Bitcoin is all the rage.
Since the beginning of 2017, Bitcoin’s price has jumped by nearly $15,000. With a move like that, it’s no wonder why everyone’s paying attention.
Though the cryptocurrency has been in the spotlight for a few years, the technology behind it may have fueled the 2017 launch.
Blockchain is the platform that makes cryptocurrencies like Bitcoin what they are. It makes them tick.
But what is blockchain, and why should you care about it?
To help small businesses, we laid out why blockchain is important to you and your bottom line.
No need for frills or technical jargon. Here’s what you need to know.
Blockchain is a method of digital record keeping. When a transaction is made, it is logged in a “block” that holds the details of the transaction.
So, other than storing it online, what makes the blockchain different from any other ledger?
It's dispersed between thousands of computers that have the exact same record of the series of transactions. So, the records are 'decentralized.' They aren't in a single location. It’s like if your bank sent your statements to another bank, and that bank sent them to another until every bank in the US had a copy.
The blockchain is what is called a “distributed ledger.” It’s dispersed between thousands of computers that have the exact same record of the series of transactions.
So, the records are “decentralized.” They aren’t in a single location. It’s like if your bank sent your statements to another bank, and that bank sent them to another until every bank in the US had a copy.
Except, no one knows it’s you.
With each copy of the record, the transactions are encrypted, so that you can never be linked to the history of a payment.
But, if your bank already keeps your records on file, why do you need all this extra stuff?
Companies large and small are adopting blockchain technology. Recently the CEO of J.P. Morgan applauded the technology and its potential for improving traditional banking systems.
There are three main positives for adopting blockchain technology that affect businesses large and small. But small businesses have a distinct advantage.
While brick-and-mortar banks find it difficult, small businesses can easily take advantage of these innovative technologies.
Here’s why you should.
By publishing the ledger online, all participating parties can see the transaction record. That means anyone who was involved in the transaction or the computers that hold the information can easily and clearly see it.
The information is stored automatically, so you don’t have to manually enter anything, and the record is immediately available. This is incredibly different from traditional banking.
Banks are anything but automatic. Payments, statements, invoices and other services can take a long time to process. Small businesses don’t have time for that.
Plus, banks are notoriously muddy. Their records can be difficult if not impossible to access, and their processes can be even worse. Besides everything taking forever, customers are often charged unnecessary fees.
Because the records are kept in-house, customers may never know why they were charged.
When sending or receiving a payment, small businesses need to know that the amount of money they send will get to the receiver in full.
By using the blockchain, small businesses avoid the inconsistencies and cloudiness of banks.
But, you might be thinking, banks must be safer than trusting my money with the internet, right?
The ability to see everything that’s going on with your finances speeds up the transfer process and adds a level of safety that banks simply can’t offer.
Anytime a “block,” or transaction record, is tampered with or changed, it can be seen and confirmed by all parties. As well, all transaction records are encrypted, so potential hackers have a much harder time finding the computer the transaction was made from.
The great thing about the blockchain is that, if any single block of the chain is tampered with or altered, the entirety of the chain is notified.
Put simply, if one number is changed, it can’t go unnoticed by the holder of the record. To confirm, anyone who suspects change can simply compare their record to anyone else’s along the chain, as these thousands of copies cannot be changed.
In fact, the majority of the network must agree on an alteration for it to be “approved” by the blockchain.
The purpose of a bank is to house financial information in a central location. While brick walls and security guards may suggest safety, your money is vulnerable from inside and out.
A hacker would have to invade the majority of blocks along the chain, which can account for thousands of servers across the globe. Not exactly an easy feat.
This kind of security measure is only possible with a decentralized ledger. The traditional centralized system is why banks have such a hard time.
Financial crises have shown us that the big banks aren’t what we thought they were. The system is far from perfect, and customers like small business owners pay the price for failure. Literally.
On top of that, the bank itself may be working against you. Stories of corruption in US and international banking systems have piled up in the past decade, especially for the big guys.
Unlike this outdated system, the blockchain doesn’t sacrifice speed for security.
Because it isn’t centered around any one country or bank, transactions don’t necessarily have to comply with the regulations that bog-down the financial system.
The blockchain is largely automated. There’s no need for manual entry, so payments and transfers arrive precisely when they’re meant to. There’s no need to confirm with multiple parties, as the blockchain does this for you.
For small businesses, this affects domestic payments, but helps even more so with international transfers.
Depending on the institution and destination, these can take weeks to arrive.
With blockchain, there's no need to worry about suppliers waiting for payments. The blockchain can save you time, money, and drastically improve your mental well-being.
With blockchain, there’s no need to worry about suppliers waiting for payments. The blockchain can save you time, money, and drastically improve your mental well-being.
But, you’re probably not going to create a blockchain yourself. You’ll need an established platform that’s experienced, and easy to work with.
Veem is a global payments solution that helps small businesses send money internationally.
Our multi-rail technology finds the most efficient, cost-effective, and secure route for your payments. One of these “rails” is the blockchain.
Veem was the first in the financial technology space to send international business-to-business payments through the blockchain, and continues to innovate the space to help you go global.
We provide everything that the blockchain promises: security, transparency, and speed, with better customer service.
What’s not to love?
To learn more, start the application process here, and bring your payments into the future.
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