As a young entrepreneur, it's important to stay in-tune with current trends and technologies that could benefit your businesses and the industries you operate in. One of the more recent concepts to emerge on my radar for my own business -- a payments firm that specializes in helping businesses get paid quickly -- has been blockchain, the distributed ledger that frames cryptocurrency like Bitcoin. Blockchain provides proof the transactions that take place, with each block representing a part of the overall chain of records. Once each transaction is completed, it is then added to the blockchain as a permanent database, with each linked together in chronological order.
While you might think that blockchain is simply a mechanism for companies like mine, you may be surprised by the different ways I discovered I could use it in my business (which might work for you, too). Here are five ways that my business is benefiting from blockchain:
Trustworthy, Efficient Interactions
I've found that blockchain promotes trustworthy and efficient interactions with businesses and customers, because it maintains an ongoing, expanding set of records. Since everyone who participates has an exact copy of the ledger with all transactions and changes, you can establish immediate trust during your interactions.
For my business, this is especially important on a financial level in terms of building trust surrounding our digital wallet and payment processing engine. While this capability still needs some work, I've found that, to date, it has helped boost those levels of trust.
Fast Transactions, Despite High Volumes
Because blockchain technology has the ability to handle a significant volume -- more so than traditional systems -- I have found that it's helped me get core organizational processes handled in seconds, versus minutes. Blockchain is part of a decentralized system, which means that there is no middleman involved that must verify and test the authenticity of each transaction. Without that third-party involvement, each transaction can move more quickly.
This capability has added speed to the transactions my business undertakes, which involve a considerable number of payments for online invoices. Any business that undertakes high volumes of transactions -- financial or otherwise -- could potentially benefit.
Improved Security Through Decentralized Cloud Storage
Because my business collects great volumes of data for the company and our clients, cloud storage has been a critical component of our offering. Blockchain offers a decentralized solution for cloud storage where trust is strengthened by not having to put everything into a single storage provider -- that you hope doesn't have any security or privacy issues.
Any extra cloud storage space that the company is not using can also be rented out, turning what could be an indirect expense into something that reduces the overall cost of offering this storage. And, since it is decentralized, I don't have to be concerned that renting out that space will compromise the security of the other data stored alongside it.
Smart Contracts Enforce Trust Between Parties
With these types of contracts, I haven't needed a third party to resolve any type of legal disputes. Instead, I can use a token, known as a smart property, to represent any asset I want to include in a contract. By being able to hard-code transfer the ownership of this asset, essentially making the contract permanent with no ability to "unsign" or make changes after it has been agreed upon, the contract becomes less breakable. In return, the party that is included in the contract trusts that I will stick to what the contract states. This builds trust at a faster rate than traditional contracts, where those involved may not live up to their end or find loopholes.
By cutting lawyers out of these business contracts, I can also save money while knowing that I'm covered alongside my customer, business partner, investor or whomever else.
The Potential for Payments Changing Shape
Because I'm in the payments business, I've been particularly interested in how blockchain can help me offer new ways of making payments more trackable. However, even if you are not directly involved in the payments industry, your business makes and receives payments, so the potential within blockchain is relevant to everyone.
I see blockchain as the start of a solution to create payment systems that provide globally accessible information, so I can quickly identify any issues or inefficiencies. By using the Financial Services Markup Language (FSML), which is a structured language for financial transactions like eCash and eChecks, I can offer these types of transactions, plus the ability to include an unlimited amount of data with each. This provides both parties with the information they need to track transactions.
This type of system has addressed the limitations found in automated clearing house (ACH) and electronic funds transfer (EFT) transactions. As such, this additional data has helped my company see the connections between account payments and procurement, while also identifying any type of fraud, double payments, or inefficiencies in a way traditional systems haven't always been able to accomplish.
While there are ongoing improvements needed to make the best use of blockchain, I've witnessed the potential from just testing out what's possible within various aspects of my business. Not only have these benefits shown me how we can transform certain processes and functions, but blockchain has also helped me to look differently at how I run my business, and what it could become in the future.
Angela Ruth is the co-founder of Palo Alto, California-based Due.com, a payments company specializing in helping businesses get paid quicker.