Blockchain For Startups: The Secret to High Efficiency?
Blockchain – the concept/technology as powerful as the Internet itself has moved from the time when it was deemed to be overhyped to now when it has become an important part of a number of industries, banks, and government.
While the technology has made a prominent place in a number of processes on a very high-level and have found associations among a number of big brands like –
A general assumption has been formed that the disruptive technology is only practical for big names of the world and has, as a result, made itself very unapproachable for mass usage, unintentionally.
Our intent today is to remove the assumption and make Blockchain Startups a technology occurence that can be implemented on mass scales by businesses and industries of all size and across all categories. While, there have already been several use cases of Blockchain in Enterprise setup, it is the startups that need to reform with the power of Blockchain at the back of them.
Something we are going to attend to in this article.
This article is for you to get acquainted with the abilities of Blockchain for startups and how it can be used to not just make your business efficient but also mark it as a brand that is highly innovative. We will help you identify the ways Blockchain Startup can impact and make your processes a lot easier. And in case you wish to dive deep in the technology’s ABC, head on to our handbook on Entrepreneur’s Guide to Blockchain.
Now ithout further delay, let us get on to what can Blockchain do for YOU.
What can Blockchain do For Your Startups?
Can make you early adopters
Just like the starting days of the Internet, the Blockchain world is underdeveloped to a huge extent. There are a number of critical elements that will have to be addressed before Blockchain becomes a mass phenomenon.
For startups that are willing to act as fast movers and follow the plant the flag strategy, there is a golden opportunity to conceive and grow a community before space becomes too overly crowded with Blockchain business applications.
By investing time and resources to develop a business model with Blockchain at the center of the processes or even a major part of the working mechanism, will automatically give startups an edge over others working in the same domain – something that all startups need in a time where there are thousands of businesses working in the same category, fighting for the same piece of market.
Can Replace Antiquated Processes With Digital Systems
A number of startups operate on some or the other form of the legacy software or outdated infrastructure, which not just increases the cost of conducting business but also make them inefficient and inconsistent to a great extent.
Plus, a great number of vital processes are manual in nature, meaning they are subject to the risk of human error to a massive extent.
With Blockchain for small businesses, startups will be able to solve a great amount of these issues. The technology is known to decentralize the pool of data segregated among a great number of different processes – something that solves the startups’ needs to rely on manual labor to collect and process data.
Can Secure Their Data
Cybersecurity is a point of concern for companies of all sizes across industries. The global spending on cybersecurity based services and products like automation and IoT is estimated to increase by $1 Trillion by the coming five years.
Noting the incredible security proof that Blockchain systems come with, they are poised to soon become the de-facto mode of gathering and organizing the enterprise data – and a primary answer behind the question on why do companies use Blockchain.
All the data gathered in the ledger gets automatically encrypted with the newest and greatest of the cryptographic methods, the warehouses are only accessible through a key-value mechanism which validates and authorizes the identification before granting access.
Moreover, the decentralized mechanism of Blockchain for small business reduces the security risk to a great extent. As the distributed system cannot get manipulated by any single entity, it is impossible for hackers to change the data without notifying everyone in the network – something that protects against corruption and give the control back to the actual users.
Now that you have seen how Blockchain can make your startup more efficient, let us look at the ways you can employ the technology in your startup to make your business more efficient, transparent, and decentralized. The answer which is same as one to Why do Companies use Blockchain.
Ways Blockchain for Small Business can be Employed for Better Processes
Here are some of the top-most applications for Blockchain in your business –
1. Payment and money transfer
One of the most common applications of Blockchain in a startup is seen in use of technology in the payment and money transfer domain.
The present day story is that Blockchain is ready to transform transactions and startups are known to deal with a number of vendors across the world, for availing low-cost, high quality services. Blockchain with its cryptocurrency element comes in handy for making cross-border payments easier and a lot more cost effective than the traditional mode of payments, which are crippled by high transfer charges.
2. Contracts Creation and Abiding
As you are just starting, there are a number of contracts that you will have to get binded into – with your interior designers, your food and beverage vendor, your offshore software development company and a number of other third-party stakeholders.
With so many contracts to be made and ensured to be followed, use of Blockchain in business can come in very handy, through the Smart Contract route. Since we have already talked about the concept in our Smart Contract guide before, we won’t get too much into the depth into the mechanism here, but what we can tell you with respect to Contracts and Blockchain is that it is impossible for any of the involved party to break the Smart Contract.
3. Distributed cloud storage
A distributed cloud-storage comprises solutions around peer-to-peer decentralized cloud storage. By using the combination of cryptography and Blockchain to protect the files on both – transmission and in nodes – decentralized cloud storage makes your files unhackable and Blockchain a useful element of your startup.
In layman terms, distributed cloud storage system comes into existence when every element of the cloud storage, like processing, transport, and storage of data is put into the blockchain ecosystem.
Once that happens, every data – how it moved, who accessed it, and how it was governed can be seen by everyone who has the access to the Blockchain. A system of this type help in offering full accountability, traceability, and transparency for cloud, and entities which are either using or managing the cloud.
4. Protection of Digital Identity
Another crucial application of Blockchain in businesses is Identity Management.
Identity management is something that the world suffers from. No matter what business or team size you belong to, you are never truly safe from your identity being leaked on the internet and in worst case scenario, in the hands of the hackers.
In the case of startups, what happens is that they – in an ode to seek growth and efficient performance – sign up and subscribe to a number of websites that in some cases can be malicious.
Blockchain, in this case, can be used as a platform to protect identities from fraudulent activities. The technology can help businesses handle the problems of reconciliation and authentication faced by a number of industries. Moreover, it allows businesses the freedom to develop encrypted digital identities that replace usernames and pin codes with comprehensive security elements that are capable of saving the institutions and their customers’ valuable resources and time.
5. Supply Chain Management
There are a number of different ways Blockchain can be used in business when it comes to the Supply Chain Management process, to make it more real-time, accessible, transparent, and efficient.
Here are the different applications of Blockchain in SCM –
In the blockchain-powered supply chain management process, provenance tracking and record keeping become very easy for the product information can be easily accessed through RFID tags and embedded sensors. Everything about the product, straight from origination to its present status can be tracked via Blockchain. Along with this, the provenance tracking can also be used for detection of frauds in any part of supply chain.
When Blockchain is used in supply chain for speeding up the administrative processes, the additional costs occurring in the system gets automatically reduced with the transactions’ security guaranteed.
Secondly, elimination of intermediaries and middlemen in the supply chain lowers the chances of product duplicacy, frauds, while saving them a lot of money.
The payments made can even be processed by the suppliers and customers in supply chain with cryptocurrencies rather than them relying on the EDI.
Having trust in complex supply chains with many participants is necessary for smooth operations. For example, when a manufacturer shares his products with suppliers, he/she should be able to depend on them for following factory safety standards.
Also, when it comes to regulatory compliances such as custom enforcers, trust plays a vital role. The immutable nature of blockchain in the supply chain is well-designed to prevent tampering and establishing trust, marking trust as the primal application of Blockchain in business.
6. Quality Customer Support
There are two ways through which Blockchain is used in Business for increasing the quality of customer support.
- Data Cleansing
Whether it’s due to inept data import tools or human negligence, CRM users all over the world have to deal with inaccurate or duplicate data at some level. With blockchain in place, a customer can have their very own personal block that presents companies with a unified and accurate picture of their personal information, past transactions, subscriptions, etc. Hence, blockchain helps these companies circumvent the issue of inaccurate, obsolete and duplicate data records altogether. This consequently yields better insights into customers and helps businesses engage them more effectively.
- Loyalty Programs
Loyalty programs aim to drive profits by adding value to the customer experience. However, due to their variable mileage, volatile value and associated privacy concerns, they prove to be cumbersome for customers and yield a low ROI. However, in a manner very similar to cryptocurrencies, brands can make use of blockchain to reimagine and reinvigorate their loyalty programs.
With blockchain, consumers would have a single decentralized wallet that is compatible with all brands. They would not be bound by the rules and limitations of individual brands and point redemption would be greatly simplified. The consumer will have far greater control over the whole experience and brands will complete for their wallet by offering them better deals.
7. Advertisement and Promotion
The need for promotion while necessary for businesses of all size is something that is unignorable for startups who are just starting up and are in need of awareness in the market.
Even after being one of the most important elements of a business, advertisement industry is filled with a number of loopholes that makes it unnecessarily expensive and opaque for the startups.
When Blockchain is introduced to the mix, there are a number of things that get sorted and streamlined on the promotion front.
Let us look at the benefits of using Blockchain in your business in terms of decentralized advertising.
Better Audience Targeting
Earlier, as marketers, we used to rely on more than one sources to get information on users’ buying habits. But now with blockchain, advertisers will get the freedom of creating buyers’ demographics by getting the necessary information straight from the buyer themselves.
The technology will gather all the information that the users wish to share their buying pattern and get them to the advertisers.
Reliable Ad Buys
The problem with online advertising is the lack of knowledge related to the fact that it is absolutely difficult to know whether the people who clicked on the ads were genuine buyers or paid clickers. However, since blockchain is transparent, advertisers can easily make out if the clicks that they are getting, even coming from the population they are targeting or not.
This way, the ad buys would prove itself to be of value to money.
Many times, it so happens that you see a banner advertisement on Facebook listing price of the product as N, but when you visit the site, the number is shown as X. The identification and rectification of issues such as these are the tasks done by the Ad verifiers, whom the networks pay heavily to. However, blockchain helps ensure that the actual information is exactly same as what shown in an advertisement.
It reduces the heavy cost that is associated with the ad auditing process.
Management of Advertisement Inventory
Ad inventory, as we all know is the space that advertisers have for ad selling. It can be calculated on the monthly basis. The information that goes into the whole ad inventory management cycle – number of space, length of the advertisement, maintaining records of which day is assigned to which brand, the amount that has to be charged space placement wise etc. – are way too much to handle manually. By using smart contracts and blockchain, brands can not just manage the inventory better but also get payments from advertisers on time.
8. To Generate Funds
One of the biggest sign of success for any startup and also the one which helps them grow to their maximum ability is the amount of investments that they receive. The moment your startup gets backed by investors, you don’t just become an establishment to look out for but also get sufficient funds to support your growth and expansion needs.
Now, when we talk about generating funds or raising investments, there are quite a few options available to the startups and entrepreneurs – Crowdfunding, Angel Investments, Venture Capitalist, Bank Loans, Small Business Administration Loans, etc.
While out of all of these modes of generating funds, Venture Capitalist has established itself as the most preferred form of raising fund as entrepreneurs get not just funds but also the experience of VC investors, ICO (a Blockchain powered mode of raising fund) is soon replacing the VC model.
There are a number of reasons that have not just brought the demand for VC and ICO at an equal stage but have also increased the fund investment count for ICO fund model. But, the ones that make ICO ideal for you are:
Compared to the VC fund model that asks for entrepreneurs to come prepared with validating market and financial response that proves how your startup or idea is a success, ICOs have a lot fewer benchmarks to follow, making it easier for entrepreneurs to raise funds through the ICO route.
While VC funding operates within a set geographical boundary, ICO can be raised from investors in the UAE while you are in Australia.
As opposed to the VC funding timeline to raise funds, ICO lasts for around 30 days, only. Making it a lot speedy for entrepreneurs to raise money.
So, here were the several benefits that come tagged with the integration of Blockchain in a startup. But, these benefits like all the genuine, validated benefits, don’t come without their set of challenges.
Specially when the technology is as disruptive and less explored as Blockchain, the instances of businesses facing a challenge in its implementation is very obvious.
Let us look at what challenges Startups face and the probable solutions there can be to overcome and adopt the technology in the business process.
Challenges they will have to overcome
Complexity in Regulations
The biggest obstacle facing enterprise blockchain adoption is the lack of regulations safeguarding entrepreneurs if something goes wrong. While, there are a number of regulations coming up aimed at bettering the Blockchain adoption rate, the time when you will have a legal regulation in place is still far away.
Presence of Legacy Systems
Startups that wish to actually benefit from Blockchain will have to have a DLT based infrastructure, something that requires technical know-how and capital. The solution to this is investing in skilled Blockchain developers who know how to integrate the technology in the existing system and then integrate on a small scale rather than going all in.
High Hack Incidents
For something anointed to be highly secure, Blockchain doesn’t come sans hack and security breach instances. The internet is filled with Blockchain hack events causing people a loss of millions and millions of money, making safety the biggest factor keeping Blockchain receive full Enterprise adoption.
The solution to this challenge is employing Private or Permissioned Blockchain ecosystem instead of Permissionless or Open Blockchain. By making Blockchain permissioned, you add another security level to the mechanism, making it completely unhackable. Also, since the number of stakeholders, in this case, lowers, the throughput time increases by manifold, making it easier to handle multiple transactions at one time.
Now that we have seen how Blockchain can make Startups more efficient and the probable challenges along with the ways you can conquer them, it is time to look into the Blockchain platforms that you will have to work around to employ the technology in your startup.
Enterprise Blockchain System Platforms
Here are the platforms that we have been trusting for the development of enterprise grade Blockchain system for your Startups –
- Hyperledger Fabric
- R3 Corda
- Hedera Hashgraph
As you could see, the enterprise blockchain systems usually have a lot more throughput, lesser latency, and a lot less complex consensus protocols compared to the standard public blockchains such as Ethereum or Bitcoin.
With this, you not just know why to invest in Blockchain for bettering your startup efficiency and the various applications of Blockchain in your business but also how to establish yourself as an innovative company but also what platforms to use to make it possible. What is left now is to get in touch with our Blockchain app developers and get started with the bettering of your startup.
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