- Blockchain is the backbone technology of Bitcoin and other cryptocurrencies
- The technology adds new layers of speed, security, and can lower costs for payment processing
- Blockchain has been proposed as a solution for small businesses in the e-commerce space for supply chain management, smart contracts, and more
Companies of all sizes are constantly bombarded with hot new technology that’s going to solve all of their problems. Some tech ends up being useful and practical, while other stuff may end up costing a business a lot in wasted time, money, and resources. Deciding which tech to implement, what platforms to buy or license, and what makes sense for your independent business can feel like a full-time job in its own right.
Chances are you’ve heard of blockchain at some point. Maybe even as a potential solution for some of the pain points your business has faced.
It’s been touted, by some, as one of those technologies that’s going to solve every problem for everybody. You may have heard it praised as a solution to any number of problems large and small, as blockchain enthusiasts are, well…enthusiastic to say the least. On the flip side, it’s also been vilified, and remains a mystery to many. But in the end, there are some realistic and practical applications for online retailers of all stripes.
What is Blockchain?
Blockchain was introduced to the world in a 2008 manifesto entitled “Bitcoin: A Peer-to-Peer Electronic Cash System,” by a mysterious web presence named Satoshi Nakamoto. To this day, not much is known about the elusive Nakamoto, and many in the cryptocurrency world believe that the name is actually a pseudonym for a group of programmers and cryptologists.
Bitcoin got most of the press when this technology was introduced because it was used as the primary currency for illicit purposes on the emerging dark web.
But the technology at the foundation of Bitcoin, blockchain, may end up being the part of the initial announcement that has the most lasting effect on the business world. Which is funny, because while the 2008 manifesto describes how it works, it never actually uses the term “blockchain.”
So, what is blockchain?
Simply put, blockchain is a distributed decentralized ledger. That means that blockchain stores data in “blocks” across a slew of volunteer computers. The blocks are in a chain, hence the name. The chain keeps hackers from taking over the data and keeps it secure. One of the central aims of blockchain is to store and distribute information without it being edited.
An easy way to think about it is like a ledger at a bank, but instead of the bank being the trusted authority on what transactions take place, the software uses a distributed network and some, mostly, uncrackable trust protocols to be the authority.
While this might all seem theoretical, there are some solutions and blockchain applications that might make sense for e-commerce businesses.
Blockchain Benefits For E-commerce
Practical applications of blockchain are still rolling out in the e-commerce space. But, there are some benefits you might be able to implement right now for your independent business.
The easiest and most obvious way to use blockchain for business is to accept cryptocurrency payments. Some larger e-commerce outfits like Overstock and Expedia accept bitcoin.
And, this option is open to online stores and growing merchants through platforms like Shopify, too. Shopify makes it easy to enable alternative currencies and accept cryptocurrencies like bitcoin. The platform notes several advantages for e-commerce stores since the transactions are fast, have low processing fees, and there are no chargebacks.
Supply chain management using blockchain is another emerging application in the e-commerce space. While using a digital supply chain might make more sense for businesses at scale now, there are compelling reasons for independent retailers to keep an eye out for a blockchain-based supply chain implementation in the future.
Speed and security are two of the main reasons that blockchain could revolutionize digital supply chains. Using traditional methods, there might be several different entities responsible for tracking an item from production to customer. Without a single source of truth, the chance for errors and vulnerabilities is increased.
One study found, “the involvement of four parties in a transaction, and in the exchange of supply chain documents, makes such transactions cost-ineffective and slow.” With blockchain, every touchpoint in the supply chain works off of the same, unassailable, digital record.
The same study found that blockchain’s inherent security measures could make the technology desirable for supply chain management. The authors cite, “a public ledger of transactions copied to all nodes of the blockchain network without transaction party identities, the use of public key infrastructure (PKI) to decrypt and encrypt a transaction, and to notify counterparties about the existence of an executable transaction with unique single-time keys,” as some of the key features of blockchain that make the technology even more secure than some of the security technologies found in the banking industry.
Contract management could also be a major benefit to small businesses. A contract stored on the blockchain would be available to all interested parties, and would be unchangeable. Making sure all involved parties have the same protected contract version can save time and money, and minimize the time it takes to wait for approvals and signatures.
Companies Offering Small Businesses Blockchain Solutions
But, the future looks bright for small businesses looking to implement blockchain for speed, security, and lower costs.
Here are just a few companies developing blockchain solutions for small business:
- R3 – R3’s Corda platform is an “open-source blockchain platform that enables businesses to transact directly and in strict privacy using smart contracts, reducing transaction and record-keeping costs, and streamlining business operations.” Independent retailers with in-house tech can use the GitHub code of the open-source platform free.
- LeewayHertz – offers blockchain consulting services, supply chain implementations, and smart contracts. They can even develop a custom blockchain.
- Veem – is a payment and invoicing platform for small businesses built on blockchain. This platform could be of particular interest to independent retailers who regularly send and receive funds internationally. Veem’s fees are low and the blockchain adds a layer of security.
Is Blockchain the next hot technology for smaller online businesses? It’s hard to say just yet.
Even though it’s been in the public eye for over a decade, blockchain is still in its infancy as a widely used business solution. The existing solutions are promising, and with emerging supply chains, more access to international markets, and higher demand for low-cost, secure solutions, blockchain just might be a leading problem-solver for independent online retailers, now and in the future.
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