Bitcoins, Ethereum and other cryptocurrencies are common in the news nowadays. Another trendy thing is the technology supporting those currencies called blockchain.
A brief explanation of the blockchain technology principles:
Blockchain is a decentralized ledger that records, verifies, and enforces any type of transactions.
When a transaction is made, a single block on a chain is created. These blocks are then secured as blocks representing transactions and added to the chain, which continues to grow. Transactions are verified by third parties, also called miners, who confirm they are valid. This method allows to cut out the middleman of centralized ledgers presently used today. (1-image)
4 Uses of Blockchain Technology for Small Businesses
Transaction with Digital Currencies
The first idea that comes in mind is the use of the cryptocurrency for money transfers and payment processing. With the blockchain technology, small businesses can send and receive payments using popular cryptocurrencies like Bitcoins and Ethereum. Those transactions are faster, more secured, without border and with low transaction fees. Backdraws are high volatility of market prices and an uncertain regulatory status surrounding the cryptocurrencies as modern money is usually created and controlled by central governments.
Create Smart Contracts
Smart contracts are another use of the blockchain technology. In any situation requiring a business contract, this technology can find an application: insurance policies, commercial real estate contracts, payment terms and financial contracts like startup business loans. (2)
Verify Digital Identity
While fraud (3) and data theft issues are a concern for small businesses, blockchain technology can help to verify and manage digital identity. Blockchain can develop unique digital signature using a public key cryptography that can replace the current identity verification processes involving password-based systems that collect data and then secure them on system that might not be that secured.
Secure Loyalty Programs and Gift Cards
The blockchain can become a powerful marketing tool for small businesses. It can help create loyalty programs and gift cards for customers with a high security level and with no middlemen. Customers who receive rewards are issued a digital gift card that can be traded on the ledger of the blockchain (4).
Although the blockchain technology is emerging, this is obviously the next big thing. The Internet is full of examples on how blockchain can be used for small businesses and this number will keep rising as new applications will be discovered. Entrepreneurs, stay alert and don’t miss the trend!
(1-image) Fedak V., (2018) “Blockchain Technology Explained to Your Grandma”, Towards Data Science
(2) Tarver E., (2017), “Blockchain Technology & What it Means for Small Businesses”, Fit Small Business
(3) BDO Canada (2018), “Business Fraud Trends in Canada: A Summary of 2017 Statistics”, Report
(4) CEO Blog Nation, “6 ways blockchain technology can impact your small business”, Rescue