If you’ve heard of blockchain but don’t know exactly what it is and whether or not you need it, you aren’t alone. The simplest answer to “What is blockchain?” is: A blockchain is a decentralized, digitized ledger of any of transactions. The most recent transactions in your ledger are made of completed blocks. They are recorded and added to your ledger by date. If you utilize Bitcoin or another type of virtual currency, blockchain allows you to keep an automatic record of your transactions.
Whether or not you need blockchain is a decision that you need to make depending on the type of transactions you accept. Today, it makes sense for most business owners to utilize it. You won’t have to keep a centralized record of your transactions, as it is done for you. Transactions cannot be deleted and are virtually meddle-proof. The problem, however, is that blockchain takes up large amounts of storage since it is a continuous record. If you don’t have the capacity to store it, you can run into problems.
What Is Blockchain? Let’s Break It Down
Blockchain was a technological innovation of Bitcoin. Because Bitcoin avoids the middle man, it was a way to publicly record transactions. A ‘block’ is a new transaction, and a chain is all of the blocks linked together. Mining appends a new block to the chain about every 10 minutes. Any user who chooses to do so can log onto www.Blockchain.info to see the entire blockchain of Bitcoin.
Think of it like this. You have a bank account and receive statements, either through the mail or, most likely, electronically. A block is like a statement. A blockchain, on the other hand, is your entire financial history. There are a variety of industries that find blockchain useful. Financial institutions, stock exchanges, Internet of Things, health care, insurance and more suggest that the technology is a must-have. Those who understand and utilize blockchain also believe that the technology can be applied to state governments, medical records and voting systems – all major institutions of modern society.
Do I Need Blockchain?
As with choosing whether you need anything, it helps to make an informed decision. If you’re wondering, “Do I need blockchain?” here are three advantages to consider:
- Traditional accounting systems can be expensive. Electronic ledgers are much more cost effective, reducing even employee costs as you won’t have to hire a person to “keep” the books.
- There are few errors and an elimination of the repetitive confirmation steps you may be used to.
- There is less capital that is held to protect you from the risks of pending transactions.
One of the biggest benefits is to the small business owner who sells products to people in other countries. With blockchain, you can set up certain conditions that deal with payments meaning there won’t be any time delays. As more people learn of the advantages of blockchain the technology will be in higher demand. By adopting blockchain now, you will be keeping yourself ahead of the curve.
All of this said, blockchain may be currently better suited to big business and the financial sector. We suggest doing a bit more research into blockchain before you make a decision one way or the other. Again, you can only make a valid decision when you have all the information you need.
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Though blockchain is the future, especially with the prevalence of cryptocurrency, many small businesses still need traditional accounting and billing software and services. At Company.com, we have just the tools you need. We’ve partnered with FreshBooks to make it easier than ever to track expenses, accounts billable, cash flow and more. Contact us today to learn more about the services we offer, or to start a free trial of our premium software package.