Blockchain and Cryptocurrency Applications for Businesses
The applications of blockchain and cryptocurrencies for your business.
Cryptocurrencies have revolutionized the way we transact value, make investments and mobilize funding. Quite simply, blockchain and cryptocurrencies are changing the financial experience of businesses and individuals alike. They are substituting the need for physical money, and in some instances, they are also replacing the need for the traditional financial system and banks.
As digital assets develop and grow in value, global businesses, both small and big, are left to determine whether they should join the cryptocurrency and blockchain revolution. Aside from growing as an investment instrument, cryptocurrencies have several applications to consider in relation to the financial needs of your business. Additionally, blockchain technology holds the potential to revolutionize processes and standard operating procedures in many business sectors.
In this article, we explore the different applications of blockchain and what it means for businesses to integrate cryptocurrencies within their existing infrastructure.
What Do Cryptocurrencies Mean for Business Owners?
As an entrepreneur, you are primarily focused on how to help your business reach its maximum potential. Digital assets like Bitcoin can help you achieve precisely that goal. The largest myth about cryptocurrencies is that they are only speculative financial instruments.
In the United States, 1 out of every 3 SMBs (Small Medium Businesses) accepts crypto payments, as per an HSB survey. Cryptocurrencies such as Bitcoin and Ethereum provide several beneficial impacts to small businesses and their customers, allowing them to foster a substantial correlation.
Read on for some of the ways cryptocurrencies can help your business.
Reduced transaction fees
One potential advantage of accepting cryptocurrencies as payment for your goods and services is that unlike traditional financial methods like credit cards, there are no direct processing fees. There are no intermediary organizations, like financial institutions, when conducting a local or international transaction with cryptocurrency for your business. They are decentralized, meaning they are immune from government interference or involvement by banks.
There is no single authority that controls the supply of cryptocurrencies. They operate directly through blockchain technology without the need for any central financial management. Besides, cryptocurrencies are a faster and more efficient substitute for traditional payment methods. For instance, back in 2014, Overstock became the first retailer to accept Bitcoin payments. The online retailer received more than 800 orders valued at $126,000 in BTC within the next 22 hours.
Raising business capital
Cryptocurrencies have changed the way startups raise funding during their early stages. With initial coin offerings (ICOs), startups can quickly raise funds affordably and efficiently from a vast pool of international investors. This net worth of a firm almost instantaneously shows in the markets, a procedure that has previously turned out to be quite a challenge for early-stage businesses.
In 2014, a Russian-Canadian teenage programmer Vitalik Buterin raised funds for his business, Ethereum, via an ICO. Buterin’s target was to revamp Bitcoin’s code and develop a blockchain that allowed people to build decentralized applications. He managed to mobilize $18 billion with just a whitepaper and a vision for his startup.
With cryptocurrencies, you have a platform that helps you raise funds for your business idea. Moreover, unlike traditional VC infrastructure, you have a diversified audience that act as early supporters for your project.
Cryptocurrencies are increasingly turning mainstream. Moreover, they are gaining rapid attention from firms like Morgan Stanley and Visa. FinTech firms are developing products and services that help bridge the gap between traditional finance and cryptocurrencies. The global network allows a business to operate on an international scale with an effective payment method.
The fast-paced growth has allowed businesses to leverage the advantages of cryptocurrencies for their business infrastructure. It allows them to cater to an international audience with the benefits of instant processing and low overhead costs. Additionally, digital assets offer an opening for anybody from any corner of the world to invest in the most disruptive technology, enabling retail investors to own a stake in high-growth startups globally.
Bridge Between Traditional Finance and Cryptocurrencies
Cryptocurrencies are known to be massively volatile, making them attractive investment options for investors to pursue high yields. However, they also present a significant risk to businesses that accept them as payment means. For instance, back in March 2020, the price of Bitcoin superficially crashed from about $10,000 to below $4,000 in an instant. Businesses that accepted Bitcoin for payments realized significant losses.
However, the issue of volatility is minimized by merchant wallets that instantly convert them to fiat currency. The majority of merchant accounts protect their users from volatility by converting the digital assets to fiat currency with just a few seconds between a payment being made and accepted.
Joining the Blockchain Community
Joining the blockchain community grants you access to some of the top business minds in the world. These people are investors, advisors, or building on the blockchain. Social media platforms such as Facebook, Instagram, Telegram, WeChat, and even WhatsApp groups have proved to be famous for creating decentralized groups of blockchain investors who can regularly reach out to each other.
Many large-scale investments in technology startups can be matched within blockchain communities within a short period, a procedure that would take months through traditional venture capital. Blockchain participants give entrepreneurs new opportunities, with all the members committed to a common objective of progressing blockchain technology to worldwide proliferation.
Digital assets provide businesses with a platform to mobilize capital promptly, efficiently, and at a low cost. Besides, entrepreneurs can effectively transact value through the blockchain and invest in high-growth startups during their first steps.
Some blockchain networks such as Ethereum enable entrepreneurs to create decentralized applications and cater to a global audience. The blockchain community gives access to big investors, engineers, and some of the leading entrepreneurs in the world. In 2021 and beyond, digital assets will continue to offer possible ways for businesses to add value.