As a business owner, why should you care about blockchain for small business, cryptocurrency, token offerings and all these new terms and tech that have been buzzing about? For those of you that haven’t heard these terms and aren’t familiar with the space, you should search “Blockchain” or read more of the articles dedicated to the topic in our new section of Financial Poise.
The short answer is the world is changing and you should be aware. Just like the internet, the cloud, and machine learning, distributed ledger—the technology of blockchain—has great the potential. Blockchain for small business can significantly change the way business owners execute each part of their business. It can also revolutionize how businesses and interact with stakeholders.
More specifically, business owners and professionals must first understand what blockchain is. They must also grasp the difference between blockchain and crypto-currencies like bitcoin, and tokenization. There are enough places on the internet to get a primer on those topics, but here it is in its simplest form.
Once you understand the difference, it almost becomes a requirement at that point to figure out how to benefit from the uses of bitcoin for small businesses. Banks and Wall Street are already finding numerous uses for the technology. They have banded together to create private inter-bank chains. Other platforms, like Ripple, were built for the banking industry and have seen significant adoption to date.
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Additionally, for those of us that deal with an international trade business, rather than using letters of credit or multi-bank escrow accounts, you can use Smart Contract functionality. The smart contract code was built by App developers on Ethereum. The code can create a transaction that requires no trust between the parties, but Smart Contract can still ensure the security of the transaction.
For example, if you run a small grocery store, you can use blockchain for small business to ensure that the food you are receiving is in fact from the correct place and time you are told without having to trust the sender.
If you run a small grocery store, you can use blockchain for small business to ensure that the food you are receiving is in fact from the correct place and time
This all works because no central authority owns or controls the underlying information. In our grocery store example, the ledger is shared between the farmer, the distributor, the wholesaler and the store owner. When a piece of information is hashed onto the chain, it must be verified and cannot be changed thereafter. This information can also be exposed to customers, who no longer would need to trust the store that this the produce is fresh. The customers can independently verify in a trustless manner that the produce is fresh.
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Additionally, all business owners have a series of accounts payable and receivable that generally crossover many times. With the future of distributed ledger, these businesses can all share a payment system. The payment system limits any single entity from changing the data, so that invoices can get cleared across businesses, updating the books automatically, and limiting the time to settle those invoices.
Take the following example:
Rather than everyone taking days to receive, clear, settle and reprocess those transactions, A can pay E 5 dollars and F 20 dollars. Everyone’s books would update to reflect the flow of funds that occurred to settle every invoice discussed. Again, this requires blockchain for small business because no trust is required for these systems to operate. It only requires a series of verifications from miners/users.
Blockchain for small business…only requires a series of verifications from miners/users.
The use cases and opportunity for blockchain technology are significant and will affect each part of almost every business. At the end of the day, you should care about blockchain for small business.
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