Blockchain technology, the capability to run transactions through a decentralized electronic ledger, has everyone from business strategists to IT professionals talking. While businesses of all sizes are scrambling to benefit from the technology – with such benefits as protecting data from changes and errors – applications for small businesses are limited. So, how can you know if blockchain technology is the right approach for in your business, or even feasible? Here, we explore what the appeal is, and if the technology is even ready for small businesses.
The appeal of blockchain
Businesses are excited about use cases for blockchain where they need to record information and trust that it never changes. Because blockchain relies on a distributed ledger, there's no need to trust one central entity to own the information. Numerous transactions in the ledger, by multiple parties, gives blockchain-based applications inherent security, since every transaction must be agreed upon by all.
"Blockchain makes sense when you're working with a lot of tiny bits of info that all needs to be recorded," said Anders Brownworth, chief evangelist at Circle, an application that leverages blockchain technology to allow users to send money anywhere in the world without delay or pricey conversion fees.
"Right now, we're in a hype cycle with blockchain. And maybe we're too high," Brownworth admitted.
Use cases for blockchain
Blockchain may be necessary when you want to be sure about the reliability of data, and when you're dealing with multiple parties. In these instances, data is being passed around and shared, but you need to be sure it's accurate – in fact, you want every party involved to be confident in this.
"There are several use cases in IoT that come to mind," Brownworth said. "For example, blockchain may make sense when you're dealing with asset tracking. For example, you know that this shipment came to the Port of Los Angeles, and then made its way to New York." Perhaps it needs to be signed off along the way to verify that is the route it took, that it did reach its destination, and that all parties agree the shipment contained what it did along the way.
Implementation challenges for small businesses
For all the hype, professionals need to remember that blockchain is an investment, like any other new technology. It's expensive, slow and somewhat inefficient.
"The only reason small businesses should sign up for blockchain is if you don't want to trust a single central player," Brownworth said. "Otherwise, it probably doesn't make sense."
For example, if you're sharing information within your own company – like FedEx tracking its packages among its own employees – you likely trust your own system. There's no need to transition to blockchain for it when your own internal tracking system is working just fine (and if you don't trust your own system, then you have another problem entirely).
As far as SMBs hitting the ground running with blockchain tomorrow, Brownworth doesn't feel like that's likely or even practical.
"The ecosystem is still so young. So much more needs to be developed," he said. "I'd be wary of opening up the floodgates for SMBs. It's not ready yet. And it demands a lot of developer time."