Small and medium-sized business owners might not know much about the transparent ledger commonly associated with Bitcoin but experts recommend getting on board and being an early-adopter.
The Blockchain is a public ledger of every Bitcoin transition that has taken place, including date, time, amount and addresses of the parties involved. This allows for proof of transactions done with Bitcoins. Payment through Bitcoins can be safely executed using the Blockchain as it can verify the authenticity of transactions and then release the funds.
Need an example of the potential of a possibly revolutionary technology? How about a little innovation from 30 years ago or so-called “electronic” mail?
Yeah, that’ll never catch on.
Machine-to-machine payments will make things quicker and more efficient for consumers and businesses but Blockchain will have far bigger applications than enabling two buddies to settle up from last night’s hockey bet. In financial services, for example, you have payments, settlements, securities trading and trade finance, all of which are massive multi-party markets with many players who need to move assets and value between them.
Blockchain’s concepts are being refined and applied in a variety of ways, said Jason Green, a partner at Hexigent Consulting, an Oakville-based firm specializing in digital investigations and cyber security. He said potential uses are being defined for the real world, which takes time, but they are most definitely coming.
“Industry-wise, behind the scenes, a lot of time and effort are being applied to developing the right models,” he said.
Small and medium-sized enterprises will benefit from the services and solutions being created by the Blockchain and it would be beneficial for entrepreneurs to have, at a minimum, a rudimentary understanding of the concept, he said.
“Mid-market firms have started exploring the potential to implement things like smart contracts and identity verification,” Green said.
“The ability to track transactions and global payments in near real-time should lead to much greater efficiencies and accuracy. It should, at a customer level, result in lower fees, fewer errors and more rapid transactional capabilities.”
SMEs can also track the movement of goods and services through the Blockchain. This kind of thing is already being done in Russia, where the fuelling of aircraft is tracked to make sure no planes are being overfuelled and how much is being paid.
Canada is a late adopter of this technology but that’s not for a lack of opportunities. Christine Duhaime, a Vancouver-based lawyer with a practice focused on anti-money laundering law, said the Blockchain could be used in British Columbia’s timber industry by logging timber when it’s cut down so it could be tracked and easily identified if it shows up in any markets illegally.
“Transparencies might make companies less susceptible to crime,” she said.
The Blockchain could also be used to fight financial crime. There have been reports of money laundering in B.C. casinos where one person will come in, buy several hundred thousand dollars’ worth of chips and then walk out without making a single bet. Another person could then return to the casino at a later time and cash the chips in. If the chips were on the Blockchain, it would be easy to identify the money launderers moving large sums, she said.
Infrastructure is another area that’s particularly susceptible to financial crime. Construction workers, contractors and painters often operate in a cash society and it’s not uncommon for the occasional bribe to influence who gets a job. Duhaime said it’s estimated that bribes comprise up to 30 per cent of total infrastructure costs.
“Imagine if you could put infrastructure projects on the Blockchain, you’d be able to reduce the cost of infrastructure, theoretically, by 30 per cent,” she said.