How Your SME Can Benefit from Blockchain Technology
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Blockchain technology is more commonly talked about in relation to corporations. This includes everything from banks streamlining their transactions and the sale of products to manufacturers improving their supply chain and global tech companies utilising blockchain technologies for any number of applications.
What about SMEs though? Are there any benefits to investing in blockchain, and are there any applications or practical use examples that deliver a return on investment?
After all, blockchain is still in its early stages. Unlike corporations, SMEs can’t afford the cost and don’t have the resources to take a punt on something so new.
That said, we are now starting to see blockchain technologies, also known as distributed ledger technologies, that are both practical and cost-effective for SMEs and that deliver a return.
Why Should You Care About Blockchain?
As an SME, you get all the same benefits from blockchain that a corporation gets. This includes:
- The decentralised nature of the technology, which removes middlemen.
- Complete transparency.
- Immutable records that can’t be changed once they are created, improving the auditing process.
- Efficiency plus the enablement of fast transactions.
- Reducing costs when implemented properly.
- Using highly effective encryption technology so it can improve security.
How Can You Use Blockchain Technologies as an SME?
What about practical examples of how SMEs can implement distributed ledger technologies? Here are some that are possible uses.
- Transferring Money, Making Payments, and Receiving Payments
One of the first uses of blockchain technology is related to finance and the transfer of money. Businesses are increasingly utilising the opportunities this presents. Accepting payments in currencies like Bitcoin is the obvious example. You can also use tools and applications to pay suppliers or remote employees in a way that is faster, more secure, and lower cost than traditional methods.
This usually happens through public blockchains, which face some issues, like scalability. However, there are improvements taking place in this area. Plus, there are some solutions like Ripple, which are not public blockchains, but they benefit from very fast transaction speeds.
One major reason an SME might want to do this, is to facilitate payments from other countries and continents, where money transfers might be take a long time.
- Cloud Storage Based on Blockchain Technology
Cloud storage solutions built using blockchain technology are known as distributed cloud storage solutions.
A standard cloud storage provider rents out the storage space it has in a data centre. Distributed cloud storage, however, is essentially a peer-to-peer network. So a company or individual can rent out their unused hard-drive space, with blockchain technology ensuring its security.
For most SMEs, this means you have access to lower-cost cloud storage solutions as distributed cloud storage is much cheaper than mainstream cloud storage providers.
They also deliver excellent performance in relation to download and upload speeds. This is because the data is distributed so there are multiple downloads and uploads happening at the same time.
- Smart Contracts
With a smart contract, all parties involved in the contract set and agree on the conditions. There is full transparency throughout the process, with all entries to the ledger becoming available in real time.
In addition, the contract is highly secure, plus the blockchain technology ensures the conditions are met before the contract can move to the next stage (e.g., releasing payment). Furthermore, the terms and penalties that are agreed in the contract execute automatically, without the involvement of a middleman. There is also no need for multiple approval processes as approvals are automated. The result is a more transparent and efficient process that saves money, saves time, improves cashflow, minimises disputes, and more.
The first blockchain to use smart contracts was the Ethereum blockchain. Smart contracts are easier to develop that most people think, with tools like the Remix IDE being freely available. In some cases, you don’t even have to code. For example, the erc-721 standard, lets you create non-fungible tokens, which can be used to identify asset ownership. You could use this, for example, to store ownership of a work of art on the blockchain, or of some other asset your company possesses.
Blockchain for SMEs
The above are just three examples of how SMEs can use blockchain technologies today. The number of practical applications available—and the take-up of these applications—is set to increase. If you want to find out whether you would actually benefit from using blockchain make sure to check out the Blockchain Framework by the Tesseract Academy.