No matter where you are, building and running a successful business is tough.
That’s why economies that implement the right regulations and structure are critical for entrepreneurs and the ease of doing business. Entrepreneurs in such economies have greater chances of success.
This leads to an important question: what is the ease of doing business?
Simply put, it is the measurement of how easy it is to start and run a business in a particular country or economy. This takes into consideration the regulations that guide the starting of a business, how protected investors and creditors are, how contracts are enforced, and other vital aspects of business.
With economies looking for more effective ways of improving the ease of doing business, blockchain technology offers the greatest potential to achieve this. According to Gartner, business value added by blockchain will exceed $3.1 trillion by 2030.
However just 15% of companies have live blockchain projects, according to PwC.
Since 2003, Simeon Djankov and Gerhard Pohl, two leading economists at the Central and Eastern Europe sector of the World Bank Group, have been publishing the ease of doing business index. The index ranks countries based on how easily businesses can start and operate, given the country’s regulatory factors.
Currently, the top 3 countries are New Zealand, Singapore, and Hong Kong.
Although the ease of doing business index does not consider every possible factor that affects businesses, here are the nine vital factors it does consider:
With the features of regulated blockchain, these processes can become easier and by extension, improve business operations.
So how can blockchain improve the ease of doing business?
Blockchain originally became popular in the financial market but can be applied to every other industry. In 2017, Kasey Panetta said the following about blockchain:
“The technology holds the promise to change industries, and although the conversation often surrounds financial opportunities, blockchain has many potential applications in government, healthcare, content distribution, supply chain and more.”
Traditional blockchain allows for more transparent and secure transactions, but it can’t be used to facilitate the ease of doing business. This is because governments need to regulate and monitor the process, and work in tandem with businesses and other stakeholders.
Regulated blockchain provides a platform with the benefits of the traditional blockchain and the ability for governments to oversee and improve business rules and operations. On a regulated blockchain platform like L3COS, government agencies and businesses can observe transactions, which increases transparency and eliminates bureaucracy. For example improvements can be brought to supply chain tracking, ensuring accountability from producer-to-consumer and eliminating fraud.
With public (tokens) and private keys, business can authenticate transactions without revealing sensitive information. Through public keys, a government agency can verify that a particular business is qualified to get a loan, acquire a property, go public through an IPO or take on another business activity.
Using blockchain, businesses and governments can lower costs associated with regulation – some of which can require an intermediary or broker to navigate. Through the L3COS three-level consensus mechanism, a government agency can verify and approve business documents in the government registry. As a result, businesses can receive fast approval to start their operation or construction, and can register properties at a lower cost, as third parties are eliminated from the process.
One of the most important factors in the ease of doing business index is contract enforcement. Blockchain is able to facilitate to creation of smart contracts which respond on an ‘if-then’ basis. Smart contracts, enforce contracts between two parties automatically.
In a smart contract, whenever set conditions are met, it triggers a corresponding action. For example, if a business needs to acquire land, the seller can create a smart contract, which sends the ownership documents to the buyer once the buyer has paid the required amount of money.
Another benefit of smart contracts is in equity crowdfunding.
During equity crowdfunding, investors can receive shares automatically when they send payment to the business. With businesses raising $13.7 billion through initial coin offerings in the first 5 months of 2018 alone, this is a great avenue to raise capital to start a business.
With the amount of data that gets uploaded by businesses and government agencies, there’s a need for a scalable blockchain platform. Without scalability, it’s impossible for a blockchain platform to facilitate the ease of doing business. A platform like Bitcoin has a maximum transaction speed of 7 transactions per second while Ethereum can facilitate 15 transactions per second.
These two blockchains therefore are insufficient for the purpose of improving the ease of doing business. L3COS has a robust platform that can execute over 50,000 transactions per second, making it well-suited.
Increasing the ease of doing business helps businesses thrive and, in turn, boosts the economy. With a regulated blockchain, governments can facilitate the ease of doing business at various stages of business operations and enhance the productivity and vitality of business.
Contact L3COS today to see how our blockchain-based operating system can help you improve the ease of doing business.