Since its founding in 2009, Bitcoin has disrupted a handful of industries, particularly with its distributed consensus mechanism for exchanging value, proving to be a viable means of sending money for users in different parts of the world.
The cryptocurrency, along with its original blockchain, is not all that distributed ledgers have to offer, however. The emergence of blockchain technologies like Ethereum and Neo came with smart contract and cross-chain capabilities, which has given way to more flexible means of recording transactions that are secure, transparent, inexpensive and friction-free for users.
For any business, the question is how the blockchain can have an impact on operations, productivity and profitability. While the idea of being able to transact and exchange value is certainly the most obvious benefit, blockchain technology offers so much more, and businesses of all sizes can take advantage of these solutions. Here are some examples.
1. Online and offline payment processing
Part of Bitcoin’s appeal is the low cost at which transactions are processed. For end users, transactions have such minimal costs that the process is practically free. However, given the limited access to merchants that accept cryptocurrency as payment, some added effort and expense has been necessary to exchange cryptocurrency into fiat money before being able to transact with traditional stores.
Here, payment gateways and processors would fill the gap. Companies like Cryptopay, whose service includes both a virtual and physical debit card connected with the user’s Ethereum or Bitcoin wallet, are a viable solution that empowers both businesses and end users to transact with stores, vendors or individuals that do not accept cryptocurrency payments.
Thus, Cryptopay offers significant functionality beyond the usual Bitcoin or Ethereum wallet platform, most of which only let users store their virtual currency and send payments to other users through the same currency. The takeaway here is that, with the current prevalence of cash and credit or debit cards as the preferred method of payment, businesses can benefit from being flexible in the payment options they accept.
2. Efficiency in supply chain management
For any business, efficiency is key in ensuring a healthy bottom line and access to growth opportunities outside of one’s home market. For this purpose, logistics and supply chain management usage of blockchain tech can help solve many of the issues plaguing businesses big and small.
One proponent of improved supply chain management is IBM, which initially partnered with shipping giant Maersk to track shipments through its Watson IoT initiative. Another startup focusing on logistics is U.K.-based Provenance, which is marketing its digital tools for “sharing your product journey.” Beyond keeping track of supplies and materials, the public, secure and inclusive blockchain aims to help businesses prove the authenticity and guarantee the quality of their goods.
3. An effective way to crowdfund
ICOs, or initial coin offerings, are the way to go for any technology company that wishes to raise capital outside of the usual venture funding or bank loan framework. This year alone, at least 55 blockchain-based companies are seeking to crowdfund money through the so-called tokensales or coinsales. The biggest success story so far is Filecoin, which has fast overtaken previous record-holder Tezos by raising $250 million and counting, versus Tezos‘ $232 million ICO.
Many other technology companies are either raising funds through an ICO or tokenzing their assets or services through tokensales. Even while already operational and profitable, Cryptopay is running its own coinsale to support its business expansion. Meanwhile, firms like Tezos and Filecoin have sought community support to build on their technology plans and product roadmaps.
Not all businesses require large amounts of capital, however, and not all small businesses lean toward technology. As an alternative to the ICO route, small businesses can crowdfund from solutions like Wefunder – somewhat of a Kickstarter for businesses, but for crowdfunding equity. The platform enables crowdfunders to accept monetary support through cryptocurrencies like Bitcoin.
4. Better business processes
As a distributed ledger, the blockchain’s most basic and fundamental function is to ensure that data is exchanged and stored across all network nodes in a simultaneous, transparent and immutable fashion. This is essential in addressing the inconsistencies in data, lack of trust and absence of transparency among multiple participants in a network.
In a business setting, this network can be the organization itself, or its information systems, which can be especially useful when combined with real-world assets through IoT.
Yet another promising area of the blockchain involves smart contracts. These are self-executing contracts – basically scripts of code – that depend on certain conditions being met. Businesses can use smart contracts for lease agreements, sales contracts, employment contracts, capitalization tables and the like. For example, for startups and privately owned small businesses wishing to manage their equity tables, London-based CapchainX fills the gap with automated tools that manage what was previously a complicated affair that required a lot of man-hours for lawyers and accountants to go over.
5. Tokenization of assets
An emerging business practice with blockchain technologies is the tokenization of assets. This means assigning cryptocurrency tokens to real-world assets. This could include enhancing the liquidity of other illiquid assets like real estate or physical plants such as automobiles and equipment, or even tokenizing service or product offerings.
Through tokenization, businesses can more easily sell, resell or manage the assets they own without the lengthy, expensive and time-consuming process of liquidating such assets in other marketplaces. Tokenization can also enable businesses to easily put a value to intangible assets, such as intellectual property, and even make these fungible with other assets of similar value.
It will only be a matter of trading the tokens, to either sell off or acquire more of such assets. An example of a startup that focuses on tokenizing assets is Slock.it, which enables limited use of property by enforcing digital locks.
There is no limit to how blockchain technologies can provide businesses a better way to do things in finance, operations, productivity and more. Finding success with blockchain tech is a matter of finding the right partners, right technologies and most effective applications of the technology.