Anyone paying attention to the cryptocurrency market this week would agree that, for all the hype it has generated over the past year, it remains rather volatile. The value of Bitcoin plunged to $10,000 – a 50 percent drop from its 2017 peak – while other currencies, such as Ethereum, Ripple and Litecoin, have experienced double-digit losses. Furthermore, BitConnect – the anonymously run exchange that has been accused of running a Ponzi scheme – collapsed on Tuesday.
This isn’t the first time the cryptocurrency market has caused an upset. Bitcoin experienced similar crashes in the spring of 2011, November 2013, and January 2017. What makes this particular crash unique, however, is that it comes amidst a global push by national governments for tighter regulation of an industry that has remained largely decentralized.
But while the future of Bitcoin remains uncertain, it is the blockchain – the technology underpinning all cryptocurrencies – that just might prove to be most valuable.
At its core, the blockchain is an incorruptible, decentralized ledger that records and verifies any transaction or contract between two parties. While it first came into use in order to securely track and verify cryptocurrency transactions, it has many potential uses across a variety of industries – with 57 percent of large corporations reporting that they were “actively considering or in the process of deploying blockchain.”
As big businesses have always been innovation enthusiasts, it’s perhaps not surprising that many are beginning to adopt blockchain technology. But a greater indication of blockchain’s revolutionary nature is its potential to be utilized by small businesses, even entrepreneurs. Accordingly, below are three practical applications of blockchain technology for small-medium size businesses.
1. Executing Vendor Agreements Through Smart Contracts
As business is largely about a contractual exchange of value between two parties, typically a middleman – such as a lawyer – is needed to oversee and execute the terms of an agreement. With blockchain technology, however, businesses no longer have to rely on a third party, but can instead utilize “smart contracts”, a set of terms coded on top of the blockchain that “automatically facilitates, verifies, or enforces the performance of a contract when certain criteria are met.”
In other words, blockchain technology enables traditional contracts to be translated into sophisticated code that self-executes the terms of the agreement when all predetermined conditions are met. As such, companies can do business with vendors and subcontractors in a secure, immutable way without the need for a middleman, ultimately saving them time and money. This is particularly beneficial for small businesses and start-ups that can’t afford to be negligent with their expenses
2. Decentralized Cloud Storage
Many small businesses depend on cloud storage, which allows them to maintain, manage and access files and data from a remote location. However, businesses must rely on a single storage provider, which offer services through a centralized system that contains all their digital assets. Furthermore, many businesses fail to utilize all the storage that they’ve paid for. Blockchain technology solves these problems by decentralizing cloud storage, creating a market that allows people to monetize their unused storage space. The result is a faster, more secure and cost-effective storage option. As centralized servers have shown their vulnerability to hacking – as we saw with the iCloud hack of 2014 and the Dropbox hack of 2012 – blockchain technology’s decentralized storage capability becomes particularly appealing.
3. Tracking and Verifying Identities
Blockchain technology can also help businesses track, manage and verify identities securely and efficiently, something that has become increasingly complex in today’s digital landscape. With the ability to code information relating to a person’s identity directly onto the blockchain, companies can then use smart contracts to verify a person’s identity before sharing sensitive information or engaging in online interactions. Given that 43% of cyber attacks target small businesses, the ability to authenticate digital identities is hugely important.
With all this being said, it’s important to note that blockchain is still an emerging technology in its infancy stage. While we have a long way to go before its widespread adoption, early movers are yielding impressive results. The cryptocurrency market may remain volatile, but we are likely only beginning to see the potential of a technology poised to transform our world.
For more information on blockchain technology and how it can be integrated into your business strategy contact, Treehouse Technology Group.