There are many benefits for small businesses if they invest in blockchain technology. If a business works with data or if they manage convoluted transactions, they will find adopting the technology highly beneficial.
There are many disadvantages that small business ventures face in the current climate. They face high barriers due to larger companies taking business, and with the current regulatory environment being built for these larger companies, it makes it more difficult for small and medium enterprises (SMEs) to build and grow.
However, blockchain technology has proven to aid small businesses in growth and popularity. In this article, we will go through four of the main reasons why small businesses should invest in blockchain.
1) Payments
One of the largest applications of blockchain is in payments and transactions, and this can bring a number of benefits to businesses. By using the technology, small businesses are able to transfer funds securely and directly to anyone in the world without complications or expensive fees.
Because of the way data is stored within a blockchain, there is no need for a central organisation to be involved. This makes it easier to transfer data and money while reducing the risk of fraud. The benefits of blockchain are such that it has been predicted that “10% of GDP will be stored in blockchain technology by 2025”, according to the World Economic Forum.
Blockchain can also reduce transaction costs. Because blockchain technology makes transactions so much quicker, it renders third parties and their charges unnecessary. This means businesses involved in multi-nation transactions will benefit. This will also have a major impact on the institutional and political implications for unbanked populations.
2) Digital identity
Maintaining strong security will always be a massive concern for all businesses. This is due to the large amount of fraud happening in the world.
A defining feature of blockchain technology is the immutability of the data it contains. Once that data is recorded and validated by the whole network, it can no longer be changed. The underlying implication of the immutability of records kept on a blockchain is that those records are trustworthy on their own. No central bank or regulatory agency needs to stand by them. Unlike people, data can be trusted.
The technology also has identity applications in areas such as IDs, e-residencies, and passports. Blockchain is allowing companies to check and validate an individual’s identity by looking at the records stored on the blockchain. This validation will stop hackers from trying to use different identities to carry out their crimes.
3) Improved cash flow
Blockchain technology allows companies to utilise smart contracts. Smart contracts are contracts containing legal agreements about the blockchain. As with any contract, smart contracts outline the terms of an agreement between two or more parties. They also enforce those terms with cryptographic codes built into them.
Smart contracts allow businesses to bypass certain regulations and lower the costs of financial transactions. Smart contracts not only help to lower costs, they also have the ability to make immediate payment invoices straight after a transaction is completed.
This fast process takes away the several layers of authorisation needed when traditional invoices are issued. All involved are able to see what is required of them and sign work off as it is happening, helping to speed up the invoice process.
4) Customer loyalty
By using blockchain technology, businesses can tap into its secure digital verification capabilities and streamline their loyalty programmes. Loyalty programmes are a great way of bringing customers back to businesses and making them want to stay.
With loyalty programmes being difficult to set up, businesses can struggle to attract new customers. However, blockchain is changing this by making loyalty programmes present and available at the start of a customer’s journey instead of at the end. This helps to drive customers to check their loyalty programmes more frequently as the reward options can be varied.
Businesses can then allow customers to interact through smart contracts using social media. This often time-consuming process can now be made much faster, saving hours of admin time and personnel costs.
Final thoughts
Blockchain is going to disrupt and change the world in many ways. The technology aims to revolutionise the business sector, and small businesses are going to need to get behind the technology if they want to stay ahead of the game.
For guides on cryptocurrencies, exchanges, and blockchain technology, click here. Make sure you take a look at all the latest crypto and blockchain news.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.