No matter where you are, creating and running a successful business is a tough endeavour.
That’s why an economy that implements the right regulations and structure facilitates the ease of doing business for entrepreneurs. As a result, entrepreneurs in such economies have greater chances of success.
This leads to an important question: what is the ease of doing business?
The ease of doing business 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 is proving to be the technology with the biggest potential to achieve this goal. According to Gartner, business value added by blockchain will exceed $3.1 trillion by 2030.
Unfortunately, only 15% of companies have live blockchain projects, according to PwC.
How can blockchain improve the ease of doing business? Let’s go through that in a moment.
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. This index ranks countries based on how easily businesses can start and operate, given the country’s regulatory factors.
Currently, the top 3 countries on the ease of doing business index 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 effectively improve business operations.
Blockchain became popular in the financial market, but can be applied to virtually 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 a whole lot of paperwork. A major benefit of this is the better supply chain tracking, which ensures transparency and eliminates fraud.
With public (tokens) and private keys, businesses 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 any other business activity.
Using blockchain, businesses and governments can substantially lower costs associated with regulation. 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 the enforcing of contracts. With smart contracts, enforcing contracts between two parties will become easy, fast and automatic.
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 is only a bit better at 15 transactions per second.
This is definitely insufficient for this purpose. Fortunately, L3COS has a robust platform that can execute over 50 000 transactions per second, making it perfectly suitable for this purpose.
Increasing the ease of doing business helps businesses thrive and, in turn, boosts the economy. With regulated blockchain, governments can facilitate the ease of doing business at various stages of business operations.
Contact L3COS today to see how our blockchain-based operating system can help you improve the ease of doing business.