Can Small Businesses Ride the Blockchain Wave?Understanding the uses of blockchain technology can help turn small businesses into powerful ones.https://www.inc.com/fivemiles/can-small-businesses-ride-the-blockchain-wave.htmlAll revolutionary technologies inevitably innovate, iterate, and mature. The beginnings of the internet date back nearly 50 years from a U.S. military research network called Arpanet to the World Wide Web we know now. Today's internet informs, infiltrates, and impacts nearly every aspect of our daily lives. Like the internet, blockchain technology is currently undergoing a transformation as developers, businesses, investors, and users require more complex computations as the technology evolves and adoption grows. Ever heard of Bitcoin? Well think of Bitcoin as the Arpanet of today.
The first two generations of blockchain networksTo begin, it's important to understand the difference between a blockchain network and a blockchain application. A blockchain network is a decentralized ledger system with a built-in consensus mechanism. A blockchain application is a program that is built on a blockchain network and provides a function to its users.
Many popular blockchain applications are cryptocurrencies. A cryptocurrency is a digital currency that uses encryption to regulate the currency and verify the transfer of funds. Future applications are potentially endless, including smart contracts (think of the ability to update your will without a third-party executor), decentralized digital identification (think consumer privacy that avoids things like the unfolding Equifax data breach) or distributed cloud storage (a real-life Pied Piper application for fans of HBO's Silicon Valley.)
The meteoric growth of ICOs this year has been chiefly built on blockchain applications. However, as these applications evolve, more mature and complex blockchain networks are required. (We currently are entering the third generation of blockchain networks.)
The first generation of a blockchain network is the Bitcoin network. It is the blockchain network built to support the Bitcoin application and bitcoin cryptocurrency. However, developers have found the network difficult to build upon and modify. Therefore, there are very few community-developed applications built on the Bitcoin network aside from bitcoin itself.
After Bitcoin came the Ethereum network, frequently dubbed "the world's computer." The Ethereum network supports third-party scripts known as smart contracts, allowing developers to get creative and build upon the platform. As Dr. Michael Yuan, Chief Scientist of CyberMiles, a decentralized blockchain protocol for optimizing business transactions, explains, "A smart contract is an immutable and transparent rule on the blockchain to specify monetary transfer when certain conditions are met. For example, an automated escrow account is a good use case for smart contracts." Additionally, the Ethereum network improved upon the Bitcoin network by supporting decentralized apps ("dapps"). This allowed third-party blockchain applications to be built on an existing blockchain network, Ethereum.
The new blockchain network frontierEthereum is not without its limitations, however. For instance, the network performance is poor and very hard to scale up. Running complex smart contracts on Ethereum is not only very difficult (for programmers) but also very expensive (for its users). Enter CyberMiles, a new blockchain network and protocol that is enterprise-ready and easier to use for developers. Since Ethereum is only able to support a limited set of rules for smart contracts, which means that dapps need to handle their own business logic outside of the Ethereum network. What CyberMiles provides is an architecture that supports a smart business contract, providing reusable code and making it easier for enterprise developers to integrate business software and build new blockchain applications.
Think of the CyberMiles architecture like the Linux operating system: the latter's widespread enterprise adoption came only after the core operating system was extended with thousands of business-friendly software packages. There are standardized libraries and frameworks to continue to build upon and grow. This is CyberMiles' mission: to build a standardized framework that business can utilize in the future.
If Bitcoin is the blockchain's Arpanet, CyberMiles and the next generations of blockchain networks are the search engines that provided us with the groundwork for discovering everything that exists on the internet today. Just imagine the myriad applications of blockchain technology that await us. We truly are observing revolutionary technology mature in front of our eyes.
What does this mean for small businesses?As we enter into the third generation of blockchain networks, building and utilizing blockchain technology becomes more accessible, scalable, and secure for business owners.
Small to midsize businesses can take advantage in three distinct ways:
1. SMBs can raise money through an Initial Coin Offering. An ICO is a crowdfunding mechanism by which projects can raise money. The money an ICO raises is typically in cryptocurrencies such as bitcoin (BTC) or ether (ETH).
2. By participating in an ICO (not their own). Participating in an ICO gives you a stake in the future success of the network. As the network grows and the services it provides become more and more valuable, the tokens allow SMBs to provide or consume services on the network, becoming part of their success.
3. By carrying on transactions through various cryptocurrencies. This opens the door to many new vendors and customers, and can positively affect the bottom line.
"For small businesses like ours, the blockchain affords extraordinary opportunities to help level the so-called playing field," Dr. Lucas Lu, founder of peer-to-peer marketplace, 5miles, attests. "We can be on the vanguard of technological innovation--the next big thing that promises to have a positive ripple effect for businesses and customers alike."
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Note: CyberMiles' own ICO officially begins on Nov. 21 at 9 a.m. (PST), with registration ending the previous day. Learn more about the CyberMiles ICO at cm.5miles.com.
