by Mike Johnston
Blockchain and cryptocurrencies and are great unknowns for most of the small business owners. They are more often than not, utterly unaware of their ability to create an entirely different business environment.
Thanks to its decentralized nature, blockchain’s transformational power lies in the fact that it enables verified and secure transactions between two parties, without any need for third-party verifications, reducing the costs and risks attached to the transaction. Especially now, when Covid-19 did some serious harm to economies and companies, modern technologies, such as blockchain and cryptocurrencies, can be used for a quicker recovery.
Read on to learn about the ways blockchain and digital currencies can benefit your small business.
As they carry many different fees, traditional payment methods can put a financial strain on your business due to the amount of money you have to waste on banks. Every time someone purchases your services or product using their card, your business is losing money. Over time, this loss can accumulate and reach some truly shocking numbers.
On the other side, digital currencies allow you to eliminate or reduce or most of the fees related to traditional card payments. By using cryptocurrency, your business can averagely save between two and five percent on every transaction. Besides, you will be able to eliminate chargebacks, which will significantly improve your overall cash flow.
No need for middlemen
The use of blockchain technology will make transaction intermediaries obsolete. Today’s small businesses rely on third-parties, known as intermediaries, to manage the transactions, mostly serving as a source of verification, making both parties feel secure about the transaction. It’s the way financial transactions function, and the banks make a pretty good profit out of charging fees for their part in the process of connecting businesses and their trading counterparts. Blockchain can make this verification through its own network, without any external verification.
Small businesses involved could avoid all the costs related to intermediaries -bankers, brokers, or lawyers, while still being sure that their transaction is safe. They will also have more control of the process, and the transaction will still be safe, as the consensus of blockchain users will internally verify it.
Trust and transparency
Blockchain will be highly appreciated by businesses who will now be able to provide some clarity to their customers, and consumers who are longing for transparency. This is especially the case when it comes to Millenials, the generation with the most purchasing power. Concerned with sustainability, Millenials make their purchasing decisions considering the planet, the society, and finally themselves. They are also ready to pay for this transparency, both with their loyalty and their money.
Millennials, but many other consumers too, want to know whether their food is grown organically or whether their clothes were produced in a textile factory are paid fairly. Small businesses will have no trouble verifying how and where their item was produced or in case of the food, how and where it was grown. Or any other information, whatsoever.
There is a high demand
Even though some people are still afraid to use cryptocurrencies, the number of enthusiasts and professionals who are getting into crypto mining is on a constant rise. Because of all the benefits cryptocurrencies bring, many people, especially the younger ones, are starting to live entirely on digital currency, using it to purchase their goods and services.
Furthermore, a recent survey shows that more than 39% of the respondents want Bitcoin as a payment method for their general purchases. By adding a cryptocurrency-based payment system to their list of payment methods, small businesses can easily command additional market space and grow their customer base.
Due to its decentralized nature, small businesses can now follow the most recent cryptocurrency trends and open their doors to international buyers and tap into new consumer’ groups for whom their services or products were once inaccessible. Cryptocurrency has the potential to go global, as it knows no boundaries when it comes to business’s digital assets – it eliminates high costs associated with exchange rates and waiting times needed for processing international transactions.
Many businesses recognize the importance of adapting to the trend to stay ahead of the curve, especially in industries such as IT software and services, hospitality and travel, finance and fintech, and international export and sales.
Keep data secure
Our every transaction, and in some cases, our every movement, is an opportunity for businesses and authorities to collect data, and analyze it. For example, during the Coronavirus outbreak, Israeli authorities are using mobile phones location to identify persons who were in close contact with confirmed carriers. In China, authorities are using another technology advancement – facial recognition, for the same purposes.
Even if such data usage can sometimes seem justified, it severely affects privacy and opens up many opportunities for misuse. With blockchain technology, your and your customer’s data will be safe, as it will grant the power over data you want to share, who you want to share it with, and for how long.
Whatever the motivation behind your small business is, as an entrepreneur you’re no stranger to challenges. New technologies, such as blockchain and cryptocurrencies, are challenges waiting around the corner, so you better be well prepared to welcome them at the right moment.
Mike Johnston is an avid blogging enthusiast and experienced content writer with a focus in business, technology, entrepreneurship, and real estate.