Blockchain offers Italian SMEs an irresistible opportunity to innovate their business, beating big companies to the punch.
The Italian industry using blockchain has grown rapidly in recent times, also thanks to a large number of entrepreneurs who have developed, tested and commercialised infrastructures and applications based on 'distributed ledgers'.
Despite this growing attention, however, we cannot yet speak of fully mature technologies, concrete applications are still scarce and there are still great opportunities to be exploited, especially for SMEs.
The benefits of blockchain for Italian SMEs
Before going into detail about what are the main benefits blockchain can offer to SMEs, let us briefly review what it is all about.
The blockchain can be defined as a decentralised database shared between several nodes of a network in which information is encrypted and made immutable within the different blocks. The validation of transactions is entrusted to a consensus mechanism shared between network nodes. When the majority of the nodes have verified and approved a transaction, it is recorded on all the blocks, becoming immutable and unchangeable. The decentralisation of activities typical of blockchain promotes data transparency and incorruptibility of the system.
This mechanism allows users to reap a large number of benefits, the best known of which are:
· Costs: the distribution of the database within the network has the potential to reduce transaction and data storage costs;
· Speed: a decentralised network is faster and more versatile than a centralised system;
· Protection: it is impossible, without the consent mechanism, to alter or modify the information in the ledger, this allows data to be protected from possible fraud;
· Security: data structure, cryptography and validation of information allow transparency and security of every single transaction.
Beyond digitisation and transparency, new applications of blockchain
Blockchain technology is set to have an ever-increasing and lasting impact on the way business is done, particularly for SMEs that have traditionally been more receptive and able to embrace the position of 'early adopters'.
In addition to the immediate benefits described above, ways of using blockchain-derived technologies to innovate, simplify and speed up business processes and activities are emerging.
One of the main ways in which blockchain technology will revolutionise SMEs is its ability to develop 'smart contracts'. These contracts are very similar to any traditional contract with the difference, however, being fully digital and configurable as a software programme that autonomously executes complex instructions within a blockchain. Thanks to 'smart contracts', a remote and autonomous consensus between two parties can be formed with a single click since an intermediary between the parties is no longer required. The simple fact that blockchains are immutable makes the 'smart contracts' system much more secure than traditional systems.
Blockchain for a sharing economy
Blockchain technologies make it possible to create common platforms for solving problems or sharing decision-making authority. Applications of this kind include centralised management of reporting systems and fundraising for a new business idea or project.
Tokenisation through so-called Initial Coin Offerings (ICOs), for instance, has already proven to be an extremely effective tool for raising capital.
In the area of simplified reporting, there are already some experiments where blockchain is being applied to the regulation of tax contribution relationships between SMEs and the entities responsible for raising it. Although blockchain technology is not yet generally used for tax collection, some promising applications for government services, such as land registries and voting systems, have already been studied, and it is therefore not difficult to imagine the introduction of similar experiments in the use of blockchain in the tax field.