If you ask why you should use blockchain for your new startup, the immediate answer will be —you will get more funding. When Long Island Iced Tea Corp, a little-known company in Hicksville, changed its name to the Long Blockchain, its stock spiked 500% in a day. Yes, they still sell ready-made iced teas. But putting “blockchain” in the company name worked wonder for them. Now you can imagine if just adding the name can have such an impact, how powerful this buzzword can be. But beyond funding, there are other compelling reasons to use a blockchain. Wondering what it could be? Read on to find out.
What is Blockchain
Before diving deep into the benefits of blockchain, let’s first figure out what this buzzword is all about. Blockchain is basically a distributed database with an ability to store and manage all types of transactions. All the transactions take place within time-stamped blocks that are linked to each other. Since every block on the chain is mathematically encrypted and validated with numerous protocols, it’s impossible for the intruders to intervene in the data.
Why Your Startup Needs Blockchain
Blockchain is much more than just a trend. Adopting this technology can help you improve several business functions. Here are some significant benefits that blockchain can offer to your startup.
Enhanced Security
You must have heard of Facebook’s recent struggle regarding user privacy issues. This shows that no matter the size, any company can be susceptible to lose public trust if it fails to protect the user data. A well-established company like Facebook may be just fine despite the glitch. But startups like yours which need funding might not be able to do that. That’s why you need to enforce data security into your business and implementing Blockchain technology is the best way to do that. In fact, today most venture capitalists prefer a company that uses blockchain to secure data and transactions rather than the one who doesn’t use it.
Increased Efficiency
Many startups operate on some software that involves manual processes that are prone to human error to a massive extent. However, with blockchains, such tedious processes can be streamlined and automated and thus, transactions can be completed faster and in a more efficient way. Also, since a single digital ledger is used for keeping records, it eliminates the need for reconciling multiple ledgers and numerous intermediaries. That means you have less clutter and more efficiency.
Easy Access to Capital
Financing is the biggest barrier when it comes to startup companies. As there is a high risk of default, most of the financial institutions don’t provide a fund to startups. This is where Blockchain comes to rescue. Startups can raise funds from any corner of the world and can operate independently from any geographic location using blockchain technology. Thus, sending and receiving funds becomes just a matter of a few taps.
Operational Cost Reduction
By eliminating the need for a middleman, blockchain enables you to save time as well as operational costs. According to IBM’s Kelley, when Walmart used blockchain to trace food from store shelves to the farm, the time reduced from seven days to 2.2 seconds. That time savings also leads to considerable cost savings.
Transparency and Accountability
Transparency and accountability are crucial for a startup business and blockchain technology can give you both at the same time. A public blockchain is viewable by all parties and no one can make any changes in the logged data without the consent of all the members. No transaction can be modified or deleted without the permission of other nodes once they are uploaded in the chain. This creates transparency and accountability in transactions.
Final Thought
It’s true that Blockchain is still in its infancy, but there are already whispers in the business corridors about how it can disrupt the existing business models. There is no denying that blockchain has tremendous potential to offer. And this is the reason why greater foundations are trying to tap into this crisp innovation. So, if you want to get benefit from the fascinating innovations that Blockchain is unfolding, now is the best time to adopt this emerging technology.