When you think of blockchain technology, chances are it's in connection with cryptocurrencies. But that's only scratching the surface of what it can do.Here's a brief look at how blockchain technology works and how you can use it to give your small business an edge.
Blockchain technology — or, more simply, the blockchain — is a database of independently-verified information. Think of the blockchain as an incredibly large spreadsheet. There are copies of it on thousands of computers, called nodes. And these nodes connect to each other, forming a chain.When you make a new entry, every copy on the chain gets updated. Every entry has a time-stamp too, so tampering after the fact is almost impossible. The blockchain is also cryptographically secured, which makes hacking extremely difficult.
Step 1: The information enters the blockchain. The data could be the details of a financial transaction. Or something else altogether, such as the details of a contract.
Step 2: The information, together with a unique, encrypted digital signature, goes through the network of nodes in the blockchain for verification.
Step 3: Each node carries out a series of complex mathematical calculations to validate transactions based and achieve the distributed consensus. This algorithm is known as proof of work, or proof of stake.
Step 4: If a majority of nodes agree that the information is correct, it gets verified. The validation leaves a permanent record on the blockchain.
Blockchain technology has many advantages. These include:
While we usually associate blockchain technology with cryptocurrencies, you can use it with any type of digital data. The possibilities are endless.Here are just four ways you could use blockchain technology to help your small business run more smoothly:
Blockchain-based apps like SmartContract or BlockCat can monitor, execute and enforce legal agreements. Let's say you're a writer. You agree to deliver an article on the 28th of the month. A smart contract app can check whether you've delivered the work. Once it confirms delivery, you immediately receive your fee — no need to chase for payment.
Is your small business involved in shipping or logistics? Use a blockchain app like Modum to keep track of deliveries in real time. Without getting bogged down in paperwork.
Blockchain-based cloud storage apps like Sia and Stori allow users to rent out hard-drive space from each other. At the same time, the platform keeps everything encrypted and allows access to the data only if you have a special key.
And not just in cryptocurrencies like Bitcoin and Etherium. Blockchain-based apps such as CoinPip can handle international payments, including payroll, in several different currencies almost instantly. And because there's no need for financial intermediaries, fees are a fraction of what you'd pay a traditional bank.
So you're sold on the benefits of blockchain technology. But how do you start using it in your small business?Well, here are a few tips:
Choose wisely. The blockchain is a huge deal right now. Which means hundreds of developers are launching apps to try and ride the wave, even though they might not be mature enough as yet. We suggest proceeding with caution. Look up reviews online and, wherever possible, take the app out for a spin before you commit