Blockchain has long been at the center of headlines. Now more than ever before, rapid advancement of this technology means small enterprises must consider how best to incorporate it into their company strategies - Gartner predicts its economic value will reach $360 billion by 2026 and $3.1 trillion by 2030.
What exactly is blockchain, and why does it matter so much? Upon hearing "blockchain," your mind might instantly jump to cryptocurrency. Still, since its inception as a Bitcoin transaction log in 2008, blockchain has undergone tremendous change - starting as Distributed Ledger Technology at its core (DLT).
Distributed ledger technology (or blockchain) facilitates safe, open, and unchangeable transactions - ideal for applications including financial services, healthcare services and supply chain management.
Blockchain was initially created as an electronic ledger system to facilitate Bitcoin transactions; today, however, its usage and application have grown beyond anything imagined when first developed for that purpose. Blockchain now stands as one of the fastest expanding and most talked about technologies worldwide - having as great an effect on society and economy as the internet ever did.
Businesses of all sizes are eager to leverage blockchain's many potential advantages in order to gain an edge against the competition. Let's examine it further, starting with why SMEs should consider adopting it and dispelling some common myths surrounding this revolutionary technology.
Blockchain business statistics:
- By 2024, 42% of small and mid-sized enterprises will have adopted blockchain technology.
- Blockchain has now reached 2.8% of the global population (Gartner).
- The forecasted corporate value-add of this technology by 2025? According to Gartner? It is estimated at over $176 billion.
- By 2030, blockchain could generate up to an economic impact estimated by PwC of $1.76 trillion.
- By 2030, blockchain will likely contribute to creating 40 million jobs (PwC).
Why SMEs Should Consider The Blockchain
Small and Medium-Sized Enterprises (SMEs), representing 90% of businesses globally and half of employment globally, form the backbone of our economy. Seven out of ten jobs created in developing nations by formal sector SMEs operating through this model may contribute up to 40% to GDP and represent up to 7 out of ten total job creation by this means - it cannot be overstated how important small and medium-sized enterprises (SMEs) are when considering that World Bank estimates projecting that we need 600 Million new jobs by 2030 to accommodate an expanding global workforce.
Underscoring this point further is that in developing countries alone, the SME financing demand stands at $8.9 trillion, while available credit stands at just $3.7 trillion at present. Funding issues, technology effects and lack of skilled labor pose severe difficulties to SMEs who find themselves trapped in unfavorable circumstances.
Blockchain technology holds great promise as an instrument of disruptive disruption, offering small and midsize enterprises (SMEs) a way to overcome funding gaps as well as overcome issues caused by automation and an absence of skilled labor. Blockchain can enable SMEs to more easily respond to problems related to automation or lack of skilled labor; as well as establish or expand their enterprises. Blockchain's ability to help SMEs adapt to an ever-evolving business landscape makes this powerful weapon indispensable.
In light of this, we have compiled a list of several ways that SMEs might profit from blockchain technology.
Introduces A Fresh Payment Method
Do you know how many Indian millennials are becoming fascinated with cryptocurrency? As soon as it becomes legalized in India, cryptocurrency will explode in popularity even further. Small and medium-sized businesses (SMEs) that accept crypto as payment will gain access to new markets while expanding client bases by accepting crypto payments as payment options; furthermore, they could directly communicate with clients while cutting transaction fees significantly by accepting cryptocurrency as payment options.
Offers An Innovative Way To Raise Capital
Initial Token Offerings (ITOs), part of blockchain technology's potential benefits to entrepreneurs, provide another means of raising capital through Initial Token Offerings (ITOs). ITOs are freely exchangeable tokens that act like conventional lenders, banks, crowdsourcing platforms or private equity firms when raising money for your venture - acting like income-sharing agreements or equity shares for your company.
Reduces Dependence On Intermediaries
Consider how much energy and resources SMEs devote to keeping records up-to-date and depending on outside validations for every action taken by their business. Your firm may move more slowly or struggle to respond rapidly and seamlessly when change arises if your records remain closed off. Still, blockchain can provide your firm with a decentralized, transparent, immutable infrastructure that facilitates business development more rapidly and seamlessly.
Optimizes Supply Chain Operations
With a blockchain network in place, you can easily track orders, payments, accounts, production and much more quickly and accurately. All parties involved will share accurate information that ensures everyone feels at ease when monitoring or exchanging valuable items on the network. Plus, it improves workflow while decreasing expenses and risks.
Leverages The Power Of Smart Contracts
Are You Needing Fast Transactions? Smart Contracts, or self-executing contracts, can be stored on a blockchain and automatically execute transactions that comply with set regulations. They offer cost-effective and efficient management of contracts between suppliers, workers and vendors, as well as payment and accessing assets - acting like virtual assistants in your company.
Ensures Secure And Cost-Effective Data Storage
Combining blockchain with cloud storage has the power to transform small and mid-sized enterprises (SMEs). Blockchain provides safe, decentralized data storage, while cloud storage offers cost-effective data management services that could boost customer service, supply chain management, efficiency and data security - while simultaneously cutting costs and improving the overall operations of your organization - leading to company expansion and greater competitiveness.
Read More: Mastering Blockchain Development: A Comprehensive Guide for Beginners
Blockchain? That Sounds Expensive
Unsurprisingly, some individuals can be cautious about challenges to adopting blockchain technology due to a lack of awareness and knowledge surrounding this emerging field. We made efforts to dispel some common misunderstandings related to it:
Please be clear: Blockchain and bitcoin should not be confused as interchangeable terms. While cryptocurrency made blockchain technology popular, its true definition includes distributed digital ledger technology with applications beyond just finance - beyond even cryptocurrency itself.
Blockchain is often seen as costly; however, that perception can often be dispelled through reduced overhead costs for smaller and midsized enterprises (SMEs) using this technology. Advantages may include lower transaction costs and merchant processing fees for transactions made using this blockchain-based accounting service automation solution, further reducing expenses while eliminating dependency on third-party providers.
Myth: All information stored on a blockchain is accessible by anyone and everyone. Transaction logs may be visible, while participant identities are anonymized through blockchain addresses that appear as character strings for added anonymity. Conversely, private/permissioned blockchains typically grant administrators control and supervision similar to an internal system.
There's also the perception that blockchain data is unreliable when, in actuality, its core principles of transparency and trust form its base. Blockchain databases store information in an immutable chronological sequence - one of the most reliable forms of storage technology out there.
Finally, it's crucial to keep in mind that digitally native or online enterprises don't solely use blockchain technology; businesses of all kinds and sizes are taking advantage of blockchain's potential today - from bakeries and gyms to nail salons, restaurants, manufacturers, and physical businesses as a method for processing payments and streamlining operations. Blockchain can benefit various businesses by improving consumer experiences while streamlining operations.
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Conclusion
Adopting blockchain technology won't happen all at once; there may be challenges along the way and will require endurance and patience, but today, blockchain stands at a pivotal juncture: decentralization can address many of the core problems SMEs experience daily for those willing to embrace it as part of the future for business; additionally, it gives smaller firms equal footing when competing against larger rivals.
Consider the use of blockchain technology for small business as more of an enabling technology than a disruptive force, similar to how internet infrastructure facilitated widespread usage. Blockchain's revolutionary capabilities present businesses of all kinds with many opportunities and may take some time for adoption - though its benefits make the journey worthwhile.
