Will I get rich with blockchain?

Especially for small and medium-sized enterprises, blockchain technology can prove to be an opportunity. Is blockchain technology a venture worth taking?

 

Digital currencies such as Bitcoins or Ethereum are particularly popular with investors and end customers today. For example, you can use them to shop anonymously on the net. But since the beginning of blockchain technology, these cryptocurrencies have had a divided reputation. On the one hand, this means of payment is touted as the future in payment transactions. On the other hand, cryptocurrencies are discredited because it is easy to launder money anonymously with them. We are particularly interested in the current status of this technology and whether small and medium-sized enterprises can benefit from it.

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But why is blockchain technology so popular with startups?


To answer this question, let's first look at how this technology works in the first place. Nowadays, data on the internet is stored somewhere central by third-party providers. Example: When we shop online, we do not pay for our goods directly to the merchant, but through a third-party provider. Such processing always incurs fees, which the merchants and end customers have to pay. But data processing in online purchase processing also has its price. Your payment information must be protected from potential attackers on a central server.
 
And it is precisely this central data storage that is an important point if we want to approach the topic of blockchain. If I store sensitive data centrally on a cloud or an external server, the hackers get a central point of attack.
 
A blockchain is now supposed to solve this problem. With blockchain technology, data is no longer stored on a server (centrally) but encrypted on several computers (decentrally) at the same time. So when you make a purchase in an online shop with a cryptocurrency, this transaction is encrypted and processed decentrally via the computers of the network participants.

 

How does blockchain work in practice?

Imagine that a blockchain is a virtual cash book. However, this cash book is not located on a server at an accountant's, but is stored as a copy on thousands of computers at all blockchain members. So if a sale is made with a cryptocurrency, this transaction appears in all the other cash books. A cryptocurrency is an anonymous means of payment that cannot be traced. The production of these cryptocurrencies requires a lot of computer power and energy. In addition to payment, companies can also use blockchain technology to store and execute contracts. Thus, complex transactions can be processed automatically.

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So what is the advantage of this technology?

At the moment, blockchain technology is still sluggish and the costs of embedding it in businesses are high. For example, a transfer with cryptocurrencies today can take days. Significantly longer than with a traditional bank. Once this technology can be used in daily practice, the following advantages arise for small and medium-sized enterprises:
 
  • Complicated processes between companies and customers can be automated without third-party providers.
  • Business processes become cheaper.
  • Manipulation-free payment system with cryptocurrencies.
  • Sensitive customer data can be better protected from attacks.
  • Transactions with cryptocurrencies are encrypted and anonymous.
  • With cryptocurrencies, there is no institution that can make monetary policy decisions or regulate the exchange rate.


Can I already pay with cryptocurrencies in retail stores today?

For most customers, paying with cryptocurrencies such as Bitcoin or Ethereum is not yet a common means of payment. But this could change quickly in the future. Numerous companies already accept payment with cryptocurrencies. For example, the credit card providers Mastercard and Visa have announced that they will integrate Bitcoins & Co. into their networks this year.
 
However, in order to be able to pay with cryptocurrencies in shops, you need a virtual wallet . Once you have created this wallet with a provider and downloaded it to your smartphone as an app, you can make mobile payments on the spot. The shops create a QR code, which you can then scan with your smartphone. Now you can transfer the money in the specified cryptocurrency to the shop via your wallet app.
 
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Summary

Especially for small and medium-sized enterprises, blockchain technology can prove to be an opportunity. Thanks to decentralised storage, complicated business processes can be automated without additional third-party providers. Thus, fees can be saved and costs reduced. Blockchain is also promising in terms of security: the different computers of the network participants ensure that sensitive data is additionally encrypted. This also promotes the "sharing economy". In the future, resources will no longer be bundled in one place, but will be available to several companies and institutions at the same time. In other words, the internet will become more democratic with blockchain technology. At the moment, however, integrating this technology into small and medium-sized enterprises is still far too expensive and the data volume due to decentralised storage is very high. As soon as blockchain is no longer inert and becomes profitable, however, this could change quickly.