4 ways blockchain technology can benefit small businesses

June 23, 2022

Ways blockchain technology can benefit small businesses

Blockchain technology is considered one of the biggest technological breakthroughs in recent history. What began as the primary framework that fuels cryptocurrencies have also found its footing in other areas of society, including retail businesses, healthcare units, and even the educational sector. Indeed, blockchain tech is making waves all over the world as the crypto industry flourishes.

However, the discussion surrounding blockchain has often been limited to financial groups or large multinational corporations. This then begs the question: Can the use of this revolutionary technology also extend to smaller businesses? After all, small and medium-sized enterprises comprise at least 90 percent of the world’s companies. In an increasingly competitive global market, can SMEs leverage blockchain technology to improve their operations?

Fortunately for SMEs, the answer is yes. Despite having existed for a little more than a decade, blockchain technology has evolved to a point where even small companies can use it and take advantage of its features. Currently, users can choose among several kinds of blockchain-related tools that can help them make the most of this exciting new piece of technology.

How blockchain technology can benefit small businesses

To elaborate further, here are some of the ways SMEs can use blockchain and all its related tools to help foster their development and growth.

Accept a new form of payment

More and more companies have begun accepting cryptocurrencies as a mode of payment. With the creation of dedicated digital wallets, it has become easier for customers and businesses to facilitate transactions as they would with cash. For example, somebody who wishes to transact completely anonymously can use a privacy coin like Monero and use their Monero wallet to purchase items.

Implementing blockchain technology for business allows the company to capitalize on this new form of payment and take advantage of its features. For one, it is a peer-to-peer system, which means that, like cash, two individuals can transact directly with no intermediary and additional fees involved. Moreover, this system is not limited by national borders, making international payments go faster and more smoothly.

Improve data management and security

Businesses, big and small, are responsible for a large amount of data, including product information, customer data, and employee info. While companies have a variety of software tools to keep track of these records, implementing blockchain technology can add another layer of organization and security to their business records.

Uploading data on the blockchain ensures that said information will remain secure and untampered from outside attacks. To elaborate, in a blockchain network, copies of the entire blockchain are stored on multiple computers. Not only does this ensure that there will be backups of information readily available, but it also makes it difficult for outside attacks to tamper with data because any alterations require all users to agree to it first. Moreover, while the changes will be noted down, the previous rendition remains on the blockchain.

Aside from cybersecurity, SMEs can leverage this function to track orders and monitor supply chains as well. Because updates are posted in real-time on a blockchain, business owners and managers can stay on top of incoming supplies and outgoing orders to ensure that operations are going smoothly.

Take advantage of smart contracts

Some blockchain networks have a feature called smart contracts. These are self-enforcing programs that run a command once conditions have been met. For example, Companies A and B agreed that Company A pays 50 percent first upfront for a shipment of goods and pays the rest after the shipment is received and checked. A smart contract enforces these terms automatically once terms are fulfilled, which cuts down the need for an intermediary between the two. 

Aside from ordering supplies, SMEs can leverage smart contracts in many ways, including payroll distribution, paying for commercial leases, and enforcing agreements with partner companies. As such, all parties reduce the need to negotiate, follow up on payments, and execute terms because everything has already been pre-programmed beforehand.

Build a credible company record

A well-detailed company record can help SMEs accomplish several things. Good credit history, for example, can help companies secure loans from banks for future company needs. A well-backed track record can also help secure new contracts with other companies and expand their businesses. With blockchain technology, companies can accrue an extensive list of past projects, partners, and finances, which they can use to back any future deals. 

After all, the blockchain is, in essence, a recordkeeping tool. With it, SMEs can create a detailed company history more efficiently because details are automatically uploaded to the distributed ledger. They also will not have to worry about losing these records because there are multiple copies on several other computers in the blockchain network.

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