Cryptocurrencies and blockchain are technologies that can revolutionize the world as we know it. Many startups choose to proceed in a relatively nascent industry. Cryptocurrencies and blockchain are two technologies that are talked about a lot in the news and on social media, but hardly understood.

Blockchain vs. Crypto Currencies

Blockchain is the kind of concept that is usually explained in either a simple way or a technical and hard way. I’ll try to keep it as simple as possible.

Blockchain, as the name suggests, is a collection of blocks, linked by a chain. Easy enough? But there is more to it. The blocks consist of data, a hash that uniquely identifies each block, a timestamp, information about the previous block, among other things. Each block is linked to the last block, while the first block in a blockchain is called the genesis block and is linked to no one. Once a block has been linked, it cannot be changed or modified.

Cryptocurrencies, on the other hand, are a digital commodity that can be exchanged in place of goods or services. There are no central authorities like banks or other financial institutions that can regulate cryptocurrencies.

Now that we have a surface level knowledge about blockchain and cryptocurrencies, we’ll be able to appreciate how these technologies are changing startups. These technologies have a wide array of applications. All entrepreneurs need to do is identify where blockchain can help fix a problem, and start working on developing a minimum viable product.

Here is how cryptocurrency and blockchain are transforming startups:

1. Secure and cheaper transactions

We’re living in a more connected world. Businesses have to cater to an audience that is halfway around the world. Banks and other financial institutions cater to our financial needs, but they also take a hefty fee.

Cryptocurrencies are cheaper than banks just as live chat app is cheaper than on call support agents. No extra fees are charged on Crypto. You only pay a certain amount when a transaction is made. Swish, a mobile payment system made in Sweden, is much cheaper than PayPal or other banks, but still a hundred times more expensive than Bitcoin Cash.

Cryptocurrencies help startups by making transactions secure from frauds and hacking. The blockchain is distributed and decentralized, so hacking is not an easy task. For example, a hacker decides to hack a blockchain that has around a million individual users. To make his hack attempt successful, he’ll need control of over half a million user accounts. Gaining access to so many accounts is not impossible, but it’ll undoubtedly take its toll on the hacker.

2. Establishing trust

Trust is essential for business. In our modern world, we need to rely on banks to make sure that our money doesn’t get lost somewhere.

Merchants still, to this day, have to trust that a customer won’t run away after he gets his order. The faster you can get notified about a transaction, the better.

Cryptocurrencies promote a feeling of trust that both parties will receive notifications about the transaction in minutes. The settlement will take place within an hour. With cryptocurrencies, payments are irreversible 10 to 60 minutes after a deal has been made.

Startups like Provenance help to establish trust by providing the origin of an item. In the luxury items market, dealing with counterfeits is a significant problem. Businesses can’t seem to keep up with the sheer amount of forgery in the industry.

Provenance has built a traceability system for materials and offerings. The consumers can quickly learn more about a supplier and identify if the supplier has gotten his wares from a legitimate source. Using Provenance, a great deal of the counterfeit market could be shut down for good.

Provenance was just one application where a startup used blockchain to establish trust. There could be several other areas where blockchain could be used to increase user confidence, for example, supply chains and delivery services.

3. Startups can become early adopters

Blockchain and cryptocurrencies are still in their infancy stages. There are so many things to be done and issues to be resolved before the mass adoption of these technologies can take place.

Startups often focus on the pain points that are overlooked by traditional businesses and governments. Entrepreneurs can take advantage of these missed opportunities.

By becoming early adopters, these startups would have a chance to become leaders in a new industry. They’ll be able to establish their presence and build mutually beneficial relationships with other progressive startups.

Using blockchain, an entrepreneur can develop solutions that previously were thought to be impossible. There are many sectors that you can have a positive impact on. Apart from finance, you can implement blockchain in several industries like healthcare, defense, education, and many more.

4. Security

Security is a significant concern for startups. Storing data in a secure way is a concern for every business and not just startups.

Blockchain provides several security features that would make the technology the primary way to store and organize data in the future. Since the digital ledger (ledger that has records of all transactions) cannot be corrupted, it would be ideal for storing all kinds of data on a digital ledger.

The data stored in the ledger is encrypted (converted into a unique code). And the only way to access the data is through a key-value mechanism. Personal identification is also made before a transaction is made.

Since the blockchain is distributed and decentralized, the data won’t be stored in a single place. Having the data dispersed along the blockchain provides better security.

Conclusion

Startups are changing our world, and new technologies like blockchain and cryptocurrencies are transforming startups.

Startups that want to have a competitive edge over the competition need to embrace new technology early on. These advances in technology will provide new opportunities that an observant entrepreneur can capitalize upon.

Blockchain and cryptocurrencies are still relatively nascent. They haven’t been around as much, but eventually, they’ll make their place into our world. A business that incorporates new technology will be the early adopters, and being an early adopter has its own set of advantages.

Image credit- Canva