Blockchain technology has been something of a buzzword for over a decade now, but how are startups incorporating it into their business models? Does distributed ledger technology have a place in the world of fledgeling online businesses?
What are the benefits of blockchain technology?
The core benefits of blockchain technology for businesses are security, decentralisation, transparency, and efficiency. Furthermore, the application of smart contracts can automate many business processes, saving manpower and increasing efficiency. For businesses or startups working in the online sphere, these are important features to incorporate into operations.
The integration of blockchain removes the need for excess manpower to carry out many repetitive and manual tasks. For example, the use of smart contracts which self-execute steps in a pre-determined chain, can be very useful in the ordering and payments process. The customer places the order, and the entire process can be managed via a smart contract on the blockchain, right through to delivery. This saves significant time and money and eliminates issues relating to human error.
Blockchain is significantly more secure than other forms of database. Each new entry is linked to the previous transaction and cannot be edited or deleted. It is impossible to alter or corrupt in any way, making it secure from hackers or falsified information. Blockchain also provides an immutable audit trail for each transaction which is key in preventing fraud.
One of the best features of blockchain is that its transaction ledger is public. In business, this provides a greater level of accountability and transparency, leaving no room for dispute. Furthermore, it instils consumer confidence and helps encourage company and community growth.
Blockchain is not centralised in any way, rather it is spread across a potentially infinite number of nodes. This means that when a new entry is made on the chain, it updates across these nodes in real-time making it both distributed and decentralised. Should one node stop working, the data is preserved throughout the network.
There are of course many more benefits that can be understood at an industry-specific level, depending on your business model, product and mode of operation.
How can it be used outside of cryptocurrency?
While blockchain started out being used solely for cryptocurrencies, it has now found its way into other industries. Primarily, it’s found a secure home in the financial services sector. Despite initial scepticism, there are a growing number of big-name banks using blockchain such as UOB Bank, Commonwealth Bank, HSBC, Barclays, LatiPay, Yes Bank, and ALFA Bank. They are using the technology internally to manage transactions, operations, and processes.
Global investment banks have also started using the technology or at least exploring the ways it can help them achieve their goals – JPMorgan and Goldman Sachs are just two examples of those that previously criticised the technology but are now embracing it.
Blockchain has also been adopted into the supply chain sector, providing greater accountability and traceability for companies like Walmart, Ford, and Unilever. One of the best-demonstrated use cases is in logistics such as parcel carrying, shipping, and customs. Some travel companies like Singapore Airlines, Etihad Airways, Delta, British Airways and Lufthansa have also engaged blockchain software in their processes.
Safe to say, more and more enterprises are discovering the benefits that blockchain can provide for their businesses both behind the scenes and customer-facing. Even governments at a central and municipal level have started to consider using blockchain for a variety of matters including voting, identity verification, fighting corruption, education, health, and record storage. The possibilities are quite endless!
How can blockchain technology be used for online startups?
So after reading about blockchain applications in big international companies, you might be wondering how it could help you as an online startup.
Firstly, accepting cryptocurrency payments is a great way to get to grips with blockchain. Cryptocurrency is gaining traction and widespread adoption and you can now pay for groceries, clothes, music, services, tickets, and various other products with coins like Bitcoin and Ether. It’s also becoming popular with online gambling and forex exchange sites as more consumers decide to put their trust in digital currencies.
Incorporating crypto-payments has a threefold benefit for startups- increased trust, the perception of forward-thinking, and providing convenience to those who want to transact in this way.
Another way business can incorporate blockchain is by partnering with a third-party blockchain services provider. This provider would integrate their service into the operations of your startup, be it for client-facing order processing, or behind-the-scenes back-office work. Blockchain can be incorporated into the client onboarding process, identity verification, order processing, payments, or even the service you are offering. There are a growing number of providers out there, ready and willing to work with online startups.
How can I get started?
Getting started doesn’t have to be difficult. Depending on the industry you want to operate in, you may or may not need licensing to carry out your activities. For example, if you are a startup online casino and want to incorporate blockchain, you will need at the very least, an online gambling license. Similarly, if you want to run an exchange, you will likely need a forex license in the jurisdiction you are operating in. In eCommerce businesses, you probably won’t need a license, but you may need assistance in incorporating a blockchain payment processor into your system.
Those that want to succeed and maintain the competitive edge need to implement new strategies and processes to stay ahead of the game. If you are looking to set up any kind of blockchain or cryptocurrency company, Fast Offshore can help with company incorporation, licensing, compliance and more.
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