5 Blockchain Applications That Will Affect Small Businesses

Regardless of whether cryptocurrencies will eventually prove to be a sustainable form of alternative financing, one thing is certain: The technology behind will continue hitting the headlines and affect the way we do business. In the following blog post, we would like to draw attention to 5 different blockchain applications that might help small businesses.

First of all, let us recall what is actually meant by blockchain technology and briefly clarify the technological concept behind. As dumb as it sounds, the blockchain consists of blocks and chains. Blocks contain a certain set of information that are encrypted and linked to another in chains. It therefore stores information across the network of personal computers. From this perspective, it refers to some kind of digital register that records transactions between customers and suppliers. In doing so, the blockchain is considered to be decentralized end-to-end which means that there is intermediaries involved. Instead it guarantees security by introducing a peer-to-peer network that adheres to a certain protocol for validating new blocks. Eventually, no one could cheat the system because everyone using the system would take notice. The fundamental value is therefore based on the impossibility of fraud.

Even though blockchain started to become popular with the invention of bitcoin as a decentralised financial transaction model, its uses are endless and definitely go beyond the scope of financial transactions. Since it provides an open and decentralized database for every transaction involving value, it can save and store information sets and properties such as money, goods, property, work, votes, ideas any many more. You can think of it as wills and contracts that execute and enforce themselves much like a patent. Ultimately, it is a foundational technology with the potential to create new foundations for economic and social systems. Therefore, it can disrupt many ways of doing business and not least affects the everyday life of any business. In what follows, we would like to draw attention to 5 different blockchain applications that we expect to deliver great opportunities for small businesses.

However, if the broad concept of blockchain technology is still not clear or you simply seek more information as to the actual modes of operations, we recommend the following Ted Talk. This will not only unleash some degree of abstraction but also make a few remarks.

1) Payments & Transfers.

The first application we would like to point out is about being able to send and receive payments. The blockchain technology has paved the way for whole new payment solutions in that it provides new ways for consumers and business to do transactions. According to a recent study, 10-15% of all transactions will be based on blockchain by 2025. These blockchain transactions come with two features: Speed & transparency. Firstly, it does not involve any intermediaries such as banks and therefore, enables people to conduct transactions fast and direct. Transactions only need to be confirmed by the system and can be done in a matter of seconds which takes huge pain out of day to day transactions. Secondly, there is a high level of transparency which makes the system indelible and unforgeable. On the whole, it is expected to play an increasing role and is currently being tested by many banks. Don’t miss out on this one and be attentive as to new opportunities!

2) Smart Contracts.

Another blockchain application that is likely to play a huge role in the future are what is referred to as smart contracts. These describe all kinds of business contracts that are built in blockchains. Smart contracts will help businesses to exchange money, property, shares, or anything that involves certain value in an efficient manner and will not least, save you and your partners large chunks of transaction costs. However, not only do smart contracts define the rules and penalties around an agreement, but also automatically enforce the obligations of such agreement and are in fact, unbreakable. From this perspective, it can help small businesses to inexpensively streamline the terms of conditions and assert claims if necessary. Whether it be invoicing, paying bills, or handling your inventory, smart contracts can have a positive impact on your business and will save you time and cost. We really encourage you to keep informed. Smart contracts will make things much more easy.

3) Financing.

Obtaining a funding and raising capital is considered one of the most difficult tasks when launching a business since it usually takes a lot of time and effort to raise capital at reasonable terms. Here’s one possible solution: Initial Coin Offering (ICO) is considered to be a very lucrative way for companies to fund themselves through cryptocurrencies and basically is a crowdfunding campaign that uses smart contracts as contractual basis. All you have to do is create a native currency with coins or tokens and use an existing platform for cryptocurrencies such as Bitcoin or Ethereum. Due to the fact that there has been an annual return of more than 1000%, ICOs seem to be very attractive to investors. It sounds even more compelling when realizing that you do not have to sacrifice future revenues or give up equities just to get a chance of growth. Therefore, Initial Coin Offering encompasses a big opportunity for small businesses to obtain a lush funding on concessionary terms.

4) Privacy & Security.

In a previous post, we have stated that every second small business is estimated to experience a cyber attack within the next few years. We strongly encourage you to not underestimate the cyber threat since it might have severe consequences for your business. In the above paragraphs, we have stated that the blockchain technology is very hard to attack and that it is almost impossible cheat on its systems. Protected by cryptography and embedded in the chain sequence, blockchain technology has the possibility to secure sensitive and critical business data as well as personal information. This is especially important for companies that employ large amounts of data and need to defend these from potential attacks that might harm their business position. Small businesses that want more comprehensive protection can host their own services on decentralized architecture of the blockchain technology and fight the security threats in an efficient manner.

5) Cloud Storage.

Last but not least, there is another application that businesses might take advantage of. Considering that the world currently spends about $22 billion on cloud storing solutions, there is a huge disruptive potential regarding data storing services based on blockchain technology. Companies like Sia and Storj are now entering the market and are offering end-to-end cloud storage solutions that are based on blockchain technology. Eventually, these providers not only ensure unlimited storing possibilities at low cost but also high levels in terms of security. Instead of buying expensive server structure, you can simply host your own services by implementing a new server architecture or draw on third-party suppliers. Regardless of whether you are dealing with loads of sensitive data or you just need to record and file it, we strongly advise you to learn more about blockchain based cloud storing.

At the end of the day, blockchain is offering sophisticated solutions to ongoing problems and can help your business in a bunch of different ways. New applications will be launching and are potentially endless. And as we enter these new fields of applications, blockchain technology will possibly become even more accessible and useful. For this to happen, the biggest obstacle is getting businesses to build on blockchain and be part of the revolution. Stay tuned on our blog to learn more about the technology and its potential uses.