Blockchain is having its moment in the tech spotlight, and it isn’t just large enterprises that are jumping on the bandwagon.
Blockchain — the shared, distributed ledger that enables the recording of transactions and the tracking of assets across a business network — is turning heads across industries because of the innovative applications it is enabling. Its ability to greatly reduce friction and increase efficiencies in transactions has led to new models for funding local journalism, making healthcare data more secure and powering systems that help reduce carbon footprints.
With these types of “next big thing” applications hitting the market and making headlines, it’s no wonder small businesses have begun to ping their R&D departments to look into how it might be adopted. But what will separate the SMB success stories and failures when it comes to blockchain is their ability to understand it in the first place.
Blockchain is not a silver bullet. Instead of viewing the technology as a “shiny new toy” that must be integrated, small businesses need to first understand where it can be specifically applied to help them solve problems:
- Saving time with smoother transactions: Small businesses in particular know there can be a lot of friction in transactions. Especially when there are multiple parties involved, transactions can be complicated by the distance between parties, varying regulations or the cost to complete a given agreement. With blockchain, the shared ledger can create smart contracts that are standardized and centrally managed, cutting out the middlemen and driving down the time to complete a contract from days to minutes. While small businesses are unlikely to be the catalysts that initiate and assemble blockchain networks, the number of opportuinites to participate in existing, active blockchain networks in their industries or markets will likely be numerous.
- Driving down costs: A distributed ledger offers far more transparency into the transactions a company participates in. With an immutable and secure ledger underpinning the blockchain, savings can be reaped from less duplication of keeping data correct and up-to-date, less oversight is necessary as transactions on the ledger is policed by the network members, and intermediaries can be reduce because the members can exchange value directly with each other. Effective blockchain networks can reduce the number of people, processes, and paperwork necessary to do business and have a direct impact on the bottom line of a small business.
- Improved security and reduced: Most SMBs have had concerns about their data at some point. Another advantage of blockchain based-transactions is the heightened level of security for all parties involved. Transactions on the blockchain can be “trustless,” meaning that the amount of trust required from a single actor in the system is minimized. This can mean two people or entities can more confidently do business without worrying if the other party can hold up their end of the deal. For small businesses that rely on payments and contracts paying out, this is an especially intriguing benefit of blockchain.
Small businesses should understand blockchain is hardly a “end all, be all” solution to every challenge they might face. Instead, when leveraged correctly with their partners and customers, it can be a technology that unlocks time and cost savings as well as opens up a much more transparent view of their transactions. SMBs should keep a close eye on how their partners (and competitors) in the supply chain are using the technology, and proactively consider how they might adopt it themselves.
Kevin McMahon is the Director of Mobile & Emerging Technologies at SPR, where he is responsible for leading a team that brings an agile, pragmatic, and experienced approach to crafting enterprise solutions utilizing the latest technologies and techniques. He has a knack for solving problems, and has extensive experience building custom native iOS and Android mobile applications, Java and .NET based backend systems. By striving to understand the big picture all the way down to the little details, Kevin understands the problems his clients face and what it is that we need to do to make projects successful.