Blockchain is a relatively new technology that has been making waves in the business world since the launch of Bitcoin in 2009. This technology has proved to be a masterstroke for businesses looking to share real-time data without bearing the full responsibility for data security. Gone are the days when revolutionary technologies like blockchain were reserved only for big companies. Today, even small businesses can maximise the benefits of this distributed ledger to streamline operations and enhance customer experiences.
So, let’s discuss several ways blockchain can make a difference in your small business and give you a competitive edge.
Auto-Executing Blockchain Smart Contracts
The global smart contracts market is growing, and small businesses should follow this trend to compete. According to a report by Fortune Business Insights, this market today is valued at $2.69 billion. The report says this could surpass the $12 billion mark by 2032, representing a CAGR (compound annual growth rate) of 23.9%.
That said, a blockchain smart contract is a computer-based agreement that automatically executes when two parties reach an agreement. Unlike traditional contracts that require manual intervention, smart contracts are automated, from drafting to execution. The involved parties don’t even need to hire expensive legal services to oversee agreement executions. These contracts can automate the payment processes and supply chains, reducing delays and human errors.
Increased Business Transparency and Trust
Trust is one of the key business growth components that small startups must never overlook. Potential customers and partners will only be willing to engage in business dealings that are transparent and secure. For a small business, even the slightest sense of lack of trust can be catastrophic. Note that established businesses already have a trusted brand that gives them an edge in the market.
Blockchain offers new businesses one of the easiest and most affordable solutions to build public trust. As you may already know, this technology is inherently immutable, creating a sense of trust and security. After a smart contract is executed, these agreements stay permanently on data blocks. This transparency can build investor confidence, opening the door for future business agreements. It also ensures that record auditing is more transparent.
Wider Market Accessibility
All business owners dream of expanding their operations to reach a broader demographic, including international markets. While this may seem easy with enough capital, there are several restrictions that a business might face. For example, payment regulatory restrictions may prevent your company from providing specific options like bank transfers.
However, choosing blockchain-based cryptocurrencies allows a business to process payments anywhere. Digital coins operate in a decentralised platform without any known central actor. This makes payments free of bank or government regulations. Today, top brands like Tesla and Microsoft accept Bitcoin payments. These coins are even more widespread in gaming, with most online casinos these days accepting dozens of cryptocurrencies.
Faster Payment Speeds
Customers and business partners want to partner with businesses that instantly process payments. Blockchain’s decentralised nature eliminates intermediaries and all manual transaction processes. In most cases, crypto payments are instant, within seconds or minutes. However, the payment times can vary depending on several factors, including network traffic.
Now, let’s take direct bank transfers as an example. A business that relies on this method can only process payments on business days. Banks also have specific business operating hours, which can deter customers from purchasing. Processing payments via physical cheques can be even slower, with some banks taking up to two weeks to process them. Let’s not forget that blockchain-based payments are available 24/7, allowing continuous business operations.
Lower Costs
Small businesses often struggle with various expenses, including operational, transactional, and compliance costs. So, how does blockchain come into the equation? By eliminating intermediaries, this technology can help an organisation facilitate P2P (peer-to-peer) transactions. This means businesses can make payments without paying transaction costs to banks and other financial institutions.
Another way that blockchain can help a startup company reduce costs is by streamlining supply chain management. This technology can significantly reduce fraudulent activities such as the theft of company products and the sale of counterfeit goods. Blockchain allows businesses to record payments and the movement of products in real-time. Partners and other stakeholders can then access this data on decentralised ledgers.
Below are more ways that blockchain can reduce business costs:
- Automating contract execution processes through smart contracts.
- Reducing data management costs by eliminating the need for central servers.
- Minimising fraud-related expenses by tracking all transactions on the immutable ledger.
- Simplifying compliance and auditing processes to reduce potential fines.
Conclusion
Blockchain’s unparalleled potential allows small businesses to streamline operations and enhance customer experiences. But despite its apparent advantages, it’s evident that blockchain has a few pitfalls to navigate. Lack of government regulation and minimal public awareness are excellent examples. Still, now is the time to incorporate this immutable technology into your business operations. The benefits are too good to ignore.
