With huge amounts of online and traditional media attention focused on Bitcoin and crypto currencies in general, the blockchain - the technology behind it - rarely gets a mention. And this is a shame, because blockchain is an immensely powerful technology. One that could change the way many industries function.
At the same time, ICOs (Initial Coin Offerings) can deliver big sums of investment capital to blockchain startups, showing that there is a robust appetite out there for supporting small businesses embracing blockchain.
Let’s look at some of the benefits for SMEs coming from this rapidly expanding arena.
Blockchain and Secured Information
For many, the terms ‘blockchain’ and ‘Bitcoin’ are innately intertwined. But digital currency is just one of the sectors taking advantage of blockchain. The two aren’t part of the same thing. Blockchain is, in its simplest terms, a way to record and share information.
Blockchain uses distributed computing – a method whereby different system components are on different computers and can pass information to one another – and cryptography to do this. This means a secure and transparent (that’s a big watch word around blockchain) system that is spread across any number of systems. Complex algorithms take information, this might take the form of financial transactions or supply chains, and can help businesses refine their processes.
Major corporations such as Walmart and UPS are already using blockchain to eradicate inefficiencies and speed up their overall business practices. For SMEs, blockchain offers a fundamentally different way to store and share records, guarantee the legitimacy of shared documents and change the way they make transactions.
ICOs raising more financing than Venture Capital
For smaller companies starting out, financing is often one of the major hurdles to tackle. But this can be hard to come by in the form of traditional investment, as many investors and venture capital firms are still in protection-mode when it comes to the economy. A good way for SMEs in the area looking for robust investment is the option of ICOs. Many UK-based companies are deeply involved in the ICO area, such as Intelliblock.
In a recent report from TechCrunch, it was found that ICOs have provided more than 3.5x the capital than venture capital investment since 2017. Despite a smaller number of ICOs in the last year, the actual funding raised by these rounds far outstrips that of venture capital investment rounds. The numbers? $1.3 billion raised by traditional venture capital, $4.5 billion from ICOs.
For SMEs, this means access to much greater levels of investment capital than traditional venture-drawn avenues can match.
Want to know more?
James Catania, leading expert in Blockchain, will be one of our industry experts at the Digital Transformation event on 27th June in Liverpool. Entry is free. You can register here.