Blog Post

April 28, 2020

How Startups Can Use Blockchain Technology

By Jazmen Brighton

As the hype around blockchain technology cools down, maturing use cases are now crossing the line from being niche applications to propellers of growth for startups.

Distributed ledger technology is not a buzzword anymore and some of its applications are well past the barrier of proof-of-concept testing. In fact, the University of California at Santa Barbara has recently finished its first curriculum that focuses on blockchain technology. As a testament to its growing prominence, more than half of the world's top 50 universities now offer similar programs.

However, the clear benefactors of this emerging technology’s applications are startups. Businesses and new ventures are starting to harness the potential of the technology in a myriad of ways. Here are some of the most prominent ones:


Fundraising



It’s no secret that getting access to capital is one of the most formidable problems startups face. Initial Coin Offerings or ICOs are now among the most popular ways through which startups gain access to investors’ money, and selling digital currency has helped launched some of the biggest names in the startup space today. Data collected by CoinDesk shows ICO funding peaking at $6.3 billion in 2018, illustrating how ICOs today have become more complex, robust and structured.

 Unlike traditional channels, ICOs have fewer restrictions on blockchain as anyone from around the world can invest in your company without paying any fees or going through any middlemen.


Automated Paperwork



Smart contracts are the most stable and widely adopted blockchain application today. These contracts reduce unwanted delay in most legal paperwork as they are automatically executed when the conditions stipulated are met. The applications are endless: from automated payments upon delivery of goods up to more complex actions such as payments across a supply chain.

While its legally binding nature depends on the jurisdiction, it’s more enforceable than regular contracts as these papers are immutable within the blockchain. Not only that, but smart contracts are also transparent and visible to stakeholders.

Data Security



Hacking and data breaches have become a trillion-dollar problem today, and startups are not in any way immune to this.

In the US alone, these ransomware attacks have cost companies and institutions over $7.5 billion worth of potential damages in just a year. Maryville University reveals that the demand for cybersecurity experts in the country nearly doubled from 2013 to 2019 – signaling the increased competition over tools and talents specializing in the field. Unauthorized and illegal access to consumer data has plagued many businesses in the past few years, and customer trust is a commodity that startups can’t afford to lose. That’s why blockchain applications that anonymize personally identifiable data are great for startups. The decentralized nature of the blockchain can render hacking a thing of the past.



Streamlined hiring



As small and scaling businesses, startups often struggle with having the right tools to appraise and hire the right talent. Blockchain solutions today offer wide applications in talent acquisition. Relevant parties can now verify claims that a candidate may have in their resume – a tedious yet necessary process – thereby saving the employer much time and resources. This is especially true for startups hiring from other states or abroad, as this will take the guesswork out of hiring and leave less room for taking applicants at their word.



Employee Compensation



The Startup notes that blockchain technologies can reduce the cost of transfers for your employee compensation and bonuses abroad. Eliminating the intermediary means faster processing and no traditional transfer fees. Going further, smart contracts can automate employee remuneration and incentives.

There’s no denying that blockchain technologies are starting to disrupt almost every industry today. Startups, especially those which are agile and nimble, have the potential to benefit from integrating these technologies in their ecosystem to gain first-mover advantage.

Resources: 

What are smart countracts? 

Blockchain and Cryptocurrency Glossary of Terms

Blockchain and ICOs are Shaking Up Early Stage Tech Startup Funding

Jazmen Brighton is an Oregon-based finance consultant and blockchain enthusiast. She's passionate about bringing blockchain to a bigger audience. Photo by Austin Distel on Unsplash

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