Whether you’re starting your first ecommerce business or giving your established brick and mortar store a much-needed upgrade, you know the way you collect, process, manage, and store information plays a major role in your success. You want data to be quick and easy to retrieve, but you also want to make sure your customers’ personal information, and your reputation, is secure. While it may not be the first thing you associate with a small business, blockchain could be what you need to take your data management to the next level.
The decentralized ledger system originally developed for cryptocurrencies has many applications for businesses of every shape and size. Lawyer Aaron Kelly on Startup Mindset notes more startups are retaining his services specifically to handle their blockchain needs. At the other end of the spectrum, Coindesk reports Apple recently filed a patent application for a blockchain program designed to certify timestamps.
One benefit of blockchain is speed. Raising capital for your business is time-consuming. Once you have spent months traveling, attending meetings, and trying to be in the right place at just the right time, the last thing you want to do is waste time exchanging emails and trying to finalize the details. Inc points out blockchain allows venture firms to transfer money just minutes after deciding to invest.
If your business frequently wires money internationally making payments via the blockchain can save time and money. Forbes reports a blockchain payment from Canada to Germany, which would otherwise have taken two to six days, took less than 30 seconds.
When things go wrong, speed is of the essence. If one of your products causes a foodborne illness, the sooner you can trace the product to the source, the easier it will be to issue the appropriate recall and take steps to prevent future outbreaks. In a pilot program, Walmart and IBM demonstrated they could use blockchain to trace a shipment of mangoes from farm to store in two seconds. Without this technology, the process could take weeks, and many more consumers could fall ill.
Once a transaction is on the blockchain, it can’t be removed or tampered with. Business News Daily states, “Blockchain offers what is essentially a permanent record of transactions, which creates an easy-to-follow paper trail for audits, both internal and governmental. It guarantees accuracies and solves the problem of pulling in records from a number of disparate sources.”
Blockchain doesn’t just protect information. If your business deals in unique, high-value items, it can help guard against theft. IBM describes how Everledger designed a blockchain for the diamond industry that creates a digital “thumbprint” for each individual diamond. If the stone is ever stolen or a fake put in its place, the thumbprint would prove or disprove its authenticity.
Smart contracts are one of blockchain’s most useful tools. By translating agreements between parties into code and distributing it throughout the blockchain, smart contracts ensure greater transparency and accountability. Entrepreneur points out the advantages for small businesses: “Ledger entries make these agreements irrefutable and universally enforceable…Many business processes that once required personnel, middlemen, expensive software licenses, subscriptions, and precious time, can easily replace these at little cost.”
The same article notes 40 percent of small businesses struggle with cash flow problems, which smart contracts help alleviate. If another business or customer agrees to pay you a certain amount on a certain date, the smart contract makes the transaction automatically, so you don’t have to deal with late payments or empty promises that the check is in the mail. Because your cash flow is more predictable, you can afford to set competitive prices and compete with bigger companies on a more level playing field.
Because they are less likely to require arbitration or legal representation, smart contracts are just one of many ways blockchain can cut out the middleman. Business.com points out blockchain gives you “a secure way of making transactions with consumers directly. This eliminates the need for third parties that usually serve as intermediaries, like financial institutions.”
If you’re a supplier who needs to transport goods or a carrier who needs goods to transport, you probably do business with a freight brokerage that acts as an intermediary and charges a sizable commission for the service. A company called Fr8 Network, however, is challenging the status quo. By using blockchain to make data publically available to the entire freight network, carriers and suppliers can communicate directly. For example, instead of hiring a broker to set you up with a carrier like some kind of blind date, you can view the carriers’ profiles, customer reviews, and other relevant data, then decide for yourself whom to hire.
While blockchain may save you money in a variety of ways, it might also generate a revenue stream of its own. If you currently store your data in the cloud, you rent the space from a service provider at a centralized location, which could be vulnerable to hacking. The Economist reveals a company called Storj is currently beta testing a decentralized blockchain cloud storage method that could increase available storage space exponentially. Users would have the option to rent out their extra storage, much like people rent out their guest rooms on Airbnb.
How will you harness the power of blockchain in your business? Share your thoughts in the comments.