The blockchain: you have certainly heard about it. For experts, the blockchain has become something familiar. For novices, this remains a subject that may seem difficult to grasp. In simple terms, the blockchain is a decentralized technology that makes it possible to store and distribute information securely and inexpensively. Mostly known as a technology behind the heart of Bitcoin, a virtual currency that has taken tech-savvy merchants by storm, the blockchain is a technology with endless possibilities. The main advantages of the blockchain include transparency, security, elimination of intermediaries, and saving time. Though it is still in its infancy, many startups have started to explore how this technology can change the way businesses run. Here are blockchain applications ideas that could help your small business.
Payment and money transfers
We start with the possibilities of blockchain in the financial sector. The blockchain is a heavily encrypted database, split across thousands of servers, where each entry is verified and encrypted. The technology now has many more advancements that are seeing it penetrates the payment scene and potentially make it a much more accepted payment technology.
The encryption ensures that the data is secure yet transparent. The point behind this is to use blockchain to handle payments locally and internationally, without a middleman like a bank, hence reducing transaction costs. Removing the expense of intermediaries also eliminates delays which mean financial transactions can be executed directly amongst network participants.
Smart Contracts
The idea of smart contracts was proposed in 1995 by a well-known cryptographer named Nick Szabo. This contract would be automatically activated if certain conditions were met. The idea may possibly remove the need for trusted third parties or intermediaries like banks or payment gateways. In simple terms, a “smart contract” is a computer protocol, written in a fairly simple language that automatically executes a transaction on the blockchain – responding to preprogrammed functions. It is a program that runs autonomously and automatically, which triggers when certain pre-defined conditions are met. The transactions that occur in a smart contract are processed by a distributed public ledger, which means that they can be sent automatically without an intermediary. The transactions only occur if the conditions in the agreement are met.
Smart contracts are made possible by the Ethereum platform. Ethereum originated because Vitalik Buterin saw the unused potential of Bitcoin. The blockchain of Bitcoin is primarily aimed at registering transactions. Buterin described in his whitepaper the idea to develop a blockchain with a built-in programming language, with which its users could build completely decentralized applications. This system was realized in 2015. These applications are baptized smart contracts.
Decentralized Cloud Storage
Cloud storage is necessary for all types of businesses to store data. And small businesses owners are increasingly ditching traditional cloud storage solutions like Oracle Cloud, Google Cloud Platform and Amazon Web Services, due to their low transparency, high cost, and limited security. Major cloud hacks have disrupted many reputable companies like Tesla. Thus, small businesses owners are skeptical of centralized cloud platforms. The good news is that distributed cloud storage solutions based on blockchain are assuring business owners of transparency and data security. Distributed cloud storage is also cheaper than centralized cloud storage solutions.
Supply chain management
Supply chain management is the broad range of activities required to plan, control and execute the flow of a product – from acquiring raw materials, production, distribution to the final customer. In other words, supply chain management is the active management of supply chain activities to maximize customer value and achieve sustainable competitive advantages.
Supply Chain Management has become a necessity especially when it comes to delivering goods at a low cost. The issue with this system is that if one chain of suppliers fails or is compromised it is the final branding that suffers. Fortunately, blockchain is exploring new ways of the overall game. It can be applied in record keeping and tracking of products. It is a better-automated alternative and less corruptible than centralized databases.
Customer loyalty programs
Loyalty programs give reward points to consumers for making purchases and can be beneficial for businesses and customers alike. These programs are considered one of the most effective means for businesses to attract new customers, increase purchase frequency, retention, referrals and lifetime customer value. These days, platforms, where blockchain-based loyalty programs can be built upon, are numerous. Even so, commercial development using the technology is still in progress. The main benefits of using blockchain-based loyalty programs are speed and cost-efficiency. They are seen as a way to increase the transparency of transactions and to reduce management costs.
Final Thoughts
It is not an overstatement to say blockchain is set to change small businesses as we know it. The blockchain is a huge deal at the moment. That means a countless number of incompetent developers are launching applications to try and ride the wave. You may, therefore, want to proceed with caution.
