How can blockchain be used by SMEs?
One of the fastest-growing technologies in the market, blockchain is providing endless solutions for businesses around the world. As noted by Business Wire, blockchain market’s growth exhibit a CAGR of 66.2 percent from 2019 to 2027.
It’s gradually becoming a major solution for governments, industries, and people. First introduced as the operating model for cryptocurrency, it’s an unbreakable chain of data that’s resistant to tampers and intervention— be it from humans or computers.
There are many ways companies can apply blockchain to their daily operations. Already, large corporations are using it to enhance data transparency while securing it from any possible threats.
As the technology moves beyond its experimental stage and sheds much of its early hype, SMEs too could adopt blockchain technology to benefit them in several ways.
# 1 | Creating unbreakable contracts with blockchain
Businesses deal with contracts on a daily basis. Be it merger contracts, vendor contracts or even payment terms, signing contracts means putting trust on a piece of paper.
Blockchain can fill up this part of business dealings by creating smart contracts. As the name suggests, smart contracts are self-executed, coded agreements that deliver guaranteed outcomes if the predetermined conditions are met. Generally, it’s like a paper contract where terms are laid out; with the difference now being that it is digitized and that it cannot be tampered with in any way because its in a blockchain.
Say, for example, a company decided to hire the services of a freelance designer to produce their ad creatives. The company could discuss and decide on the number of deliverables the designer should produce each month for a set price. Once both parties agree, a smart contract can be put in place to facilitate the agreement. It’s a risk-free way for businesses to manage and regulate relationships with their vendors and subcontractors.
Smart contracts, when applied to a bigger scale (like a merger or acquisition) may not need a lawyer to facilitate the agreement. As long as the conditions are met, value transfers can happen without fail.
# 2 | Safer data storage for an affordable price
While today’s preferred data storage method is in cloud computing, a lot of storage space on public cloud domains remain unused (especially prepaid ones). The fact that cloud servers are centralized at the service provider’s end makes people even more worried about the possibility of breaches and cyber-attacks.
With blockchain, users can store data in a safer digital space, for a reasonable price. Organizations can begin storing data mutually on each other’s computer by renting additional hard drive space— this relationship is managed on a blockchain by specialized providers.
The stored data is then encrypted and will only be accessible to those who have the crypto-key. Businesses using a blockchain-based, shared data storage system could be reassured that data is safe and secure, while those ‘renting’ storage space can enjoy an additional source of income for otherwise surplus resources.
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# 3 | Reduced complexity in supply chains
Many small businesses will find themselves on some rung within a complex supply chain. Shipping and logistics operations can be an admin-heavy, resource-swallowing process to organize and keep track of.
With each supply chain partner relying on one another’s organization, punctuality, and accuracy, if one part of the chain breaks as a result of error or delays, businesses can be affected and partner relationships damaged.
Blockchain can serve as a central repository for all documents, records, and data relating to shipping and logistics information, with each partner involved able to gain real-time visibility across the entire supply chain they are part of and adjust their operations accordingly.
What’s best for your business?
When it comes to leveraging new technology, it’s hard to say what would work for your business, and what would not.
The three benefits shared above are some of the most common ways blockchain works for both large corporations, and they can work small businesses alike as agreements and contracts increasingly go online, and greater amounts of sensitive data are amassed.
Of course, like any tech solution, blockchain solutions come with a cost, but the efficiency and security gained as a result— so long as partners can be on-boarded with ease— could make these emerging solutions a viable investment for smaller businesses.