Though still in the experimentation stages, the blockchain has established its place as a futuristic technology that will positively impact businesses, promote efficiency at scale and accelerate growth. Big brands and corporate houses have started leveraging the futuristic blockchain technology to reap the first-mover advantages. On the other hand, startups and small businesses perceive this futuristic technology to be unapproachable for their use and that it can only be used at mass scales by companies that can invest larger sums. This, however, is not true; the blockchain has a wide array of uses and use cases for small businesses and startups from across the spectrum to make their business more efficient, innovative and cutting-edge. Let us take a look at some of these uses and use cases.
Supply chain management and logistics are areas that are currently ridden with inefficiencies, inaccuracies, leakages and resultant losses. A lot these permeate from inherent process and management complexities, human errors, a lack of digitization in several aspects of SCM and poor visibility of the value chain.
With blockchain technology and the use of blockchain ledgers, companies are able to improve the end-to-end traceability and visibility of the value chain and optimize roadblocks, remove inefficiencies and eliminate leakages. With improved visibility of their cargo and transportation vehicles, startups can closely monitor the conditions and immediately contact insurance companies in case of mishaps, apply for and receive claims faster.
They are also able to be more transparent with customers, telling them where their products are and when exactly they will reach them and thereby, improve customer trust and brand image. (Both trust and brand image are difficult for small businesses and startups to gain.)
The other major use case of blockchain in SCM is hassle-free data storage and secure data exchange. All data relating to the product and services offered can be stored in the blockchain ledger and seamlessly tracked overtime for record duplication and fraud detection, inefficiencies, etc.
The self-verifying and self-enforcing smart contracts stored in blockchain ledgers eliminate third-party interference and middlemen, unlike traditional paper contracts, from the process of making involved parties abide by all the clauses of the contract. They eliminate complexities, bottlenecks and inefficiencies in enforcing contracts by automating the process. These smart contracts can expedite and smoothen workflows greatly and immensely reduce legal/third-party service provider costs for startups who usually deal with several contracts in their lifetime. Some of the areas where smart contracts can be leveraged by startups are:
Data breaches, identify thefts and related frauds are ever-increasing in the digitally transforming world. For startups and all other business, irrespective of team size and nature of operation, data security, secure identity management of internal and external stakeholders and protection from misuse/ fraudulent activities is indispensable and is becoming a matter of legal compliance globally. While larger businesses have the financial strength and infrastructural power required to recuperate from data breaches and information thefts, but small businesses and startups do not and end up shutting down within months of a breach or cyber-attack.
Blockchain technology enables businesses to create encrypted identities, handle problems of authentication and reconciliation and ensure highest levels of information security. Startups can onboard onto several web applications, third-party software and services while keeping the customer and company information safe and secure from hackers and other malicious actors. This apart, data is stored in a distributed cloud storage system in an encrypted manner, making it impenetrable.
One of the major problems with CRM tools world over is the inaccurate, fragmented and improper representation of the customer caused by duplication of customer information (customer history, personal information, subscriptions, etc.) inaccurate information capture and human errors. Such an inaccurate picture of the customer only makes the data obsolete, the insights ineffective and unactionable and customer engagement and experiences incoherent. With Blockchain technology, these challenges can be eliminated. And startups can leverage these high-quality insights to create high-quality customer experiences and engagement.
Similar to the previous pointer on customer experiences and engagement, blockchain technology can be used to aggregate user data effectively and accurately to get actionable and high-quality insights on users that can be used to customize advertisements and promotions and to ensure better targeting of audience.
One of the biggest misconceptions that many of us hold is that bitcoins and cryptocurrency are the only possible applications of blockchain technology but clearly there are so many more applications and use cases for businesses of all kinds.
The above discussion amply proves the fact that blockchain technology enables startups and small businesses to achieve high levels of cybersecurity through a combination of data encryption, decentralized cloud storage, digital identity management and key-value mechanism for authorization and authentication. Blockchain immensely reduces cybersecurity risks for startups and helps strengthen their security posture.
Antiquated and legacy IT systems are still used in several startups and small businesses. This could be because they do not have the means to shift to the constantly changing technological advancements owing to their frugal resources. Blockchain technology is available on subscription/ pay-per-use basis and is cost-effective for startups. This apart, leveraging this futuristic technology also enables startups to eliminate manual drudgery, redundant processes and unnecessary grunt work involved in legacy systems, thereby, reducing unnecessary admin and other costs while freeing up employees for more important tasks.
Blockchain technology is still in its nascent stages and startups (like their corporate counterparts) that leverage this technology now can develop key competitive and strategic edges.
The increased transparency and process visibility provided by blockchain technology help startups to reduce their risk of frauds while also building customer trust and brand image.
Having discussed the use cases and benefits of the blockchain technology, it is important to note that it is not without challenges and it is not a new tech cure-for-all. One of the major challenges with blockchain technology at present is that there isn’t enough strategic investment and critical momentum in the area to create a minimum viable ecosystem. Accordingly, the number of users is low. The technology works best only if there is a good volume of users – say 100 or 1000.
Lastly, all the use cases and applications do not suit all types of startups. Startups and small businesses must analyze and understand their business processes and in which areas will the application of the technology yield maximum benefits before jumping onto the blockchain bandwagon.