All small companies have a thing in common, they’re seeking better ways to serve their public and increase their efficiency, and blockchain can prove extremely useful for them because it presents them with innovative ways to raise capital and complete transactions. While many entrepreneurs believe that access to advanced technology like blockchain is only for large companies that afford to invest in expensive tools, the cost to adopt blockchain technology is lower than they’d think. Blockchain developers have created solutions suitable for both Wall Street and Main Street.
Not only online-based companies but also digital-first companies can benefit from blockchain technology. Fitness centres, bakeries, restaurants, beauty centres, and other small business categories that run brick-and-mortar spaces can use blockchain technology. Using digital currencies as forms of accepted payment has spiked in popularity and demand lately. The current bitcoin price also encourages people to consider using crypto tokens as payment.
What is blockchain technology?
According to Forbes, blockchain technology is a distributed digital ledger that stores information about all activity in the ecosystem. As its name states, it works similarly to a chain consisting of data blocks. New blocks are created and added to the chain when new data is added to the network.
The main characteristics of blockchain technology
Blockchain technology has a series of unique characteristics that make it appealing to businesses of all sizes. Maybe its biggest benefit is that it cannot be altered. With each new block added to the chain, the ecosystem becomes more secure because each node verifies and confirms data accuracy before integrating it into the ledger. The principle behind blockchain technology promotes transparency and allows no corruption.
As mentioned earlier, blockchain is also a form of decentralized technology, so no single authority or individual can govern it, making it resistant to exploitation.
How can small businesses incorporate blockchain technology?
As mentioned before, adopting blockchain technology isn’t as challenging as one might think. Here is how small companies can utilize the blockchain.
Bitcoin and cryptocurrency payments
Small companies have to test and plan digital currency payment systems before fully integrating them into their operations to understand if they could benefit from them in the long run. The testing process implies getting a merchant gateway and digital wallet to accept and store cryptocurrency.
After setting up the new system, small companies can deal directly with the buyers, cutting down transaction costs. Cryptocurrency payments also allow them to prevent fraudulent chargebacks because they’re irreversible and permanent.
- Cloud storage
Cloud storage is paramount for businesses nowadays, but the costs associated with it can add to the organization’s budget. Cloud storage costs the average business around 1% of its revenue. Blockchain technology includes storage applications that allow companies to store their information securely at a more affordable price.
- Smart contracts
Smart contracts are programs created on the blockchain that run only when predetermined conditions are met. Blockchain users employ them to automate the execution of an agreement to certify the result. Companies can use smart contracts to run agreements with suppliers, vendors, employees, buyers, and commercial leases. Smart contracts offer them a higher level of security and protection and enable them to lower costs by removing the middleman from legally binding agreements.
- Capital raising
Blockchain technology offers small business owners an innovative method to raise capital through Initial Token Offerings. ITOs are an alternative to lenders, traditional banks, private equity firms, and crowdfunding platforms. They can be used for exchanges as users can trade them freely. Blockchain experts compare them to revenue or equity shares.
Those interested in investing in a small business buy into the offering and receive new blockchain-based coins from the firm. The coins could have some utility in using the service or product the business is offering or can represent a stake in the company.
The number of token investors has increased in the last few years, and ITOs have become more popular and accepted as a viable capital-raising alternative. The tokens obtained in the process can be bought, traded, and sold in marketplaces that offer the general public access to different forms of liquidity.
- Integrating blockchain and AI
AI is another form of technology that has found its way into the business world – and not just by offering robots and similar tools to tell users what to purchase. Artificial intelligence includes several kinds of technology, from neural networks to natural language processing and machine learning.
Blockchain and artificial intelligence can bring multiple benefits to small businesses if put together. For example, smart contracts that are an essential part of blockchain can perform more in-depth data analysis. When used like this, companies benefit from better automation of internal processes and tasks and improved execution.
In addition, a mix of artificial intelligence and blockchain could enable companies to reduce costs by automating internal procedures and processes while boosting security and auditing accuracy.
- Blockchain isn’t short-term technology
Even if blockchain provides the mentioned benefits, company owners must carefully consider when they integrate the technology. They can uncover blockchain’s true values when using it in areas where they cannot rely on conventional databases and instances where there is no central control. For example, if they deal with a lack of visibility or potential for corruption, they can employ blockchain as a solution.
As mentioned earlier, blockchain applications function best when paired with machine learning, artificial intelligence, or another form of decision-making layer. The technology is meant to bring some business transformation and disruption, even if it doesn’t revolutionize a business entirely.
The blockchain is a ledger of transactions with one-of-a-kind features that helps businesses address issues in their processes and systems.
Blockchain benefits are particularly alluring for small companies because it provides them with efficient and affordable avenues to receive and make payments, build a credit history, store information, and access investment. The companies that implement blockchain technology improve their operations’ transparency, modernize their accounting processes, eliminate human error, and complete traceable transactions that enable them to comply with regulations.