November 20, 2017
Bitcoin may be seen as the key reason that drove the sudden rise of blockchain as an in-demand technology. It’s pretty tough to overlook how bitcoin’s value has risen tremendously just within this year. Average consumers are now finally paying attention to cryptocurrencies and other blockchain activities because of this. Even governments are feeling the pressure to advance regulations and legislation to cope with the shift in consumer attitudes.
Arguably, however, it’s the integration of smart contract development that has spurred on the wider adoption of blockchain. Smart contracts are software linked to the blockchain that can keep track of the terms of an agreement and facilitate the steps towards its fulfillment. This, combined with immutable record keepings, makes blockchain quite a powerful platform for a wide set of business applications.
The Ethereum blockchain platform has also been instrumental to blockchain’s popularity among developers. Developers are free to use Ethereum’s smart contracts to power their services and even their own cryptocurrencies. The latter has been the reason why there’s also a surge in initial coin offerings (ICOs) which allows startups to offer their own custom crypto currencies as securities. ICOs have proven to be a quick and quite lucratively way to secure funding for projects.
It is important, however, to look beyond tokens in exploring blockchain applications. Because of its ability to automate the fulfillment of agreements, smart contracts can redefine business process flows which inevitably changes the way businesses engage their respective markets.
Better Experiences and Less Friction
Consumers increasingly demand quicker and intuitive ways to complete transactions. The shift to mobile has further exacerbated this demand that page load speeds and complicated checkout processes could adversely affect conversion rates. As such, minimizing friction has been among the major challenges to most ecommerce ventures. This clamor for quicker transactions is now also affecting business-to-business (B2B) ventures. 90 percent of B2B leaders are now looking into more investments on customer experience.
Many ecommerce ventures have relied on a hodgepodge of third parties such as payments, logistics, and legal service providers for their fulfillment process. The involvement of these intermediaries often introduces friction in customer experiences. Payment service providers have been actively finding solutions to this but the diversity of fiat currencies and the stagnancy of traditional institutions continue to provide roadblocks to faster transactions.
Blockchain payments can provide faster and cheaper since money does not have to move through different clearing houses and institutions. Bitcoin wallet services are finding much use particularly in markets with growing bitcoin adoption. BitPay, for instance, provides merchant services to allow businesses to accept bitcoin as payments. Monetha caters to those invested in ether coins from the Ethereum blockchain. But aside from supporting popular cryptocurrencies, these services provide conversions to fiat currencies.
To further address this, blockchain platforms are now heading towards supporting ecosystems. For businesses dealing with digital products, smart contracts can streamline the fulfillment process. More consumers have become more open to the use of blockchain and cryptocurrencies for payments and smart contracts can be used to automate the delivery of digital goods. These, combined with blockchain’s ability to keep immutable records, make transactions secure and binding.
As developments in the technology continue, the same can be achieved with physical goods and other services. Blockchain services are now working on integrating other facets of the fulfillment process such as logistics and even legal documentation. PricewaterhouseCoopers expects that by 2020, smart contracts will take over these tasks that each transaction can be a smart contract “in miniature.” The integration of these elements under one platform could only help simplify transactions for a more frictionless experience.
Overcoming Barriers to Adoption
Getting a business up to speed in blockchain and smart contracts isn’t without its challenges. Smart contract development requires technical expertise and given the competitive market for these skills, bringing expertise in-house entails significant investment. In addition, legal acceptance and enforceability of smart contracts are still being worked out by territories. Companies may have to explore getting legal advice to ensure compliance. Such costs can be prohibitive to small to medium enterprises (SMEs).
Fortunately, blockchain services are now addressing this need area. Startup Jincor offers a smart contract management platform that significant lowers the barriers to implementing smart contracts. The platform provides an interface that allows just about anyone to create and manage smart contracts and manage cryptocurrency payments without needing technical expertise. More importantly, Jincor also helps its users manage the compliance side of smart contracts by providing identity verification to ensure validity of transactions and extending legal guidance in the event of disputes to encourage trust among its users.
Jincor co-founder Vagan Abelyan says that “Jincor gives the companies an opportunity to exploit all the advantages of blockchain-technologies without the necessity to invent those instruments or adjust them. These are transactions in cryptocurrency, smart contracts of different nature and safe B2B communications. This is the key reason, why our product will be useful for both companies and individual entrepreneurs.”
While the availability of such services is a welcome development particularly to SME’s, businesses must also not overlook the need for a comprehensive strategy when adopting blockchain. The technology will significantly impact the organization’s ways of working and such changes have to be managed.
Changing Market Engagement
These changes include a shift in how business engage their respective markets. For business-to-consumer (B2C) ventures, secure automated transaction flows could result in faster and guaranteed transactions. Businesses could free themselves from the fulfillment issues so that they can focus on product, marketing, and customer satisfaction efforts. The ability to cut out intermediaries and consolidate the fulfillment process under a blockchain platform would help lessen process complexity and even help save on transaction costs.
Smart contracts could even have a more tremendous impact on B2B companies. B2B transactions often require meticulous documentation which contributes to the time and effort needed to close sales. Smart contracts have the potential to assume these functions hastening transactions. In addition, big-ticket transactions can now also be conducted digitally. Long term and repeat transactions can also be fully automated through smart contracts. The days of the travelling salesperson may soon be numbered.
Aside from the fulfillment end, B2B businesses could also enable smart contracts to automate their supply chain, including sourcing of raw materials and new inventory. Industries that rely heavily on legal documentation such as financial institutions could benefit greatly from smart contracts. For instance, loan applications and disbursement could be done over a blockchain platform.
Automation and Beyond
Smart contracts offer businesses something truly exciting. Automation has long been one of the great challenges for many businesses. Blockchain and smart contracts could help businesses cover several bases such as payments, fulfillment, and legal at once. The efforts of services to address the barriers to smart contract development also come as a welcome development. Streamlining transactions can further minimize friction and improve customer experiences both for B2C and B2B organizations. This should encourage more ventures to shift their businesses to digital channels.
Read more about smart contracts and blockchain on TechCo
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