With all the buzz around blockchain tech and cryptocurrencies, small businesses might feel left out.
Even for those who are not necessarily cutting-edge in terms of tech, these five tips can empower entrepreneurs and small businesses in leveraging bitcoin and blockchain as cryptocurrencies for their financial and other needs.
Using Bitcoin and Blockchain in Your Small Business
Accepting Payments in Bitcoin and Other Cryptocurrencies
The survival of the cryptocurrency revolution is completely reliant on its acceptance, and that is where small businesses can excel. Some larger companies, like Amazon and Tesla, are currently accepting cryptocurrency with not too many small businesses jumping on board.
First, let’s talk a moment about why accepting cryptocurrency can be of benefit to you:
Little to no fees — Credit card processors will easily charge you 2-4 percent in fees for using the service. Cryptocurrency transfers are close to free, although services will usually charge a minimal amount (0-1 percent) which means you will save money. Note that you can use services that can confirm blockchain transfers faster, but will have a bigger fee to expedite it.
Faster access to your funds — Banks are not involved with the transactions, and there are no centralized clearing processes. This means you get the payments considerably faster. For example, most bank-based payment processors send payment within 1-2 days. You can get Bitcoin payments within minutes to a few hours, depending on the network’s cryptographic load.
No government ties — Since cryptocurrencies are not tied to any governments or regulatory agencies, there are no borders to consider. You can avoid international exchange rates or transaction fees.
Avoid disputes — Although cryptocurrencies are completely digital, they work like cash rather than credit. All sales are final, and there is no way for a customer to dispute a transaction. If you have had issues with people contesting charges, accepting cryptocurrency can change that for you.
You can actually make a name for yourself by being a pioneer in this regard. It’s as easy as setting up a payment processor that specializes in cryptocurrency.
While many services will offer “wallet” capability, some startups go beyond this. CryptoPay, for instance, offers both a digital wallet for Bitcoins and a physical debit card, which allows users to spend cryptocurrency at any establishment that accepts Visa debit cards. CryptoPay is one of the more established players in this niche and is planning to raise funds through an initial coin offering (ICO) in order to further improve its services.
Signing Agreements with Vendors Through Smart Contracts
Signing agreements with vendors would usually require a lawyer to draw up a contract for you and your client to sign. This can be an agreement for an exchange of service and money, complete with the agenda and timeline. You would wait for the contract to be finalized, parties to sign it, and it would get notarized. Then you would do the work and expect payment to arrive. If the other party didn’t pay you as agreed, you would then go back to your lawyer to bring suit against the other party.
Smart contracts change all of that by making it simpler.
Blockchain technology makes smart contracts possible — these are digitally-signed agreements to execute certain things when certain conditions are met. You create it with the services you will provide, the mutually agreed upon cryptocurrency amount and the deadline for the service to be completed.
Once submitted, the contract cannot be altered, and copies will be hosted across all the nodes in the blockchain, so that it’s completely accessible at any time. Because the contract is on the blockchain, it is monitored to be sure the service promised is delivered. Then when the service is provided, the cryptocurrency is exchanged on the due date without anyone having to do anything to start the process.
There are services to enable businesses and individuals to execute legally-binding smart contracts, such as Agrello, which dispenses with the need for middlemen, such as lawyers, and eliminates the possibility of breaking the contract.
Conserving Power through Smart Electric Grids
While cryptocurrencies have been criticized for their excessive use of electricity, we are seeing a turnaround in being able to conserve power through the blockchain. In some larger cities, folks are selling solar power on the blockchain to one another.
Essentially, they harvest the solar energy from their own solar panels and then store the excess on a smart power grid. Then, they utilize blockchain technology in order to monitor electricity usage, availability of solar-generated power, and such.
These communities also use the blockchain to sell excess energy to their neighbors or the electricity grid, or to acquire energy when their solar cells are short. All transactions are, of course, dealt with in cryptocurrency.
As a small business owner, you can benefit from using someone else’s excess solar energy, which can result in savings from buying electricity from the grid. If you have a big enough solar power facility, you can even be a net seller of electricity.
The Brooklyn Micro Gird is a P2P energy market based on the blockchain technology. Such projects and initiatives will improve our ability to monitor and manage transactions, as well as creating a connected and distributed network that could disrupt the energy market on a larger scale.
Keeping Track of Logistics and Vendor Shipping
As we mentioned previously, the blockchain is tamper-resistant when it comes to the integrity of your documents. You can add whatever you want, and you cannot delete or change any document or transactions within the blockchain – although everything can be audited and monitored by all parties involved.
This means a lot for the small business owner who needs to track inventory. When you receive inventory, its transaction is recorded in the blockchain. When you sell that item, it’s recorded. When you ship the item, it’s recorded. Who you purchase the inventory from, who purchases it, and who is shipping is all recorded and makes your life much easier. This means no more costly programs that are supposed to do this for you that happen to allow for transactions to be altered or deleted. All of it is done in real-time and with no major cost to you.
Several startups are trying to revolutionize the supply chain. The future holds many promises and it’s only a matter of time until businesses use this technology.
Paying Utility Bills Through Bitcoin Wallets
In the past, one of the reasons people weren’t excited about cryptocurrency was the lack of use for everyday items. We want to be able to pay bills or buy gas with our cryptocurrency and allow our bank accounts to grow while we do so. This has slowly been changing and we are seeing more Bitcoin wallets giving the ability to make utility payments for us.
The above-mentioned platform CryptoPay offers a way to easily make bill payments without having to manually transfer your Bitcoins to your US dollar bank account. Some wallets even let you convert your Bitcoins to fiat currency (like Euros or US dollars) so you won’t be affected by the volatile values.
While cryptocurrencies haven’t been embraced over the last few years like we had hoped, we are still seeing growth happen — both in terms of their values vis-à-vis fiat currency and more acceptance across different businesses. Jumping on board now broadens your customer base and provides you with some added benefits that you can’t get in today’s current market.
Bitcoin Photo via Shutterstock
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The bitcoin is an evolving currency. They say that it seems to have some promise. I am just not sure. Has anyone tried bitcoin trading?
I think that Bitcoin will be big. Just give it time and you’ll be surprised.
Awesome article. Thanks for sharing this very useful information. Blockchain looks very promising and the examples sited really helped me understand. It’s really fascinating to know that many small players are trying their hands out at blockchain – very innovative and useful products/services lined up. I agree the success of this technology remains on the level of adoption, but given the advantages I would hope we have a strong case for adoption.
Thanks again for this wonderful article.
You wrote, “Because the contract is on the blockchain, it is monitored to be sure the service promised is delivered.”
Monitored by who or what?