How blockchain will change the way small- to medium-sized enterprises carry out business


The increased use and application of blockchain technology is set to disrupt companies of all sizes, across all industries, and in almost every area, from payments and transactions to contracts and identity verification. Small- to medium-sized enterprises (SMEs) will not be immune to the disruption.

Blockchain technology was created to facilitate online payments via a cryptocurrency such as Bitcoin. Referring to a chain of digital transactions that are recorded in a distributed ledger, a blockchain is the overall record of all digital transactions. A group of verified transactions is referred to as a ‘block’. A chain is built as further transactions are confirmed and added to preceding blocks.

Blockchain technology is also used to manage how information is stored and how transactions occur.  The blockchain is permanent and cannot be deleted. The distributed ledger is updated in real-time, with each transaction visible as it happens. Because all participants can view the ledger at the same time, each participant can add to it without needing a principal authority to act as an intermediary.

Blockchain technology removes the need for a trusted third party to act in transactions, letting people send money directly to unknown parties safely and securely. Blockchain technology can be differentiated by three key characteristics:

  1. There is no central database accessible to hackers as every blockchain is distributed, operating on computers situated anywhere in the world. This makes it incredibly secure.
  2.  While the blockchain is public and any person can access the distributed ledger, it cannot be modified, meaning people cannot steal Bitcoins, for example.
  3. Due to heavy encryption, the blockchain offers greater security than most organisations.

Blockchain technology isn’t limited to tracking financial transactions. It can document a wide variety of information from births, deaths, and marriages to supply chain activities, proof of ownership, and much, much more. Therefore, blockchain technology is hugely disruptive and will fundamentally shift the way transactions are processed, impacting SMEs in seven key areas.

1. Tax: By automating processes including PAYG withholding, blockchain simplifies tax administration and makes validating claims straightforward. However, blockchain also allows opportunities for tax evasion as a result of user’s capacity to remain anonymous. Consequently, it is a logistical conundrum to control the divergent activities and organisations.

2. Insolvency risk: The risk of defrauding is reduced as transactions can settle in close to real time. The automation facilitated by blockchain technology enables accelerated settlement.

3. Payment transactions: Cryptocurrencies such as Bitcoin are not recognised as financial products by the Reserve Bank of Australia and are therefore currently unregulated. SMEs may need licensing if they are considering offering payment options that include cryptocurrencies.

4. Fraud: Criminal activity may be identified sooner as the permanent, real-time, and detailed information included in the blockchain may allow for easier detection of suspicious transactions and trace funds.

5. Errors: There are fewer opportunities for mistakes as the automation of distributed ledgers enabled by blockchain essentially eliminates manual intervention, saving time and money.

6. Privacy: SMEs must find a means through which to assure customer privacy due to blockchain technology’s pervasive and transparent structure.

7. Governance: Governance continues to be necessary to correct errors in the technical code, audit compliance, enforce legal and regulatory obligations, and more. It must be negotiated as control of the blockchain could possibly become a source of power.

SMEs must start to prepare for the change in the nature of business that blockchain technology will bring. It is essential SMEs comprehend the challenges and opportunities afforded by the use of blockchain technology and start to plan for incorporating and using the technology into the future.’


About the author

Jean-Marc Imbert is partner and national head of Risk Advisory Services at professional services firm RSM Australia. He is specialised in providing risk advisory services, including internal audit, risk management, compliance audit, market audit, national greenhouse energy reporting audit and alliance audit. Jean-Marc has over 25 years of experience in the public and not-for-profit sectors as well as the corporate sector, including significant experience with public transport, infrastructure, regulatory bodies, energy and mining industries and international groups.