It’s pretty challenging to be in the business world and not hear the buzz surrounding blockchain. It’s been built up by some as the biggest thing since the Internet and dismissed by others as all hype. The truth, however, is probably somewhere in the middle.
Blockchain has the potential to change the way a lot of business transactions are done, in a manner that many industries may find revolutionary or disruptive. Much like the Internet, blockchain technology will also continue to evolve over time. If you’re an entrepreneur and wish to stay current, here are some common questions about blockchain and how it could affect your business.
What is blockchain?
Blockchain is a new way to verify transactions. While that sounds strictly financial, it really applies to any change in property ownership. Whether that’s purchasing music, shipping food, or, of course, banking, the technology is not limited to one industry. That’s because it uses an immutable, decentralized ledger—a permanent, mutually-accessible record-keeping system—to both store and verify information. Instead of relying on a third party like a payment processing service to process and verify a transaction, every participant in a blockchain has the same copy of the ledger as everyone else. That ledger is continuously updated so everyone possesses the same information, similar to working in Google Docs.
What should I know about blockchain as an entrepreneur?
Whether you want it to or not, there’s a good chance that blockchain will affect your industry. These changes won’t occur overnight. That’s because you cannot simply adopt blockchain with the push of a button or new software. It requires a fundamental reworking of many business processes to fully take advantage of the benefits this technology has to offer.
How can blockchain help my business?
How blockchain can help your business varies depending on what your business is. While the applications are apparent for major industries like finance, there are also a lot of uses for something as small as a neighborhood pet shop. Here are a few examples:
Supply chain verification
The power of instantaneous supply chain verification has ramifications for every industry. By providing tamper-proof records, the blockchain ledger can nearly guarantee the authenticity of products starting from their place of origin. This helps maintain merchandise quality standards while reducing theft and loss during transit.
Smart contracts are self-executing agreements stored on the blockchain. They use the blockchain ledger to verify that contractual obligations have been fulfilled and then can distribute funds or transfer ownership as agreed in the terms, independent of a third-party escrow firm. For example, if party A is selling a house to party B, a smart contract could automatically transfer the ownership deed to party B once it verified that the proper payment was made.
What is the outlook on blockchain startups?
With the potential that blockchain technology has, it’s hard to determine the impact it will have this early in its lifespan. However, startups in the blockchain space have a lot of opportunity to shape how the early adoption of blockchain takes place.
Venture capitalists agree and are continuing to fund blockchain startups with solid capital injections. Because blockchain has implications for nearly every industry, the market is still undersaturated in both startups and the talent needed to power them.
Thinking of founding a blockchain startup? Rocket Lawyer can help you incorporate. Answer a few questions about your business, and we’ll file the paperwork for you.