5 Ways to Use Blockchain Technology for Your Business
On this page, we’ll discuss the basics of blockchain technology and five ways to integrate it into your business. If you have any questions, contact us today at 888-601-5359 to speak with a strategist.
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What is blockchain technology?
Blockchain is a digital ledger of economic transactions. It can record anything of value, from finances to contracts. All of this information is shared in a public database, where records can be viewed and verified by anyone.
Blockchain technology composes two primary components. The first is a decentralized network that facilitates transactions. Simply put, there are multiple computers that work in this network to complete transactions, rather than one central computer.
This distribution prevents failure and corruption in the system. Unlike most transaction systems, there is no single-point-of-entry for hackers because the information is processed through multiple computers.
The second component is the ledger. This is where the information is stored and shared. Everyone who accesses blockchain technology can see transactions in the ledger.
Basically, blockchain technology focuses on distributing transactions amongst a network of computers, known as nodes, and keeps these transactions public for verification.
The most famous example of blockchain technology is Bitcoin — the digital currency launched in 2009. It’s a peer-to-peer cash system that takes out the middle man when sharing money with friends, family, and businesses.
Bitcoin grew in popularity because of the encryption and protection of financial information. The inability for human error added to the appeal, and it became a trusted way to eliminate the need for third parties to facilitate transactions.
How does blockchain technology work?
To fully understand blockchain technology, you need to understand how the transaction process works.
- Someone requests a transaction. The first step is to initiate a transaction. Transactions include exchanges of money, documents, and information.
- The transaction goes to the nodes. This is the network of peer-to-peer (P2P) computers that process requests. Once the transaction is initiated, the nodes will process it.
- The nodes validate the transaction. Once the nodes receive the transaction, they process it. It involves using algorithms to determine if the transaction and users are valid.
- Transaction information creates a block of data. This data will combine with other data to form the block. This block is formed in the ledger.
- New blocks are added to the chain. As new blocks of information are processed, they are added to the old blocks. This forms the blockchain.
- Transaction is complete. Once all this information is passed and linked together, the transaction is complete.
4 downfalls of blockchain technology
With all new and developing technology, there are always negative aspects. Here are four that you should know.
1. Environmental cost
One of the most important features of blockchain technology is that no central company or computer controls transactions. This is one of the most prominent features because it prevents hackers from obtaining important information.
The issue, however, is the amount of power needed to run blockchain technology. Since there is no central computer, it requires multiple computers to run this technology. Multiple computers mean you need a lot of energy to run blockchain technology.
This system requires more energy to run than other systems, like credit cards or online document programs. While it is more secure, this comes at a cost to the environment. When you run computers 24/7, you waste energy that could be saved for other processes.
2. Lack of regulation
Though one of the prominent features of blockchain technology is the lack of someone regulating the transactions, it is potentially a major downfall. There are multiple reasons that a lack of regulation negatively impacts blockchain technology.
For one, people want to know that their money is backed by a company they trust. It is hard to convince people to use a service that doesn’t have a reputable company backing it, like PayPal, Amazon, or Walmart. The lack of a trusted authority leaves people hesitant to use the service.
Secondly, the lack of regulation opens the door to scams and manipulation. There is no one to identify these problems or flag issues.
Normally, people can rely on a trusted company to make sure transactions are legit or handled properly. If things go wrong, they have the company to rely on to fix the mistake. Without a trusted administrator, the door is open to people scamming other people out of money or information.
3. It’s difficult to explain
When you have a great tech idea, you need to get the average person to like it and agree to use it. This means you need to be able to explain the idea simply and easily. If you can’t get the average person to understand the technology, they won’t use it.
Since blockchain is so complex and new, it would be a challenge to show the average person the value of using blockchain technology if they aren’t familiar with it. This makes it hard to convince people to use the technology.
Not many people will take the time to research and learn more about blockchain technology. They are comfortable with the payment options they have now, so they won’t feel inclined to research and learn more about this technology. It makes it difficult to get your audience interested in it.
Without a company backing it, this makes it even more difficult for people to understand just how secure blockchain is and why they should use it. People need to know that their money is safe and secure. Without a company backing it, it makes people hesitant to use the service.
4. It’s slow
In today’s world, people want things done quickly and efficiently. Technology, like Apple Pay and Google Pay, is designed to create a faster checkout experience for people. Blockchain technology is behind compared to these services because it does not process transactions as quickly.
Blockchain technology can only process 7-10 transactions in a minute. This means that people will have to wait for their transactions to process. In some cases, it can take hours for a transaction to properly complete.
Major credit card company, Visa, can process approximately 24,000 transactions per second. This is far quicker and efficient compared to blockchain technology.
It would be a challenge to get users to use blockchain technology when they are used to the speed at which Visa completes transactions.
Unless blockchain technology becomes more efficient, it will remain difficult to convince users to use a slower service to process their transactions.
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5 ways to use blockchain technology
Despite the bumps in the road, there are many helpful uses for blockchain technology.
When you create contracts with other businesses, things can easily get jumbled. Documents are lost or aren’t updated. Sometimes people never receive the contract or don’t carry it out.
This is frustrating for your business because it makes it harder to do your job. With blockchain technology, you can alleviate this frustration.
Blockchain technology uses self-automated computer programs to carry out contracts. The contracts are unbreakable and must be upheld by both parties. It’s a great way to ensure that both your business and the contractor fulfill the contract.
This technology also can bypass regulations. It creates a lower cost for your business and ensures that your contracts will be carried out without hassle.
2. Supply chain communication
When you need products for your business, you have to constantly check in with your supplier to make sure that your supplies are arriving on time. If they don’t, it sets your business back and creates headaches.
With blockchain technology, you’ll get records that proactively show you the state of the project. You can see the status and know what’s going on to ensure the project gets finished.
This is great technology to have if your business relies on other companies to manufacture materials for your products. It helps make the process easier and helps you know what’s going on with your materials.
3. Pay employees
Blockchain technology took off with the idea of being able to pay people without a third-party administrator. With cryptocurrency, blockchain technology makes it possible for you to pay your employees easily.
This is an extremely helpful feature if you have employees that are overseas. It’s a long process to pay these employees because it requires fees and time to get the money to them. With blockchain technology, you can forego these issues and send money easily to your team members who are overseas.
This will save you money and time. Your employees will get their paychecks faster, and you will eliminate the headache of going through the process to pay them through other means. It makes blockchain technology a viable solution for your business.
4. Loyalty programs
Loyalty programs help you keep your customers coming back. If they enjoy their experience at your business, a loyalty program makes the experience even better. Customers can acquire benefits from returning to your business while enrolled in your loyalty program.
Each type of loyalty program has its own unique problems. If you hand out punch cards, your risk your audience losing their card and having to start over. This also means that you waste paper printing more rewards/loyalty cards.
Some loyalty programs face issues of fraud. People try to use other people’s accounts to reap their rewards and take their benefits. It creates frustration for your customers that experience these scenarios.
With blockchain technology, you can create a safer and more efficient loyalty program. You can create a token-based system that stores each customers’ earned tokens in a blockchain. This creates an efficient and secure system for your customers to earn rewards.
5. Back up data
Your data is important to your company. You want to know that it is protected and secure.
With cloud systems, there is still a risk of hackers taking your data. These systems are also vulnerable to malfunctions and problems. It makes it difficult to manage and store your data properly.
Blockchain technology is a solution to that problem. It is more secure than cloud technology and keeps your data safe. You won’t need to worry about hackers getting ahold of your important data.
This doesn’t mean you need to abandon cloud storage completely. Instead, you can use blockchain technology as your backup to cloud storage. That way, you always have your data securely stored in case something goes wrong.
WebFX will help you take advantage of blockchain technology
Blockchain technology is quickly on the rise, and more businesses are taking advantage of this technology. This technology has the power to help your company do business more efficiently. At WebFX, we can help you market your blockchain technology to customers.
We’re a full-service digital marketing company that knows how to create engaging marketing plans. When you partner with us, you’ll get a team of 450+ experts that are dedicated to your campaign. Our team of tech-savvy marketers will help you create a plan that works for your business.
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