Blockchain in Business

The Internet is filled with a plethora of information talking about the benefits of Blockchain Technology, how it can make our lives as humans better and how it will change the way we conduct business, get educated, access health care etc.

While this information is true, it is important to share a real world use case;that is, a real life situation which demonstrates the innovative power of the Technology in solving real world problems. This will go a long way in ensuring adoption. In this article, you will learn how Blockchain Technology can contribute positively to the growth of Small and Medium Enterprises.

Definition of terms

Understanding what Blockchain Technology is and what Small and Medium Enterprises are very important to make sure we are on the right footing.

A blockchain is a public decentralized, digital ledger that allows the recording of transactions or information across several computers.

Small and Medium Enterprises are businesses whose revenue and employees are below a certain amount. For some countries, a business is regarded as a small business if its employees are not more than 50, and if its revenue is not more than a particular amount of money. A business is regarded as a medium Enterprise with less than 250 employees, with a revenue within a certain threshold.

Understanding how Blockchain Technology can add value and contribute to the overall growth of Small and Medium Enterprises is very important especially because of the pivotal role Small and Medium businesses play in the global economy.

Small and Medium Enterprises employ about 50% of the global workforce, and contribute up to 40% of the GDP in emerging economies. They account for about 90% of the businesses in the world, hence they are very important in the achievement of the United nations sustainable development goals. However, they are faced with several challenges that inhibits their growth. In succeeding paragraphs, you will learn about three ways in which Blockchain Technology can add value to small and medium enterprises.

How can Blockchain Technology help Small and Medium Enterprises?

• Reduce the cost of doing business

Blockchain technology offers small businesses a cost-effective solution for safeguarding company's data. Blockchain records information in a chronological manner automatically. Small and medium businesses that employ the services of Blockchain Technology will not spent so much when it comes to data management. This is because information is stored safely, automatically and securely.

In addition, it also cuts down the amount of money spent on conducting business transactions. Blockchain reduces reliance on intermediaries, so there is no need to pay intermediaries.

This helps small and medium businesses who leverage Blockchain solutions for business growth to reduce the amount of they spend in doing business. With Blockchain solutions, transaction costs are reduced to the barest minimum while maintaining efficiency in the delivery of services

• Accessibility to funds/micro-loans

Small businesses are often faced with financial challenges. According to World Bank, SMEs are less likely to obtain loans than large firms. It's often difficult for them to access traditional financial services with ease. Traditional financial services providers like Microfinance banks often require small business owners to go through stringent processes before they can access loans or grants.

Blockchain facilitates easier access to funds and microloans through DeFi Platforms like Aave. The lending processes are streamlined and automated by Smart Contracts protecting both the Lender and the borrower while ensuring an inclusive environment.

• Business expansion

With accessibility to loans and grants, small and medium businesses can expand and grow beyond their geographic location with ease. Blockchain technology opens new avenues for business expansion.

In addition, Tokenization of assets makes it easier for small and medium businesses to attract investors. Tokenization simply means the art of covering something into a digital token. A token is a digital representation of an item on the Blockchain Technology.

Thanks to Tokenization , small and businesses can represent their businesses in the Blockchain and make it easier for more people to invest in the business and own shares. This will ultimately help them to grow and expand their businesses.

Further, Blockchain facilitates fast cross border payments. This is very helpful for Small and Medium Enterprises because we live in an interconnected world. Location is no longer a barrier to conducting business, and the E-commerce is gradually booming. One major challenge for many small and Medium business owners borders around accepting and confirming payments.

With Blockchain Technology, it's easier to confirm transactions and currency is not a barrier. Small and Medium business owners who accept crypto as a form of payment can attest to the fact that it has helped them to serve clients globally.

In conclusion, Blockchain Technology can be applied in every industry. In this article, three ways in which Blockchain Technology can add value to small and medium sized enterprises. With Blockchain solutions, SMEs' can establish trust with partners and customers globally, grow their businesses, and contribute positively to the achievement of the sustainable development goals.