all computers in the network exchange data among themselves and don’t need a central server. Transactions are stored in blocks, which cannot be altered or deleted after creation. The time and terms of the transactions are publicly visible but people carrying out the transactions are anonymous.

Do I need Bitcoin in my business?

First of all, repeat after me — Bitcoin is not the same as blockchain. Bitcoin is a cryptocurrency which uses the blockchain technology for transactions. Blockchain has a wider scope than merely acting as make-belief money.

It is still in active development and explored, and a lot of proofs-of-concept are seeing fruition every day. Businesses that plan on utilizing blockchain must religiously learn and study the latest advancements. So, you may not be using Bitcoin but yes, get deeper into Blockchain.

Why do I need Blockchain in my business?

I know small businesses can’t afford to take risks by employing experimental solutions. However, blockchain has a lot of existing features that every business can take advantage of.

Here are a few examples.

Cryptocurrency

Well, using blockchain for its initially intended purpose could really profit you. Think about it! At present, all your financial transactions go through banks. By using cryptocurrency, you’re effectively cutting out the middle-man.

Then, say bye to ridiculously high transaction costs! Sure, you’ll still be paying a minor transaction fee to miners, but it‘s going to be the same whether domestic or international. (Miners, by the way, are those who confirm the transactions and add it to the block-chain).

A word of caution though — using cryptocurrency could turn out to be a really bad idea depending on where your business is located. Consult legal and financial professionals before using cryptocurrency.

But as long as your local laws don’t cause any trouble, it can save you a lot of money.

There is an added benefit of using cryptocurrency — we call it:

Smart Contracts

Smart contract is another concept that removes the need of any middle-man. A smart contract is a computer program that executes its terms automatically. In essence, it is an irreversible contract that doesn’t need a mediator, to be executed.

Assume you’re selling software online. The banks through which the payments are provided act as mediators. If some dispute occurs during payment, solving it becomes tedious. Smart contracts simplify that.

Your customer pays the amount through the blockchain, and the contract keeps it in escrow. If you deliver the license to your software, it releases the amount to you. If you fail to deliver, then the amount is returned to the customer. No mediator, no paperwork, no disputes. Elegant, right?

Supply Chain Management

But why stop with smart contracts? If the terms of a contract can be executed automatically, then why not other things too?

This is the kind of thinking that brought blockchain to the field of supply chain management. By making the entire manufacture and supply chain transparent, your business could increase its productivity exponentially.

Every stage of the process can be timestamped, and anyone in the network can check for bottlenecks. You can track the production and supply in real time.

The process could even be further automated by embedding sensors like RFID or NFC in the products, allowing them to automatically stamp the steps in the blockchain!

Notary

When you think about it, blockchain seems to be another form of notary. The very foundation of blockchain is its ability to validate information between two parties. All you need to do is generate a document’s imprint using a hash function and get it timestamped in a blockchain.

Timestamping proves that at the time of the transaction, you were in possession of the hash and by extension, the document.

As the hash can’t be used to recreate the document, the data in your document is safe from prying eyes. Also, as no two documents can create the same hash, there is no threat of false claims either.

There are a number of blockchain-based services like Stampd that act as digital notaries. These pre-existing services could save a lot of time and money for small businesses.

Identity Privacy

This is another application that is an extension of blockchain’s core principles — anonymity. By using blockchain, businesses can verify the identity of their customers without having to collect and store their data.

By using public-key cryptography, unique digital signatures can be created, managed, and verified in the blockchain.

This adds a layer of security and transparency to your business, cementing the trust people place in it.

Distributed Cloud Storage

Traditionally, cloud storage stores your data in a remote server. If that server were to be attacked, then you stand the risk of losing all your data. However, the start-up Storj aims to prevent this by using a peer-to-peer network.

The computers in the network share a part of their hard drive capacity to be used as cloud storage. Your data is shredded into small pieces and stored across multiple computers. And the secured blockchain ensures that only you can reassemble and access your data.

Since multiple computers are used, the system is faster, cheaper, and more secure than cloud storage. A great cost-cutting option for the small businesses. Hurray!

Is that all?

Nope. Not even close. For now, these are the safest solutions available for small businesses. But at the rate blockchain is being developed, you can expect much more applications to pop up in the near future.

As I mentioned earlier, businesses that plan on utilizing blockchain must religiously learn and study the latest advancements. So keep learning, keep innovating, and keep adapting!