광고 Small and medium-sized enterprises account for around 90% of all businesses and 50% of all the jobs over the world. In emerging economies, up to 40% of the national income is contributed by formal SMEs and they create 7 out of 10 jobs. SMEs play a crucial role in economic growth, with the World Bank estimating that 600 million jobs are required by 2030 to provide employment to the increasing global workforce.
One of the biggest hurdles for small and medium businesses in the informal economy is that they don’t have enough access to finance, as identified by the Enterprise Survey by the World Bank. This can have an adverse impact on their growth and operations. In developing economies, the demand for SME finance is $8.9 trillion, whereas the credit supply is $3.7 trillion currently. (Source: ifc.org)
Such a financing gap, along with the negative impact of skills shortages and automation, indicates a dark reality for many small and medium businesses. However, blockchain technology can help SMEs adapt to these challenges and drive business growth imbx.
This post outlines some invaluable benefits blockchain brings to the table for small businesses.
To use blockchain technology, the first step businesses need to take is accepting cryptocurrency as a payment method. This change will require lots of testing and planning, since traditional merchant services are not yet prepared to accept bitcoin. Small businesses would need to evaluate and invest on a merchant gateway, a digital wallet, or a combination of services required for accepting cryptocurrency from customers.
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Accepting blockchain currencies brings several benefits for organizations. Customers see businesses using this form of payment as their willingness to expand their services.
With cryptocurrencies, businesses also have the ability to deal with customers directly, which lowers transaction costs. Blockchain’s another major advantage is that payments are irreversible and permanent. So, if a customer wants a refund, they will need to contact the business directly. This addresses the problem of chargebacks, where customers buy an item but cancel payment with the credit card company, which leaves the business on the hook.
Personal users and businesses spend over $20 billion per year on cloud storage. With blockchain storage applications, users, including small businesses, can store data safely and at reasonable prices, without compromising overspending or data security.
Businesses can employ blockchain technology for smart contracts that are self-verifying and self-enforcing contracts. The contract is stored in a blockchain ledger and is recorded such that it can’t be manipulated or changed. Examples of smart contracts include agreements with suppliers or vendors, employee contracts, and commercial leases.
Small businesses can get a level of protection from smart contracts which they can never afford otherwise. Smart contracts eliminate the need for the middleman, usually an attorney, and so, businesses would have to bear lower costs.
Ethereum – a global blockchain platform – first introduced smart contracts. It’s believed to be one among the more advanced platforms for processing and coding of smart contracts.
Immutability implies that once any transaction is recorded in a blockchain, it can’t be erased or modified. All transactions on the blockchain are date-stamped and time-stamped, resulting in a permanent record. So, blockchain can be employed for tracking data across time, enabling a reliable and safe data audit. Contrastingly, paper-based filing is susceptible to errors, and legacy computer systems may be decommissioned or corrupted.
Blockchain-based systems are built such that the data is visible to all the participants, even as information is shared only with users who need to know it. Such a feature facilitates greater speed and improved efficiency for businesses.
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As everything is logged on a digital ledger that is accessible to anyone with permission, it’s no longer necessary for an employee to ensure that the concerned people are informed. They can view the record freely.
One of the major use cases of blockchain for SMEs is building transparency into the supply chain. Transparency appeals to the sense of fair play of people. If people aren’t aware of what’s happening behind closed doors, they’re always doubtful about how ethical a company is. With blockchain, businesses in any industry get an opportunity to be fully transparent with their customers or clients.
Let’s take an agriculture industry business as an example. Such a business requires sound control over their supply chain to make sure that quality standards are being met. Using blockchain, such a business can successfully track its produce from farm to table. With blockchain technology, an agriculture business can get the opportunity to evaluate every stage of its process to recognize where a higher level of transparency can be applied.
Several small businesses need to carry out loads of paperwork, which can hinder urgent transactions in business. For small businesses associated with the supply chain and handling logistics and shipping, a blockchain application can significantly help in keeping track of delivery as well as providing excellent service in the shortest time possible. This avoids any sort of paperwork delays.
Blockchain brings a different approach to capital raising by using initial token offerings (ITOs). ITOs are tokens alternative to using private equity firms, traditional bank modalities, ledgers and crowdfunding. The exchange and trade of these tokens is often carried out freely.
How it works
Investors can purchase the token offerings and obtain new tokens based on blockchain from the companies they purchase from. The offering may represent a type of product or utility offered by the company or a stake in the project of the company. The tokens are bought, traded and sold in market places according to the demand and supply principles. Apart from creating a new way to raise capital, it has served as a way to build trust.
Cryptocurrency and blockchain play a vital role in security and privacy. It’s more likely for customers to be associated with businesses incorporating blockchain technology.
Because of the Tokpie exchange data, the Initial Exchange Offering (IEO) has proved to be a useless way to raise capital in the present times. Many small businesses are nowadays employing a Fair Token Launch principle, instead of IEO. In this principle, companies just issue tokens based on blockchain and then sell a part of them. Another part is given to people for free for engagement and useful activities.
Owing to these invaluable benefits of blockchain technology, more and more small businesses are hopping on to the blockchain bandwagon. Are you one among them? If not, why not?
Adopting blockchain can be a game changer for SMEs, opening up avenues for massive growth for them. If you are looking for direction on how to adopt blockchain for your small business, consider consulting a blockchain development services provider. Such companies can develop effective and innovative blockchain solutions for you, customized to your business needs.