9 blockchain facts for small merchants

Is Blockchain really set to transform the landscape of e-commerce?
Blockchain has caused both tremendous excitement and big concerns, so it's not always easy to look past the emotional or promotional hubbub and get an accurate look at what it really is and what it is good for. Especially for SMEs and smaller merchants, we're trying to make you see the forest for the trees.

The good news: blockchain is a mostly positive thing for SMEs if they decide to use it. The bad news: it isn't completely without risk.
1. Blockchain has applications beyond cryptocurrencies

While blockchain was designed to act as a public, distributed and immutable ledger for the first cryptocurrency, Bitcoin, it can do more than that. So we need to look past the hype around cryptocurrencies, many of which will probably collapse or are already collapsing into obscurity. This says nothing about the value of blockchain technology.

2. 'Single source of truth' against fraud

New blocks are added to a blockchain only after they're verified and correspond with the established data already in the chain. So, the longer the blockchain becomes, the more impressive the data therein becomes because they all rely on mutual verification, in effect becoming a 'single source of truth' for data provenance, e.g. in tracking manufacturing processes to battle counterfeiting, or to validate signatures.

3. Distributed hosting relieves pressure from your IT setup

While the total computing power required by blockchain-driven processes can be quite high, the local investment in IT for a smaller merchant can be quite modest. Blockchain processes are cloud-based and don't require heavy upfront investment. Together with the rise of IaaS (infrastructure as a service), IT costs become substantially lower, which is good news for SMEs with smaller margins and financial surpluses.

4. Blockchain can cut the middle man

Blockchain technology allows you to set up and authenticate a P2P (peer to peer) system for payments, contracts and so on. This helps explain the panic with PSPs (payment service providers) and banks, whose business is based on being the trusted middle man. Most of them are also experimenting with blockchain anyway, because they don't want to miss out. So in short, your payments can get faster and more direct, and without extra transaction costs.

5. No political or economical interference

Another reason why the big fish are wary of blockchain is because they can't control it. Due to its distributed nature, there is no one policy or ideology driving blockchain, unlike for-profit or governmental systems that underpin payments, verifications or identity checks. In addition to being neutral, this again includes less costs on the part of the merchant.

6. Beyond payments and verifications

Cryptocurrencies may or may not become a bigger part of the global financial landscape, but blockchain technology is a more certain bet to become more important. Beyond verification and payment, it is also useful technology for archiving and documentation, product history, general operational ledgers, reporting and more.

7. The 51% vulnerability

However, blockchain is not completely perfect. Its designer(s), who goes or go by the name Satoshi Nakamoto, acknowledged that if 51% of a blockchain begins accepting information that is false, the falsehood becomes 'truth'. While the computing power needed to realize this is enormous, it is still a potential flaw, especially in smaller and start-up blockchains.

8. Limited processing speed

A blockchain's processing speed is limited by the total available computing power in its nodes. Especially Bitcoin has become notorious in not only soaking up huge amounts of resources, but also limiting itself to 7 transactions per second. The constant re-sending and re-recording of all information in the blockchain is quite laborious and may not be very interesting to a smaller business that finds its agility hampered by this.

9. Complexity and jargon

Blockchain comes with a whole new vocabulary of jargon that can be daunting to learn, especially for businesses that don't have the time to sit through long tutorials or delve up information. That, and the new skills it takes to get started with blockchain make for two deterring factors. Like with the initial rise of the computerized office, there is no quick cheat to get into this — you'll have to put in the hours.

Conclusion

Despite the inherent kinks to a nascent technology platform, the future of blockchain looks bright. It is set to change the business landscape for the better, and once SMEs can get over the hurdle of the initial time and learning costs, it can trim operational costs and highlight their profile as a more trustworthy partner to do business with.

While it's natural to remain on the fence for the time being, sooner or later individual and business customers will want to know where you stand and what you can offer them with blockchain. Forget the cryptocurrency hype, but focus on what blockchain can do for your business and your customers.

Speaking of cutting the middle man…

… for smaller merchants and SMEs, e-commerce can seem like a series of choices between the devil and the deep blue sea. Options like Amazon and Flipkart are easy but offer you very little control, while traditional webshop builders offer more control of your business but take too much time and effort to learn.

That's why we designed Shopitagthe ideal entry-level e-commerce platform that lets you set up an online pop-up store in less than 30 minutes. Don't believe us? Check it out for yourself. It's free up to three transactions per month!
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