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Blockchain technology 101 for small business

Bitcoin, Ethereum, NFTs, Cryptocurrency, blockchain. If these concepts seem foreign to you then you are in the right place. In this article, we will look at what blockchain technology is and how small businesses can use it to build stronger digital-first businesses.

What is blockchain technology?

According to, blockchain technology is a decentralised, trusted ledger for keeping track of online records. This new technology is made up of three parts:

  1. The record: This is the trade or transaction and the private key for those involved in the transaction.
  2. The block: This contains the hash of the box, the hash of the box before it and the record.
  3. The chain: This is the link between the boxes. The box is linked use the hash from the box before it.

This technology is secure because it uses several nodes to reach a consensus of what is held in the block and that each block has two hashes. If one hash is changed all the subsequent blocks which flow would need to be changed, thereby making it quite secure.

There are three types of blockchains. They are:

  • Private blockchains are restricted, and individuals need to be authorised to be part of the blockchain.
  • Public blockchains are where most blockchains currently are. They are open, decentralised networks of computers that are accessible to anyone who wants to validate or request a transaction. This action is known as mining and the individual gets rewarded for validating transactions.
  • Hybrid blockchains are a combination of public and private blockchains.

How does a blockchain work?

Now, that we know what a blockchain is, let’s see how it works.

Step 1: A trade or transaction is recorded. This record contains the digital signature of the individuals involved and the details of the transaction.

Step 2: The trade or transaction is validated. The network of computers confirms if the trade or transaction is valid.

Step 3:  The transaction is added to the block. When the transaction or trade is verified and accepted as real, it is added to the block. This block will always contain its unique hash and the hash of the box before it. This ensures that we always know where the box will be located.

Step 4: The box is linked to the chain. A box can contain many transactions. Once all the transactions are completed then the box will be linked to the chain.

These steps ensure that every transaction in a matter is recorded which improves the transparency of a transaction.

How can SMEs use blockchain in their business?

  • Sharing sensitive information: Because of the security in place, blockchain technology is a good option if you are dealing with highly confidential information.
  • Creating contracts: By using smart contracts, you can execute contract protocols automatically if the contract conditions match what has been programmed in the smart contract. This makes contracts traceable, transparent, and irreversible
  • Track royalties. Non-fungible tokens (NFTs) have made it easier for musicians and digital artists to track royalties of products they have produced. Kings of Leon recently made $2 million from the sale of their new album using an NFT.

With this brief review about blockchain, you can see if this new technology is something for your business to invest in. You can learn more about blockchain technology here.

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