Did you know the potential of blockchain technology has access to finance, transparency and traceability, security and reduced fraud, along with entry to global markets and revolutionizes the MSME ecosystem? Transactions can be recorded reliably and openly in the blockchain, a distributed ledger system. It employs cryptographic methods to provide an immutable ledger of transactions that a number of different people may use. In this article, let us discuss the important points to understand when considering blockchain for Indian MSMEs.
Transforming MSMEs: The Power of Blockchain Technology Unleashed
Here are some concrete ways in which blockchain technology might help micro, small, and medium-sized enterprises:
- Supply chain management, utilizing blockchain technology, may assist small and medium-sized enterprises (SMEs) and keep tabs on where their items come from and where they go.
- Financial transactions may be made safer and more transparent with the help of blockchain technology, lowering the possibility of fraud and increasing MSMEs’ access to finance.
- Businesses with less than 250 employees can benefit from using blockchain technology for data management because it allows for the creation of safe and immutable data records in fields like healthcare, real estate, and supply chain management.
- Blockchain technology can be utilized to create safe, decentralized identity verification systems, which can be helpful for micro, small, and medium-sized enterprises (MSMEs) that need to check the credentials of their workers or clients.
- Tokenization in blockchain technology can help MSMEs in a number of ways, including facilitating interactions with a larger number of investors, boosting liquidity, decreasing transaction costs, and simplifying the fundraising process.
Micro, small, and medium-sized enterprises (MSMEs) that use blockchain technology gain in terms of competitiveness, efficiency, and cost savings. However, before deciding to embrace the technology, MSMEs should carefully assess their unique needs and objectives. Several blockchain tools show promise for micro, small, and medium-sized enterprises. The most popular ones are:
- Ethereum is the first decentralized, open-source blockchain technology that allows developers to build smart contracts and dApps. It is often used for the development of corporate applications.
- Hyperledger Fabric helps programmers make blockchain apps that are both trustworthy and scalable. For highly confidential and secure enterprise-level applications, it is an ideal choice.
- Corda is tailored to the needs of the financial sector. It paves the way for banks, insurers, and other financial organizations to create blockchain applications that are both reliable and extensible.
- Ripple primarily aims to facilitate instant and secure international money transfers. It’s great for small and medium-sized businesses that often deal with foreign exchange.
- Chainlink is a distributed Oracle network that facilitates smart contract access to off-chain information and resources. It can be used to construct contracts that respond to changes in the market or the environment, for example, in the commodity price or the state of the weather.
It’s important to remember that the blockchain technologies mentioned above have their own set of disadvantages and advantages, so the right one for a micro, small, or medium-sized enterprise (MSME) will rely on its particular goals and needs.
Empowering MSMEs with Blockchain Technology – The Way Forward
There are many ways in which blockchain technology can improve the MSME ecosystem:
Improved financial access
One benefit is that small and medium-sized enterprises (SMEs) would have easier access to funding because of the decentralized finance (DeFi) systems built on the blockchain. If this happens, micro, small, and medium-sized enterprises (MSMEs) will have easier access to financing.
Increased traceability & transparency
Blockchain technology can improve supply chain transparency and traceability, making it less difficult for small and medium-sized enterprises to monitor the whereabouts of their products. This has the potential to boost supply chain efficiency and facilitate deeper connections between MSMEs and their suppliers and customers.
Blockchain technology can help make supply chain management and financial transactions safer and less vulnerable to fraud. This can prevent monetary losses and strengthen the resilience of SMEs.
Raising global market access
Blockchain technology may facilitate micro, small, and medium-sized enterprises (MSMEs) to reach out to and enter new markets by facilitating safe, transparent peer-to-peer lending with partners worldwide.
In general, micro, small, and medium-sized enterprises (MSMEs) that use blockchain technology stand to gain in terms of competitiveness, efficiency, and cost savings. Small and medium-sized enterprises (SMEs) should give serious thought to their individual requirements and objectives prior to arriving at a choice on whether or not to deploy blockchain technology because of the potential complexity and expense involved.
Overcoming Challenges: Blockchain Technology in Business Landscape
Several obstacles have slowed India’s progress towards the widespread use of blockchain technology. Many Indian companies and individuals do not know much about blockchain technology as well as how it functions, which might make it hard for them to perceive the value of implementing it. There is a lack of clear standards for how blockchain technology must be used and regulated, and the regulatory environment is complex because it is still in its infancy in India. This might lead to scepticism and slow the pace at businesses adopt the technology. Most important of all, better user experience and safer transactions can be made available to more clients with blockchain in just a couple of seconds by integrating payment processing.
The lack of swift adoption of blockchain technology by numerous leading Indian corporations could pose a challenge to its widespread usage. Businesses may v struggle to deploy and manage blockchain-based systems due to a lack of technical skills and a lack of trained experts in India who are versed in the technology of blockchains. Insufficient nodes and mining facilities have delayed the widespread adoption of blockchain technology in India. This is because the blockchain infrastructure in the country is still in its infancy.
While blockchain’s uptake in India remains limited so far, that’s anticipated to change as more people and companies learn about the technology’s advantages and the country’s regulatory system improves. Cryptocurrency has superseded conventional banking systems. Fintech that makes use of new technologies and adopts a flexible approach is the wave of the future. It rapidly transforms the finance landscape and enables new business models due to automation, digitalization, and data-driven decision-making. There has been a sea change in fiscal management, and that shift is only going to intensify.
It is impossible to overstate blockchain technology’s impact on the MSME sector. Blockchain technology has many uses for SMEs, including boosting supply chain management and financial transparency and security. Before embracing blockchain technology, however, SMEs must thoroughly analyze their specific requirements and goals. While widespread blockchain application in India has yet to be realized, there is a positive outlook that this will change as more people become educated and as regulatory hurdles are overcome. Blockchain technology is well-positioned to play a critical role in fostering creativity and development in the MSME sector as fintech continues to disrupt the financial landscape.
MSMEBlog offers insights into the Govt. Schemes available for MSMEs. Learn more about government MSME schemes by visiting https://www.msmeblog.com/.