Blockchain Technology and its Impact on Small Business
As a small business owner, you may have heard of blockchain technology but you’re not really sure what it is or how it could change the way you do business. Blockchain is most commonly known as the technology that powers the virtual currency bitcoin. The majority of new blockchain applications will probably emerge in the fintech industry but it is capable of providing market applications across many different industries.
Basic Blockchain Technology
Blockchain is essentially a platform-like technology that other applications can be built on. It can be used as a decentralized ledger which records and verifies any transaction or contract between multiple parties. Blockchain documents each transaction as a single “block” on a long “chain” Using mathematical encryption techniques, each transaction is recorded and verified. This makes it nearly impossible to alter a transaction once it becomes part of the chain. As each consecutive transaction is added to the chain, previous transactions become even more difficult to alter, making blockchain transactions extremely secure. So what does this mean for small business?
Increase Transaction Security
While the encryption techniques implemented in blockchain technology provide transaction security, the fact that it is a decentralized or distributed ledger takes that security one step further. What this means is there is no middleman such as a bank or financial institution that controls a centralized ledger.
With blockchain, information is listed across a distributed network. This allows everyone in the network to validate the ledger’s accuracy with their own copy. Because there are multiple copies, blockchain technology can prevent anyone from tampering or manipulating the system. There is no central point of failure, increasing the ability to avoid malicious attacks.
Blockchain technology can also increase the speed and efficiency of doing business. By transferring funds directly between the involved parties and eliminating the use of banks and financial institutions, transaction fees are reduced and transfers are practically instantaneous. It also eliminates the need for transferring funds between various banks. If your business is strictly domestic, this may not be as important to you but it can be a big time saver and reduce expenses for those that do business internationally.
Simplify Gift Card Programs
Gift cards and loyalty programs are a great way to grow a small business. In fact, they are one of the best ways to establish strong customer relationships and compete against larger businesses. Blockchains verification capabilities can expand your digital payment options as well as issue gift cards and manage loyalty programs. Gyft is a perfect example. The digital gift card platform uses blockchain to make it easy for consumers to trade and redeem gift cards as well as combining them with reward points or coupons in a seamless single transaction.
Blockchain technology can also be used for non-monetary transactions. One of the ways this could benefit small businesses is with identity verification. For any business, it is important to build the best team possible. In the future, blockchain could make the hiring process easier and more successful.
According to the Australian Financial Review, The University of Melbourne is one of the first universities in the world to use blockchain technology as part of their credential process. The university uses a system called Blockcerts, developed by a US company, Leaning Machine, in partnership with MIT.
Rather than relying on an applicant’s resume and references to verify their skills and certifications, systems similar to Blockcert would make it possible for employers to review someone’s credentials quickly and easily. Because blockchain technology is so secure, it would be almost impossible to alter one’s credentials.
Keep Your Business on the Cutting Edge
Blockchain is relatively new and, as it evolves, will offer many advantages to small business owners. Of course, integrating new technology into your business can initially be costly. CFG Merchant Solutions can help you get the working capital you need to keep your business on the cutting edge and ready to compete. We offer a variety of alternative lending options. We will guide you in choosing the perfect solution for your individual business needs. Our team brings to the table more than 60 years of institutional investment banking experience in the credit, commercial finance, and capital markets.
CFG Merchant Solutions is a privately owned and operated specialty finance and alternative funding platform. We focus on providing capital access to small and mid-sized businesses (Merchants) in the U.S. that have historically been underserved by traditional financial institutions and may have experienced challenges obtaining timely financing. Contact us or apply online today!