Blockchain technology; the next link in the innovation chain for Small businesses

July 20, 2017

Traditionally, private SMEs lack access to public stock exchange networks or formalised credit structures. With Blockchain SMEs can better access credit and link into a broader and more mature investor ecosystem, enabling them to set up new trading networks and obtain funding by sharing financial data in a security-rich and transparent public arena. By implementing blockchain solution private companies can exchange and bring transparency around shareholder data and expand credit access.

Blockchain breaking barriers to achieve transparency together with security

Sharing secure and transparent critical network data across shareholder networks is difficult using traditional system, blockchain is poised to help remove some of these barriers in traditional methods for the transfer of value – much as the Internet did for the exchange of information in the late 1990s.

Blockchain Goes Mainstream

Blockchain users can access information within the digital ledger securely and without the need for central oversight. That is why it is quickly moving from a niche technology into mainstream application:

  • Medical patients could share their electronic records with researchers or pharmaceutical companies for a controlled period, such as a course of treatment or a drug trial. Patients could also share encrypted health information with multiple providers without the risk of privacy breaches.
  • Transportation and logistics players could negotiate coverage by sharing criteria such as risk, route, weather and vehicle type via a blockchain-based insurance market.
  • Consumers could use blockchain to manage fractional ownership in autonomous cars.
  • Voters could cast ballots via smartphone, tablet or computer, resulting in immediately verifiable results.

What Blockchain Means for SMEs

Blockchain offers a built-in mechanism for trust, combined with finality of transactions for improved processes. Transactions can be run and approved automatically in seconds or minutes, reducing costs and boosting efficiency.

Once a block of data records on the blockchain ledger, it’s extremely difficult to change or remove. When someone wants to add to it, participants in the network run algorithms to evaluate and verify the proposed transaction.

So blockchain offers increased transparency, accurate tracking and a permanent, secure leger. It can cut out transactions involving middlemen, such as banks and other financial service providers who often charge costly international fees.

Cutting Costs Across Borders

Blockchain could also be a positive disruptive force for SMEs that do cross-border business, offering an alternative to the hefty fees associated with international wire transfers. Circumventing a major bank or FX provider with blockchain can lead to an immediate increase in efficiency.

Currency exchanges can occur in real-time, eliminating the correspondent bank’s FX conversion process — while converting and depositing money into the beneficiary account quickly and without any extra deduction or fee.

Blockchain is still an emerging technology, with many R&D centers working on new possibilities and innovative uses for the technology. But early indicators suggest that SMEs armed with blockchain can take greater control of their financial independence — and that’s just the beginning.

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