If you have not been paying to the cryptocurrency revolution over the past decade, it is never too late to start informing yourself. Not only do the myriad cryptocurrencies out there represent a genuine revolution in our global monetary system, but the cryptocurrency investment opportunity is still very real, as are the implications of widespread crypto adoption and use for and by businesses. Here is what crypto could mean for commerce and businesses.
Cryptocurrencies as an Investment Opportunity
Cryptocurrencies always have been, and remain to this day, investment opportunities. The lucky few who got into coins like Bitcoin in the early days (when a coin was valued at less than 10 cents) and cashed out a few years ago at its high of $19,783 (before the crash) include many current “Bitcoin millionaires.” Cryptocurrencies briefly fell out of favor following this crash but are once again making major gains.
There are now dozens of cryptocurrencies on the market, and evaluating them takes knowledge and time. If you are interested in cryptocurrencies as an investment vehicle for your business, make sure your sources of crypto information and market analysis are reputable. Investing in cryptocurrencies requires market insight and an understanding of the many dynamic macro and micro forces at play.
Reduced Payment Transaction Fees
One of the many enticing features of crypto for businesses large and small is the promise of reduced transaction fees. The payment processing fees from the big banks and credit card companies are notoriously high and loathed by business owners. Crypto circumvents the big players in the processing market and offers businesses a secure, fast and less expensive way to send and process payments.
Banks make money by facilitating payments and so they have little incentive to lower their costs. This is especially true of cross-border payments, which generated 40 per cent of all transactional revenue from global payments in 2016. Cryptocurrencies and blockchain could force banks to compete, which would be a win for business owners and customers. Businesses, and particularly small businesses, could save a tremendous amount on transaction costs annually while offering their customers an alternative to payments with established global currencies.
Cryptocurrency as a Hedge
A hedge is an investment made to offset the risk of another investment. Businesses who deal in multiple different currencies do it all the time to avoid exposure to sudden depreciation or appreciation. Cryptocurrencies can also function as a hedge, especially for poor governance and monetary policy.
Cryptocurrencies are widely viewed as effective hedges against inflation, expanding monetary supply and dramatic moves by central banks, especially as the world sits in the shadow of a looming global depression. Cryptocurrency is decentralized on purpose and does not require an intermediary to guarantee the transaction. As it becomes more normalized and widely accepted, it could function as a viable value store for businesses with a lot of cash on hand during volatile times.
Better Fraud Detection
One of the omnipresent threats when doing business and processing payments online is fraud. While cryptocurrencies are still subject to a troubling amount of fraud themselves, the technology that underpins them (blockchain) poses an opportunity for businesses because of how transparent it is. Losses to fraud using standard payment, transaction and encryption methods are inevitable, but blockchain could completely revolutionize the way wire transfers, cheques, and automated clearing house payments are sent.
With cybersecurity breaches already the biggest threat to businesses, business owners will increasingly be forced to defend themselves against cybercriminals and fraudsters. Given the near impenetrability of blockchain encrypted data (financial and otherwise), the technology that makes cryptocurrencies possible could swing the cybersecurity dynamic heavily in favor of businesses.
While the adoption rate of crypto is still quite low (though growing) among mainstream businesses, the potential for branded proprietary currencies offers companies a great new growth hacking method. These tokens, which would function similar to credits or vouchers, could be offered to visitors and customers for doing things like leaving reviews, referring friends and family, boosting social signals, or buying various items and services.
Tokens are easy to create, can be accepted as currency for purchases made either directly through online stores or third parties, and give current and potential customers a unique way to shop. There is already a wide range of cryptocurrency payment options that businesses can make use of, including Dether, Bitpay, PumaPay, GoByte and Crypterium, with many more in development.
Cryptocurrencies represent a major upheaval to traditional monetary and exchange systems and are undoubtedly one of the most exciting economic and financial services developments of the 21st century. Understanding the variables that dictate the price of the various cryptocurrencies currently in circulation requires research and self-education–a prerequisite for investing and speculating regardless of the asset.
The potential benefits to companies are numerous and represent significant cost savings and new opportunities to do businesses, as well as increased security and protection against fraud and data theft. The widespread adoption of cryptocurrencies could change the way business is done and business owners would do well to keep abreast of this dynamic and fast-paced market.