25 Aug 2023
Blockchain has been around for more than 10 years, yet its many benefits haven’t been fully utilised, especially by small and medium-sized businesses, or SMBs, the fundamental structure holding together every nation’s economy.
An SMB could be a small grocery store, a tiny souvenir or tailor shop, a restaurant, a barber shop, a salon, a computer repair shop, a bookstore, a small boutique, or a start-up, to name a few. As opposed to SMEs, short for small and medium-sized enterprises, also known as “mid-market", SMBs have fewer than 100 employees and smaller revenues (between $10 million and $1 billion as defined in the US markets).
There are approximately 557,000 SMEs in the UAE as of the end of 2022, according to government statistics. And their number is forecast to grow to 1 million by 2030. Along with them are also tens of thousands of SMBs that contribute to the country’s economic progress.
So, if SMBs are smaller in scale than SMEs, why should they still spend money on digital tools like Blockchain? Because in today’s tech universe and digital economy, going digital is essential to survive, grow, and thrive.
According to the World Economic Forum, Blockchain, defined as distributed ledger technology (DLT), could be a platform for designing financial services to bridge many gaps in today’s virtual market system. While traditional databases track records for single entities only, Blockchain connects a group of entities and allows for data to be synchronised across multiple, independent stakeholders, making its usage particularly alluring for small businesses.
Blockchain provides them with an affordable and efficient avenue to make and receive payments, access investment and savings products, and build a credit history. Enabling greater access to this technology can foster SME growth, which, in turn, enhances job creation and economic development.
Hong Kong and Shanghai Banking Corporation couldn’t agree more, saying small businesses can even tap Blockchain to raise funds for expansion.
“A blockchain network can track orders, payments, accounts, production, and many more. Today, all businesses are adopting blockchain technology, irrespective of their size. Restaurants, gyms, nail salons, bakeries, manufacturers, and other small business categories that rely on a physical space are also considering using blockchain as a new form of payment to handle transactions,” HSBC said in a report.
Here are a few more ways SMBs can benefit from Blockchain:
Blockchain can help SMBs reduce transaction costs by eliminating the need for intermediaries or third parties to verify or approve the transactions.
Because blockchain is a transparent and unchangeable ledger, everyone can see all of the transactions that have taken place. This can help improve trust and transparency between businesses and their customers.
Blockchain is a very secure technology because it uses cryptography to protect data. This can help SMBs protect their sensitive data from unauthorised access.
Blockchain can help small businesses improve their efficiency by automating many of their business processes. This can free up time and resources so they can focus on other areas of their business.
Blockchain can be used to track the movement of goods and materials throughout the supply chain, improving transparency and traceability and thereby reducing fraud.
Blockchain can be used to protect intellectual property by registering and tracking the ownership of digital assets.
Blockchain can be used to create new financial products and services, such as peer-to-peer lending and invoice financing. This can help SMBs access the capital they need to grow their businesses.
Blockchain is a relatively new technology; it’s best to start implementing it on a small-scale basis first and see how it works.
The good news, however, is that the UAE stands ready to back you up, both judicially and legislatively. And of course, the country’s robust tech and telecom infrastructure, including that powered by etisalat by e&.
The market value of Blockchain, the distributed ledger technology (DLT), which allows secure, transparent, and tamper-proof transactions between parties, is estimated at $360 billion. By 2030, it will shoot up to $3.1 trillion, according to the US-based Gartner, the leading global tech research and consulting firm.
As the UAE transitions more to the digital economy, it has adopted a set of extensive legislative frameworks and judicial systems to protect investors, consumers, businesses, and the public to operate in a safer and more secure environment.
This includes creating in Dubai, the world’s first specialist regulator for virtual assets, the Virtual Asset Regulatory Authority (VARA), and an International Digital Economy Court dedicated to resolving disputes related to emerging technologies such as big data, Blockchain, AI, fintech, cloud services, unmanned aerial vehicles (UAVs), 3D printing, and robotics. Now, that’s the foresight we all need to keep growing in this digital world.