The terms “trust” and “cyber technology” are not often used in the same sentence. The past year has seen an onslaught of cyber hacks, forcing everyone to question security on the web. Luckily, the growing Blockchain movement has the potential to reverse this course of distrust.
Blockchain has been gaining awareness thanks to the support of major technology and financial institutions, but there is still a great deal of misunderstanding swirling around the term. Blockchain is an open, distributed ledger that seamlessly records transactions between two parties, thus increasing trust in the transfer of assets. Blockchain technology, most notably recognized for powering Bitcoin, is on the verge of becoming one of 2017’s most transformational transactional applications.
Why does Blockchain matter?
The Internet comprises the foundation of our existence; almost every aspect of today’s culture runs on the web and relies on its ability to store information and transactions. Since the Internet’s inception, the way that information has been stored and retrieved has been largely untouched–until Blockchain came along. As the Harvard Business Review recently expounded, the goal of Blockchain is to decentralize data, thus creating a shared, globally accessible network; this decentralization of data has the power to revolutionize the world.
Early conceptions of the Internet imagined a virtual structure free of hierarchy. That promise has been half-delivered; while it’s true that the Internet is widely accessible (given that those attempting to access it live in an environment with infrastructure built for the Internet) technology corporations and governments have largely been in control. An open system is especially intriguing for burgeoning entrepreneurs and small business owners because it solves many of the problems plaguing small businesses today: payment scams, transactional disputes, and data storage. Blockchain provides business owners with the opportunity to enhance internal operations and external customer satisfaction.
Lower transactional fees
One of the most anticipated effects of Blockchain is lower transactional fees. The implementation of Blockchain technology will help small businesses compete with large corporations, because Blockchain technology offers the potential to drastically reduce transactional costs, thus leveling the playing field.
For small business owners Blockchain holds the key to a reduction in operational costs. For example, through utilizing Blockchain, small product sellers no longer have to rely on major marketplace providers like Amazon and Ebay to connect and facilitate transactions with buyers. Blockchain enables them to facilitate 1:1 payments which, essentially opens up their potential customer pool. Businesses today can start accepting Blockchain payments through a cryptocurrency system like Bitcoin.
Increased contract transparency
Many entrepreneurs today are building business ventures with the help of a number of contractors and product providers. To get a product from inception into the hands of the public requires many different chains and players, which is often difficult to manage. Blockchain can help business owners protect themselves if something goes awry in the chain of command. Blockchain enables the creator and storage of permanent, yet auditable digital records. All responsibilities are clearly stated and open on the Blockchain ledger, which keeps all parties accountable and can save business owners time, energy and potential costs of any disputes that might occur during the product process.
Faster transaction speed
We live in an age of immediacy; customers and providers alike want transactions to occur as quickly and seamlessly as possible. Blockchain takes the middle man out of the equation, thus speeding everything up without sacrificing transparency or accuracy. How does Blockchain achieve this? Well, as an open network, every separate entity can both add and verify transactions added to the Blockchain. Blockchain is more immediate than other systems because it’s decentralized. This means that transactions get added and verified more quickly. In other systems where there is a central authority, transactions tend to take longer because that one entity must provide approval. Blockchain is more immediate than other systems because it’s decentralized. This means that transactions get added and verified more quickly. In other systems where there is a central authority, transactions tend to take longer because that one entity must provide approval.
Let’s say you run a small rental business. Traditionally, your customers would pay for your services via check or credit card, which would then have to be verified by your bank. Processing the fees could take several days which is frustrating not only for you, but also for your customers. However, if your transactions are facilitated through a Blockchain ledger, you’re essentially removing the middleman (central bank) from the equation and able to record, verify and process the transactions immediately – which is a win-win for everyone involved.
The future of Blockchain is bright, and it’s in your best interest to not only educate yourself on the possibilities of a Blockchain-run future, but also on the ways in which you can start incorporating Blockchain technology to advance your business operations today.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.