Almost everyone with access to the internet has heard of Bitcoin, the first application of blockchain technology to gain worldwide recognition. Some have even mistaken the two for synonyms.
While Bitcoin led the recognition of cryptocurrencies and even went on to be accepted by various businesses around the world, blockchain itself has benefits far beyond facilitating payments. Here’s how the tech can benefit both big and small businesses.
Better Cash Flow
Through smart contracts, blockchain allows for immediate and automated payment of invoices once the transaction is signed digitally. Every party involved can stay updated by following the ongoing payment process in real time.
What’s more, there’s no need to wait for the invoice to be issued in physical form or wait for different authorities to sign and share documents necessary to carry out the payment.
Furthermore, an automatic payment can be triggered once specific requirements are met – such as both parties signing a contract. It is even possible to receive and make instant payments to any part of the world with minimal charges while avoiding absurd exchange rates.
Efficient Supply Chain Management
Efficiency is vital for the success of any business. Using blockchain can boost the performance of logistics and supply chain management a great deal. The distributed ledger technology (DLT) lets you create a chain of transparent, immutable, and auditable records. With it, you can ensure the provenance of each and every item that is purchased or sold.
There is nothing that slows processes and increases costs like having many clearing authorities in a business. Blockchain technology cuts off middlemen such as banks, real estate agents, brokers, etc, thereby reducing the costs and time required for transactions. Having fewer intermediaries also improves trust and reduces the possibility of conflicts.
Many tech companies prefer raising funds outside of the traditional bank loan and venture funding systems – by using ICOs. Initial coin offerings are a relatively new way of crowdfunding that has enabled many startups to raise millions of dollars. Among the biggest success stories are Filecoin and Tezos, which gathered over $200 million each.
Tokenization of Assets
Another blockchain-based business practice that is catching up fast is the tokenization of assets. Basically, it means you assign crypto tokens to real-world assets. It could be real estate, automobiles, or even services. This increases the liquidity of assets, allowing businesses to sell, resell, buy, and manage assets without having to deal with cumbersome conventional marketplaces.
Tokenization also allows you to put a value on intellectual property – such as patents and copyrights – as well as other intangible assets, and even make them mutually interchangeable with other assets of the same value.
Blockchain has many applications and even more are being invented as the technology is being developed with each passing day. As a business person, you want to stay up to date by finding ways to explore the benefits of blockchain technology to streamline your processes.
For more information, check out the infographic below.