Blockchain is jargon in the tech world that has been used for quite a long time. Everyone only knows that this is a disruptive technology. Institutions like banks, industries, and governments are set to benefit from blockchain technology.
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But, are these institutions the only benefactor of blockchain? Obviously no. Startups and on-demand businesses are creating ripples in recent years and yes, these two can immensely benefit from the blockchain.
Read below to know how blockchain can help on-demand startups and how even small startups can adopt blockchain.
Let me throw more stats on the present on-demand market. More than 505 of the users of on-demand services are between 20 and 35. Sixty percent of the on-demand market is composed of the online marketplace.
This inexplicable growth attained by the on-demand startups is mainly because it leveraged the potential of smartphone growth and network connectivity.
“I think Bitcoin is a technological tour de force.”Bill gates, founder, Microsoft.
How blockchain can help on-demand startups?
Replace outdated infrastructure with the latest digital systems
Most startups work on outdated technology and rely on many manual processes. This restricts their business growth and makes their business ineffective and inefficient. Also, there is a large room for human error. These shortcomings can be avoided by blockchain.
Since the blockchain is decentralized, all the processes like data aggregation, and database management can be made secure and safe. The need for manual work to do all these is totally eliminated.
Data security is an important concern for the on-demand industry. It collects an inexplicable amount of data from the users and a small breach can be detrimental to the business. To avoid this a whopping $1 trillion is spent worldwide on cybersecurity.
But the blockchain can provide excellent security at an affordable price. Blockchain consists of a decentralized ledger. All these ledgers are encrypted and the data in these ledgers can be accessed only with a key.
Provides an edge over others in technology adoption
By investing time and resources in blockchain technology can help your startup to adapt to the fast-changing market. This definitely gives an edge over others in the same market. In the flooded on-demand market, one who moves fast along with the changing scenario stands out from others and blockchain helps you in this.
The blockchain is a decentralized system. All the data are stored in a separate ledger and each is encrypted. This helps small enterprises to store data confidently. So, it is impossible for hackers to retrieve data from each ledger.
“Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.” – Vitalik Buterin (Co-Founder of Ethereum)
That said, how startups ranging from small to large can apply blockchain to various areas?
The distributed cloud storage consists of a connected decentralized cloud storage system. It is combined with blockchain for encryption. By doing this, only those who have access are able to get the data from the cloud.
This type of blockchain system gives accountability, traceability, and transparency for the cloud, and entities that are either using or managing the cloud.
The payment gateway is an important process of any on-demand startup and the credibility of the enterprise among the users depends much on this.
At a micro level, the blockchain will disrupt the payments system. Blockchain along with cryptocurrency can make transactions even across countries to be trustworthy and cost-effective than many traditional payments method.
“Just as cryptography is planting the seeds of a revolution in payment systems, bitcoin, and other cryptocurrencies are planting the seeds of a revolution in currency.” – Edmund Moy (Former Director of the U.S. Mint)
For most of the on-demand services, mainly aggregator and marketplace-oriented enterprises rely more on supply chain networks. Strengthening and increasing the efficiency of the supply chain process can prove to be a deal-breaker for the business.
Blockchain-powered supply chain makes record keeping easy and the product information right from inventory to selling can be accessed through RFID tags and sensors. Most importantly, all these details are secured and encrypted as explained before. An added advantage of incorporating blockchain is that any breaches in any part of the supply chain can be easily detected.
The main aim of the supply chain is to reduce the input cost as low as possible and blockchain helps in doing that by eliminating middlemen and intermediaries. There will be interaction only between the maker and the end-user. Finally, using blockchain in the supply chain network instills trust among the users which is vital for an on-demand firm.
Marketing, advertisement, and promotion
Marketing is important for any business and on-demand is no different. Social media marketing is a popular medium for taking the business to the users. Blockchain decentralizes marketing.
One main problem with digital marketing through web ads is that you don’t know whether the user clicked the ads. In simple words, you don’t know whether the ads reached the user effectively. Blockchain makes it transparent and you can measure the reach of the ad.
If you know the user demographic, it is better the prepare target ads. Blockchain helps in doing this. It gathers the pattern of searching and matches it with the age group.
See, there is CRM software to take care of the customers. But even the most effective CRM software cannot avoid duplicates. With blockchain in place, the users can have their own personal blocks that present the companies with accurate details, past transactions, etc. This helps the business to focus on the right customers effectively.
Even if you prefer a less ownership model on-demand business, you definitely need funds to expand the business. Startups like Uber, Ola, Swiggy, FoodPanda, and Go-Jek have received millions of dollars in funding and they attribute their success to this fund generation.
Among all the ways of fund generation, venture capital is still the most popular. Soon there will be a blockchain-powered fund generation method. It is estimated that the blockchain-powered model will soon replace the VC model.
Blockchain-based fund generation enables you to raise a fund with people far away without even having a physical interaction.
So far we have seen the ways of applying blockchain to on-demand startups. Now we can see some challenges that are stopping the blockchain from immediate adoption.
Opportunity to apply in various industries
Nowadays blockchain can help various startups make their work effective. One of blockchain’s advantages is that you can adapt its technologies in various industries where data security or payments are needed.
That means that you can upgrade your services not only in the e-commerce, technology, or finance sector, but also in the education, marketing, healthcare, and even energy and utilities industries. Looking towards the future, you can be sure that blockchain will bring a lot of change and many start-ups can surely take advantage of that by starting to learn about it as soon as possible.
Challenges in blockchain
There is very little regulation in place for blockchain since it is an emerging technology. So, if anything goes wrong, it is difficult to come out of that. Startups which has to adopt a blockchain system have to come up with a DLT-based infrastructure which requires a lot of capital. Enterprises which is bootstrapped find it difficult to adapt to the blockchain.
Like every technology, blockchain also has its pros and cons but the pros clearly outweigh the cons. Even though blockchain is in its nascent stage, is growing rapidly and the rate of adoption is fast. Traditional taxi companies that are looking for a revival see blockchain as a key to the next level.
Small entrepreneurs who are looking to make a mark in on-demand business should not shy away from blockchain and insist on app development companies who develop apps for on-demand businesses to apply blockchain.
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