6 Things Business Leaders Should Know About Cryptocurrency
The concept of cryptocurrency refers to a digital currency that uses encryption techniques to control its use and generate its supply. A cryptocurrency is not regulated or managed by any bank, government, or centralized financial authority, unlike conventional currencies such as the British Pound, US Dollar, or Euro. And it’s finding peak interest from an increasing number of businesses, who are using cryptocurrencies worldwide for various investment, operational, and transactional purposes.
There are unknown dangers, as with any frontier, but there are also great incentives. It appears that the doors are now open for more significant mainstream adoption and practical use among business owners in the future years.
Here are six things business leaders should know about cryptocurrency:
1. Decentralization promotes liberty
No central body regulates cryptocurrency, as it is based on a public digital ledger – the blockchain. One of the advantages of a blockchain is that it eliminates the intermediary. Users that use this way of exchange do not have their payments vetted, and governments are not engaged in the production of cryptocurrencies.
2. It’s still volatile
Cryptocurrency is a speculative investment, and the smallest provocation influences its worth because it may fall or rise under unknown circumstances. The influence of volatility on the cryptocurrency market opens up opportunities too. Businesses would do well to remember this.
3. The rise in value could be due to the legitimacy
Countries worldwide have been rushing to create regulatory frameworks in response to the rise of cryptocurrencies. Major countries around the world have taken quite varied approaches to cryptocurrency legislation. The landscape is still changing, but given how slow governments typically move, there is still a lot to be seen. It has become evident that its acceptance in nations and popular establishments and users may have increased its value.
4. Many billionaires find cryptocurrency enigmatic
Warren Buffet has not spoken out enough about the topic of digital money, but when he did, he cautioned people to avoid it. He stated that he believes Bitcoin has no intrinsic worth. As you can expect, his statements generated a stir in the crypto realm, with its value plummeting, although that didn’t last long in the market.
JP Morgan Chase CEO Jamie Dimon had similar sentiments before the brand did an about-turn on their stance. He predicted that the government would crack down on it at some point because no one could generate money out of thin air. Another billionaire, Mark Cuban, does not share these two beliefs. Despite his claims that Bitcoin is overvalued, he is reported to have a considerable cryptocurrency investment.
5. Paying Employees With Cryptocurrency Could Be More Simple
As a remote team employer, managing payroll for a team of employees that live all over the world may be a big hassle considering having to pay your employees in a variety of foreign currencies. Arranging cross-border transactions to pay international employees living in different countries isn’t nearly as tricky as fees for changing foreign currencies.
Instant cross-border transactions with minimal to no fees are now possible with cryptocurrencies. Cutting out banks saves money for both the business and the employee, making it a win-win situation.
6. Crowdfunding and capital raising are much more straightforward.
People enjoy using digital platforms to raise funds. Fundraising is done transparently in this manner. It also allows people to appeal for money publicly and explain why they need it. Platforms like these will almost certainly continue to be used in the future.
Crowdfunding can become a more legitimate means of funding a wide range of projects and causes by offering greater supervision into individual campaigns and lowering the degree of trust required to donate in good conscience, due to blockchain technology. Similarly, it will allow fundraisers to avoid third-party platform expenses without losing their donors’ trust. A crypto wallet also allows everyone to see how much money has been donated.
Reasons why businesses should embrace cryptocurrency
Here are some of the reasons why some companies are presently embracing crypto and should keep on doing so:
- Cryptocurrency may open doors to new demographic groupings. Users usually represent a more cutting-edge clientele that places importance on transaction transparency. According to a recent survey, up to 40% of clients who pay with cryptocurrency are first-time customers, and their purchase amounts are double those of credit card users.
- Introducing crypto today could help your firm become more aware of this emerging technology. It might also help the firm position itself in this critical emerging space for the future, which might be incorporating central bank digital currencies as well.
- Cryptocurrency offers several advantages that fiat currency does not. Programmable money, for example, can enable real-time and accurate income sharing while also increasing transparency that may be facilitating back-office reconciliation.
- More businesses are discovering that critical clients and vendors want to work with them using cryptocurrency. As a result, your company may need to be set up to receive and send cryptocurrency to ensure smooth transactions with crucial stakeholders.
- Crypto could be a fantastic alternative for balancing assets to cash, which can devalue over time due to inflation. Cryptocurrency is a viable investment option, and some, such as bitcoin, have outperformed the market over the last five years. Of course, there are apparent volatility risks that must be carefully evaluated.
Determine your company’s direction and create a road map for it
Some people consider cryptocurrency to be an essential aspect of financial evolution. When your firm decides to be involved with crypto, it involves adaptations across the firm and changes in perspective. An implementation plan is required for each technological change or upgrade. This plan should include, but not be limited to, the following types of questions:
- What is the overall plan?
- What are the goals for the short and long term?
- What internal and external partners does the organization require? Can leaders find effective champions for the effort in all critical areas across the organization?
- Will the company’s recent decisions and activities allow for future flexibility and scaling?
- How can the firm combine the security requirements of operating in the digital asset ecosystem with the company’s existing security and cyber efforts?
- How will the company go about implementing crypto?
- What more resources will the organization require in addition to those it already has?
- What additional skills would it require?
- What will the roadmap for implementation look like?
- How will the company track its success as it goes through the implementation process?
- Is the organization using the right processes to keep track of transaction execution and vendor performance?
- What does the final result seem like before launch?
The Convergence of Business & Crypto
Businesses should keep a close watch on how cryptocurrency progresses and evaluate how it may be used to their benefit as it becomes more widely accepted. Acceptance should be approached cautiously. Any company that uses cryptocurrency should be aware and prepared of market volatility, the risks involved and react to the periodic changes in regulation that will almost certainly occur in the coming years.