It’s impossible to open a newspaper, log into your favorite website, or scroll through your newsfeed without hearing about different businesses being influenced by blockchain. With the nearly daily updates on the price of Bitcoin, and discussions about alternative currencies, it can seem overwhelming, confusing, and intimidating.
A question I hear every week is whether or not a small business should start accepting, or investing, in one of these alternative currencies. The fact of the matter is that there are, actually, many alternatives to Bitcoin based on the same underlying technology — blockchain. While the specific trends and currencies may change over time, the underlying technology and implications of blockchain contain several implications that will influence businesses of all sizes.
Drilling specifically into the business applications of this technology there is clear evidence that larger organizations are investing in this technology. From large public accounting firms investing in technology tools, to Amazon purchasing web addresses linked to cryptocurrencies, there is significant investment already occurring in this space, but is this something you and your business should be doing?
Let’s take a look at some of the ways blockchain might impact your business:
1. Understand what blockchain actually is.
At the core of the idea, blockchain technology represents a platform tool that can generate several benefits for your organization. At its core, blockchain is a decentralized ledger or transactions that are recorded in a list of records called blocks. Every organization or entity (including you) is assigned a unique identifier, and equipped with the tools to encrypt and decrypt information communicated via the transaction.
This means that you can do business, and verify that the transactions have been completed without having to call anyone, check your emails, or go visit your anybody in-person.
2. You need to understand what blockchain actually means for your business.
Blockchain may seem like a mysterious topic, but at the end of the day it can be boiled done to a few important topics. Even more important for you, these applications have real world implications for businesses of every size.
- Increased security over transactions
- Lower (eventually) lower audit, tax, and other compliance related fees
- Reduced downtime and lag in your supply chain
3. It will increase the security over your transactions.
One of the fundamental benefits of investing in blockchain, and worthy of the consideration of every entrepreneur, is that by doing so, you will be increasing the security and transparency of your transactions. Since every entity involved in your blockchain will have to voluntarily enter into the blockchain environment, and comply with security and encryption responsibilities, this will increase the security and data integrity of your transactions.
4. Your accounting fees will (eventually) be lower.
As a CPA, I can attest that the reality is that blockchain will fundamentally change the nature of how tax returns and audit reports are compiled and reported to external users. Although this represents both a challenge and an opportunity for practitioners, the quick-take is that entrepreneurs and small business owners will benefit from the increased automation of tax and other accounting functions. Since greater percentages of back office and accounting related works will be automated over time, this will lower costs for you and your business.
5. Blockchain helps improve your supply chain.
A topic I have seen quite a bit of conversation about are the implications that blockchain technology will have for supply chains, and this is a topic that is worth further analysis. One common pain point is the amount of time spent confirming the status of shipments, emailing or calling to address these issues, and sometimes not hearing back until incorrect goods have already arrived.
Blockchain, by providing access to both operational and financial information in real time, will give you and your suppliers updated information in real time, including data about your shipments.
With all of the buzz and even possible hype surrounding blockchain, it is entirely possible to feel overwhelmed and confused as to what this technology means for your business. Like any other technology, however, it’s important to understand that blockchain is simply another tool you can put in your businesses toolbox, and that this tool can help your business starting today.