March
23, 2021
5 min read
Opinions expressed by Entrepreneur contributors are their own.
As small businesses seek efficiency and better ways of serving customers, blockchain can especially be useful for these companies as a way to conduct transactions and even raise capital. While many small businesses might think that such advanced technologies would only be accessible by companies large enough to afford expensive developers, the cost to incorporate blockchain technology into a small business operation is less than you think. Vendors have emerged to provide blockchain-based technology not only for Wall Street but for Main Street, too.
Blockchain technology is not just for online-only or digital-first businesses. Restaurants, gyms, nail salons, bakeries, collision centers and other small business categories that rely on a physical space can get started using the blockchain today.
Let’s have a look at a few of the benefits blockchain provides entrepreneurs who want to bring their business to the next level:
It’s a new form of payment
The first thing a business can do to adopt blockchain technology is to simply accept cryptocurrency as a method of payment. What signals more of a commitment to blockchain than allowing customers to pay with bitcoin or other cryptocurrencies?
The rollout will require a lot of planning and testing, as traditional merchant services are not set up to accept bitcoin. As such, a small business will need to evaluate and spend money on a digital wallet, a merchant gateway or a combination of services needed to accept the cryptocurrency from customers.
There are a few benefits for organizations when they accept blockchain currencies. As a gesture, customers can see this form of payment as a willingness to expand your services. Cryptocurrencies also allow businesses to directly deal with the customer, which reduces transaction costs. Another big advantage of the blockchain is that payments are permanent and irreversible, leaving the customer with no choice but to contact the business directly if they want a refund. This helps address the issue of chargebacks, in which customers purchase a product but then cancel the payment with the credit card company, leaving the business on the hook.
Related: 25 Payment Tools for Small Businesses, Freelancers and Startups
It provides safer and cheaper cloud storage
Businesses and personal users spend more than $20 billion every year on cloud storage. Blockchain storage applications allow users, including small businesses, to store data in a safe way and at a reasonable price, without compromising data security or overspending.
Related: Cloud Data Storage: Issues and Threats Every QA Tester should know about
Businesses can leverage smart contracts
Businesses can use blockchain for smart contracts, which are basically self-verifying, self-enforcing contracts. Stored within a blockchain ledger, the contract is recorded in a way that cannot be changed or manipulated. Smart contract examples include commercial leases, agreements with vendors or suppliers and even employee contracts. Smart contracts offer small businesses a level of protection it would otherwise never be able to afford. The middleman — usually an attorney — would not be needed in a smart contract, and as such, a business would have lower costs.
Global blockchain platform Ethereum was the first to introduce smart contracts to the cryptocommunity, and is considered one of the more advanced platforms for coding and processing of smart contracts.
Businesses can use it for capital raising
Blockchain technology provides business owners with an alternative method to raising capital through Initial Token Offerings (ITOs). As an alternative to the use of traditional banks, lenders, private equity firms and even crowdfunding sites, ITOs are tokens available for exchanges where they can trade freely. These tokens are comparable to equity or a revenue share in a typical company.
Interested investors can buy into the offering and receive new blockchain-based tokens from the company. This token may have some utility in using the product or service the company is offering, or it may just represent a stake in the company or project.
The growing loyalty of token investors has made ITOs much more popular over the years, and a viable capital-raising alternative for businesses of all sizes. These tokens can be purchased, traded and sold in marketplaces where a new realm of liquidity is made available to the general public.
The blockchain has ushered in a whole new way to build trust. Rather than being seen as a way for individuals to be secretive about their dealings, people are starting to see the value of blockchain technology and cryptocurrency in the areas of privacy and security. Customers who understand the benefits of blockchain are likely to seriously consider buying from a business that harnesses this technology, and small businesses can use this in their marketing strategy.
Whether it’s additional methods of payment or the knowledge that their data is stored in a ledger that cannot be modified without their consent, small businesses should consider incorporating elements of the blockchain into their business today. In doing so, entrepreneurs can bring their business to the next level of speed and security.
Related: 10 Entrepreneurs Who Are Showing Why Blockchain Is Here to Stay