Can Small Businesses Ride The Blockchain Wave?
By Megan Ritter
Don’t be mistaken by the blockchain benefits for your small business. The blockchain is an innovative way for small businesses to record a variety of ordered transactions, like the exchange of money or property without the middleman.
One common misconception about blockchain is that it is solely for cryptocurrency exchange. For instance, exchanging cryptocurrency like Bitcoins. This, however, is simply not all blockchain is useful for, especially when it comes to small businesses.
Let’s take a deeper look into how blockchain works, how small businesses can utilize it, and the benefits it can have for your bottom line.
What Exactly is the Blockchain?
Blockchain is a technology that applications can be built upon. It serves as a decentralized ledger that records, verifies, and enforces transactions between people, businesses, or a combination of the two.
Each transaction is a single block on a chain that is recorded, verified, and enforced using encryption. The long chain and its blocks are then secured over time as the chain grows. This is what sets blockchain apart from centralized ledgers financial institutions use.
Blockchain technology can be used to securely exchange property and money quickly, implement business contracts, speedily enforce those contracts, verify identities, and more.
Three Main Aspects of a Blockchain Transaction
When a transaction is being processed on the blockchain, three things happen to ensure a secure processing.
- The transaction is created: The transaction is first created by the blockchain and records it on individual decentralized ledgers. For instance, if a customer makes a $100 purchase, the amount and terms are recorded across multiple ledgers.
- The transaction is verified: After the new transaction is recorded, each individual ledger it was recorded on verifies that it is indeed a valid transaction. The information of the transaction must match a minimum of 51 percent across all ledgers.
- The transaction is enforced: Once verified, the blockchain can then enforce the transaction terms. For instance, if you purchase a service from a vendor, the terms of the agreement will be automatically enforced before money is exchanged.
How Can I Use Blockchain for My Small Business?
Presently small businesses use the blockchain to accept payments of cryptocurrency, like Bitcoins. However, the decentralized nature of blockchain can be utilized in a number of ways.
For instance, if your small business needs to verify someone’s identity you can use the blockchain. It is also very useful for contractual purposes with clients, vendors, or investors.
Three ways you can implement blockchain into your small business processes include:
Many small businesses are already using the blockchain to accept and send cryptocurrency. While cryptocurrency may be trending, you will also find it it to be a more efficient and effective form of payment processing.
There are numerous platforms where you can set up a blockchain account to accept cryptocurrency payments from customers. In fact, you may already be using blockchain technology without knowing it. It is simply a more cost-effective and secure way to process customer, client, and vendor transactions.
Blockchain transactions are commonly known as smart contracts. Smart contracts allow your …read more
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