Blockchain may have gained notoriety as the technology that provides the infrastructure for Bitcoin, but it’s playing a bigger role in business, including small and midsize businesses (SMBs), writes Inc.
At its most basic, blockchain is a more efficient way of storing information. What makes it more powerful than any other file-sharing service is that data isn’t stored from the point of view of any one participant, but rather from everyone’s point of view in agreement. That means that two parties sharing a document will always be looking at the same exact copy of that information, eliminating the time-consuming back-and-forth that comes from ensuring that everyone has the same version of, say, a contract or an invoice. Blockchain creates an audit trail that everyone can see in real time.
This is especially important for small businesses that are constantly looking for ways to streamline their operations, says Bill Carmody, CEO of Trepoint, a digital marketing firm. Here are some of the ways blockchain is enabling entrepreneurs to operate their businesses more efficiently and with greater transparency.
1. Better supply chain management. When a small-business owner places an order with a supplier, it’s clear who’s on the other end of the transaction. But the business owner may not know who the supplier’s suppliers are.
By bringing transparency into the supply chain, blockchain enables a business owner to see every company that’s had a hand in creating, growing, or manufacturing any component of a product it sells or service it delivers. This kind of information is vital in the event of a product recall or if a company needs to identify ethical sourcing or to avoid purchasing counterfeit parts, Carmody says. For instance, a bakery that markets itself as using only organic ingredients would be able to verify that fact through blockchain technology because it could see every company that provided ingredients for its products, all the way back to the farm. “Your vendor may promise you everything is organic, but without blockchain technology, there’s no way to verify his or her suppliers are using organic ingredients,” he says.
2. More transparent contracts. How many times have you hammered out the details of a contract or agreement with a client and then been delayed in starting the project until everyone has read and signed the final version of the document? With blockchain, each team member always has the most current version. By eliminating version issues, SMBs can save time by not having to wait for approvals or signatures.
3. Faster payments. Because the need for reconciling documents like invoices and billing statements is eliminated with blockchain, payments can be made almost instantly. This can have a significant impact on SMBs’ cash flow, including those that rely on insurance reimbursements. For example, with blockchain, a small dental practice could submit a claim to a patient’s insurance company. If both the dentist and the insurance company are using blockchain, the insurance company would know exactly when the visit took place and what was done, and be able to put through payment to the dentist that day. And because the insurance company can pay the dentist almost instantaneously, the patient will know the co-payment or co-insurance amount even before leaving the doctor’s office, or shortly thereafter.
4. Quicker background checks. Carmody says he can envision a day when blockchain technology can be used to verify a potential employee’s work history. Rather than undertaking the time-consuming task of having HR folks call previous employers to check out a job candidate’s work history, blockchain could be used to verify tenures, job titles, and other important qualifications. He says this could save small businesses a tremendous amount of time and prove that a potential employee has the skills and background he or she claims to have on a résumé or LinkedIn profile.
Blockchain can be a game-changer for SMBs, saving time and streamlining operations. It’s time for smaller companies to begin exploring the myriad improvements blockchain can make in their businesses.