Why blockchain is critical to SMEs

The era of knowledge economy is the era of technological innovation. As the most active and dynamic component of today's business climate, SMEs are important in promoting economic development, GDP growth and national competitiveness.

However, there are also many disadvantages. For example, the threshold for entering the emerging technology field is very high, and it is greatly affected by the market operation environment and lacks the ability to respond to market changes. And these factors make it almost impossible for them to shake large companies in the same industry.

Therefore, it is difficult for small and medium-sized enterprises to find other ancillary services such as financing, operation management, process payment and recruitment. These services are necessary and occupy a large amount of time and resources for SMEs.

Blockchain can achieve remote autonomy among enterprise users. This self-reliant data infrastructure goes far beyond the meaning of cryptocurrency and is very valuable. It can help companies bring products and transaction services to market quickly and cost-effectively, and reduce traditional security costs, Know Your Customer (KYC) protocols, data storage and other expenses. Not only does it reduce costs, it also allows companies of all sizes to develop in a more level playing field.

(Annotation: Blockchain in enterprise applications, can refer to Sergey Grybniak's article in Business 5 Ways to Put Blockchain to Use as a Small Business Owner, the author lists the five applications of blockchain in the enterprise, to people Indicates that blockchain technology is not just for cryptocurrencies.)

Leverage development on the blockchain

Small and medium-sized enterprises tend to expand the size of the company by a certain percentage, but this approach ignores the basic process of initial invoicing, inventory and payroll. Guided peripheral traffic that supports business products or services also needs to be developed, otherwise bottlenecks may result. While this may mean buying a CRM or CMS platform, hiring new employees or signing up with other service providers, the blockchain can provide a solution.

Smart contracts are a more economical option to help SMBs streamline business processes in a cost-effective manner while keeping the business running. As a young company's operators and customers, they use blockchains to create, review, and execute contracts between users, whether it's invoicing, paying employee compensation or interest, repaying bills, insuring, processing inventory, completing new transactions. Or other trading activities, smart contracts can have a positive financial impact on SMEs.

(Annotation: Roger Aitken wrote for Smart Contracts On The Blockchain: Can Businesses Reap The Benefits? in Forbes, he detailed in the article whether companies can benefit from smart contracts on the blockchain. Interested readers can search for this Article to learn more.)

Smart contracts can also help SMEs that need sustained cash flow to ensure on-time payments. For them, unlike the large-scale enterprises of the same generation, they do not have sufficient cash reserves, so whether the funds can be turned around determines the success or failure of the company. In fact, in the past year, 40% of small businesses have experienced cash flow problems.

The blockchain can undoubtedly solve this problem. Through blockchain technology, companies can clarify the flow and reserves of funds. In addition to significantly reducing the additional investment that business owners need in the process of raising funds, they can also make the cost savings available to customers, making products and businesses more competitive.

(Annotation: For 40% of this data, refer to Shubhomita Bose's article in Small Business Trends 40 Percent of Small Businesses Have Had Cash Flow Issues Within the Last Year, in this article, the author said that according to a network payment service provider WePay In the research conducted, only 40% of companies reported cash flow problems in the past year. 16% of companies said they encountered payment fraud.)

Due to the nature of distributed ledgers, these protocols are irrefutable and generally enforceable. In this way, SME operators and their employees do not have to waste time on filing, verification, arbitration and legal support. At the same time, they are also privately owned companies, and it is a wise and sustainable move to build smart contracts between the company and its many partners, participants and stakeholders.

Many business processes, including people, middlemen, expensive software licenses, feedback systems, and valuable time, can be replaced with low-cost blockchain technology. This has enabled SMEs to remain efficient and competitive, while also significantly reducing the cost of customer service and arbitration. Due to the immutability of the blockchain general ledger itself, the only thing that makes a mistake is humanity (a mistake that cannot be refunded).

Young companies want to be able to connect themselves with their partners through smart contracts so that they can take advantage of some of the blockchain services as early as possible, in order to avoid the development costs of some underlying architectures in Ethereum, blockchain companies like Confideal and dAppBuilder It's easy to create and publish a complete smart contract portal with just a few mouse clicks.

Improve privacy and security

Significantly reducing management costs is the main advantage of SMEs based on blockchain technology for services, and its security and transparency will also bring value-added benefits to enterprises. The public and private key systems, protected by a layer of encryption, ensure that participants in the blockchain service can authenticate with the same service without exposing their most sensitive personal financial or identity information.

(Annotation: For information on how blockchain protects sensitive personal information, see Michael Mainelli's article on Harvard Business Review, Blockchain Could Help Us Reclaim Control of Our Personal Data. The author details the principles of blockchain protection in privacy and security. And application.)

This is a boon for companies that are at the risk of dealing with large amounts of personal data. Customers will also know that their sensitive information will not be peeked. A small and medium-sized business that requires customer credit card data can verify transactions without knowing the identity of the customer, and users only need to access their personal information through system authorization.

Currently, companies based on blockchain technology are already leveraging the fragmentation and security of blockchain to provide better, more transparent identification tools. These companies provide customers with a way to identify themselves, certified documents and fairness, and a marketplace where customers can buy services and products.

Small and medium-sized businesses that want more comprehensive protection can host their services on a decentralized architecture to do this by default. A savvy startup CEO may choose to rent a custom-sized, decentralized hosting space from a blockchain platform instead of buying expensive centralized servers or paying high fees to AWS and Google. Enterprises can purchase as much local bandwidth and storage as they like, collected from the most recent users. This provides greater data integrity and a more cost effective cost plan.

A similar service essentially eliminates the company's privacy protection burden and requires only the appropriate blockchain encryption standard to identify and authenticate customers. While protecting customer information, companies running services on the blockchain are better protected against hacker attacks.

Web-based attacks can cost companies valuable time and resources, and are a daunting challenge for small and medium-sized businesses that don't have the IT resources to defend against these potentially deadly attacks. Although 14 million companies in the United States are at risk of being attacked, many companies do not place security at the top of their agenda. Regrettably, most SMEs that suffered losses as a result of cyberattacks were closed in less than a year.

(Annotation: The data source is Chris Morris's 14 million US businesses are at risk of a hacker threat.)

Due to the fragmentation of the blockchain, hackers must attack all the peer nodes in the chain by attacking websites or applications on the managed blockchain, making DDoS attacks difficult to implement.

Bringing new business to small and medium-sized businesses

Regardless of the potential value of the blockchain for SMEs, the best outcome is how to use this new technology to get funding. Small and medium-sized enterprises usually do not need funds because bank loans take time, and the time to wait for loans can be allocated to other activities. Even when monopolizing the time of the owner and the accounting department, the loan will bring high interest and collateral threats to the more sensitive cash flow of the startup. VCs are a more modern way of acquiring capital, and they are also replaced by blockchains. The blockchain was the initial driver, driving new sales trends, as startups attempted to absorb working capital by offering their own cryptocurrency to the market.

These currencies convey economic value through the Internet and have a value relative to the legal currency. This is also why traders are being able to fund these new companies: promising companies in the upswing, increasing the relative value of tokens. It has funded thousands of new businesses such as finance, healthcare, games, politics, and social welfare. Many people think this is a very competitive new option for financing. Compared with other methods, it has many advantages, almost all of which are conditional. Companies do not have to sacrifice future income or decision-making control in the form of shares just to gain development opportunities.

At the end of this article, it is important to clarify that the blockchain is an emerging technology and the existing infrastructure is still expanding. As it becomes more stable, savvy SMEs will emerge new ways of doing business and incorporate it into their value proposition. To achieve this goal, the biggest obstacle is to enable companies to build business on the blockchain and drive customers to adopt these solutions. It is a participatory technology compared to anything else, and it does not bring any benefit to those who don't use it. The blockchain is like a rising wave, but only the ship that first arrives at the wave can succeed.