Cryptocurrency, is rapidly emerging from the underbelly of the internet and becoming mainstream. Bitcoin, Litecoin, and hundreds of other “forks” are gaining traction every day.
Electronic currencies are becoming part of the financial landscape and they are here for the long run. It’s time for businesses to start understanding these financial instruments today. Understanding digital currency could be the advantage you need for tomorrow’s market.
Here are a few things your small business needs to know about cryptocurrencies and how they’ll impact your business.
Similarities and Differences
There are hundreds of cryptocurrencies available for financial transactions. No need to focus on all of them unless you’re interested in gambling on which one gets popular next. To get started just stick with the 5 most popular ones:
Bitcoin, Ether, Litecoin, Monero, and Ripple.
Honorable mention goes to Dogecoin, the number 6 most popular currency that is proof that the internet can truly do whatever it sets its mind to. Even turning a joking meme into it’s own coin.
All of these are paperless, and exist entirely in the digital realm. These financial instruments utilize cutting edge encryption, which makes each transaction unique and secure.
Bitcoin, for example, uses a system known as the block chain, which time-stamps each transaction successively for verification. The enhanced security of cryptocurrency allows it to function as a peer-to-peer financial transaction system. Using it enables parties to conduct financial transactions and avoid intermediaries, like banks, that other financial instruments require.
Some cryptocurrencies limit the number of digital “coins” that can exist in the system; these are known as deflationary currencies. Inflationary cryptocurrencies, on the other hand, allow for additional money to be added to the system. Bitcoin is an example of the deflationary currency and Ripple is an example of an inflationary currency.
There are arguments on both sides for these different types of cryptocurrencies. Understanding them is an important step for any small business that is going to start using them.
The Global Market
A great way to make your small business more competitive is to expand into international markets. Businesses that go global normally realize a positive return within 1 to 2 years and of those a third achieve profitability within 6 months.
Adopting cryptocurrency can help ease your small businesses entrance into a global market. Cryptocurrencies are a peer-to-peer transaction system. They do not rely on a central bank or exchange. Businesses that accept cryptocurrencies can do so without the hassle and costs of currency exchanges. Paperless currency is increasingly a border-less currency.
As cryptocurrencies become more and more popular, their value in enabling global business will only increase. Beyond maneuvering past exchange rate costs and risks, this technology will enable increasingly rapid, secure and financially secure transactions.
Using cryptocurrency can also help reduce major costs related to fraud or theft. Fraud is a major drain on businesses. Credit card theft alone costs merchants upwards of $190 billion annually.
Cryptocurrencies, however, can be a hedge against this threat. The main part of this new digital financial tool is the cryptographic system that makes it up, and therefore makes it secure enough for peer-to-peer transactions.
These currencies offer better privacy for businesses and their consumers. Since this requires no third party intermediaries, financial transactions can remain anonymous. This anonymity does more than keep transactions private it eliminates the risk of lost personal details from lax third party vendors.
Instant Customization (aka Cost Savings)
Electronic currencies can be custom-designed to execute a specific transaction, like a contract. This allows cryptocurrencyy to eliminate many of the middlemen – notaries, brokers, lawyers, etc. – often required for complex financial transactions. This can save businesses and their customers considerable time when buying and selling real property.
It can also eliminate the crazy fees associated with these services,. Furthermore, the small businesses that these currencies have a considerable advantage over less tech-savvy competitors.
While still immature, cryptocurrencies are firmly establishing themselves and they are here to stay. For that reason it’s time to start following the other giants in the landscape.
Over 100,000 businesses, already use these currencies in everyday transactions. Giants like Bloomberg, Shopify and NewEgg have begun accepting them as well. Hundreds more are following their lead every day.
Refusing to adapt to new currencies and new technologies? These new technologies are here to stay. Therefore, the sooner you understand cryptocurrencies and how they work, the sooner you are ready for a rapidly evolving financial landscape and the future of your business.