Blockchain has generated a lot of hype. But could blockchain technology be a boon for small businesses?
Markets and business leaders seem to think so. Annual spending on blockchain technology solutions has tripled since 2017 and is on track to reach $15.9 billion per year by 2023. The global blockchain market is forecasted to grow to $58 billion by 2025 at a compound annual growth rate of 69.4 percent. Since 2018, job postings for crypto and blockchain-related jobs have increased by 26 percent. Meanwhile, 83 percent of business executives say there’s a compelling business case for blockchain, with 53 percent identifying blockchain technology solutions as among their top five business priorities.
While the vast majority of executives at large companies understand the business case for blockchains, now is the time for small businesses to explore growth opportunities tied to blockchain technology for existing or new business lines.
But to understand how blockchain can fuel small business growth, we need to understand just what blockchain is and does.
At its most basic level, blockchain is a distributed ledger technology. You can think of blockchain as a kind of spreadsheet or digital database. What makes blockchain unique – and potentially very valuable for business – is the way it stores information in that digital database.
Blockchain cuts out the middleman. Unlike with a conventional database, information on a blockchain stays updated and in sync based exclusively on software rules and community agreement. One person, or one company, does not choose how to update the entries in the blockchain spreadsheet; rather, all (or a specified number) of the computers in a network agree to make the update together. When information is written in blockchain, there simply is no need for record-keeping middlemen.
And by cutting out middlemen, blockchain can spur small business growth by dramatically cutting expense costs and powering efficiency in day-to-day business operations.
For example, blockchain can transform the speed and cost efficiency with which businesses conduct international transactions. Blockchain can also revolutionize supply chains by increasing efficiency and reducing fraud. Walmart, for example, has successfully used blockchain to reduce the time it takes to trace food supply chains from seven days down to 2.2 seconds. Meanwhile, GUTS uses blockchain to eliminate ticket purchasing fraud in its supply chain.
And blockchain can fundamentally transform the data economy by increasing the range of internet tools available to them while driving down common expenses. For example, data storage is as real of a cost for many businesses as their electric bill, and blockchain can make data storage less expensive and more efficient. Protocol Labs, where I work, plans to launch the Filecoin network this year, a blockchain-based marketplace for buying and selling cloud data storage. Other companies are working on using blockchains to help businesses to access computer processing, to authenticate users, and to advertise to users while protecting privacy.
Already blockchain technology is bringing beneficial tech innovation to small businesses in exciting ways. While, of course, there’s more development ahead as technologists and innovators work to fully capitalize on blockchain’s potential, one thing is clear: Blockchain is shaping up to be the future for business growth, the next iteration of opportunity in disruptive tech innovation. Filecoin will be a crucial part of that future.
Marvin Ammori is an executive at Protocol Labs, a company focused on improving the internet and computing generally through decentralized web protocols such as IPFS and Filecoin; he also served as a technical consultant to HBO’s “Silicon Valley.” His views are his own.
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