Cryptocurrency appears to be a fast-rising trend in the financial industry today, and it seems to be integrating into businesses as time passes. An increasing number of forward-thinking businesses all over the world seem to be joining this crypto trend, and you probably don’t want to be left behind.
Businesses are using these digital currencies for a variety of transaction, operation, and investment purposes. But is integrating cryptocurrencies into your business a worthwhile endeavor? Is it a good investment for your business? To find your answer to these questions, it might help to understand first what cryptocurrencies are.
What You Should Know About Cryptocurrency
Also known as decentralized money, cryptocurrency is a digital currency used as a medium of exchange that runs across a network of distributed computers that shares the work. It uses an online ledger with strong cryptography to ensure transactions are secure.
Unlike paper money, cryptocurrency has no physical form and isn’t considered legal tender. All transactions involving cryptocurrencies take place online.
Most cryptocurrencies, such as Bitcoin, Stellar, and Ether, are based on blockchain. This means they use blockchain technology to record and secure transactions. Blockchain is a distributed ledger that records online transactions in multiple places simultaneously. It secures the integrity of cryptocurrencies by encrypting, verifying, and recording transactions permanently.
Despite its remarkable growth in recent years, cryptocurrency continues to battle with numerous controversies that surround it. There are issues about its volatility, its use in illegal activities, and the vulnerability of the infrastructures that underlie it. There’s also no guarantee they’d ever be adopted mainstream.
If you’re planning to invest in digital currency, you must know extensively its complex characteristics and processes. Seeking the help of professional service providers like Blake Harris and other financial experts could greatly help solve your cryptocurrency and other financial concerns.
Popular Types Of Cryptocurrencies
After learning some important details about cryptocurrencies, it’s time to be introduced to a few of the most popular cryptos to help you have a better understanding of them:
- Bitcoin: Bitcoin is the first cryptocurrency to record transactions successfully through a secured, decentralized blockchain-based network. Said to be the original cryptocurrency, it was founded in 2009 by a presumably pseudonymous programmer. Any cryptocurrency other than Bitcoin is called altcoins. While you could also choose from these other cryptocurrency options to invest in, Bitcoin remains to be the most popular and valuable among them.
- Litecoin: Launched in 2011, Litecoin was among the early spinoffs of Bitcoin (or altcoins, as previously mentioned). This particular crypto is a lot like Bitcoin but could generate a block of transactions faster than Bitcoin does. And this makes it very attractive to investors. Today, Litecoin is ranked the twelfth cryptocurrency in terms of market capitalization (market cap).
- Ether (Ethereum): Ethereum is a decentralized blockchain for building and running smart contracts and decentralized applications, which was founded in 2014. In 2015, its native cryptocurrency was launched, Ether— the fuel that operates the Ethereum platform. Currently, Ether is the second-largest crypto in terms of market cap, and Ethereum is widely used in different industry use cases because of its known smart contracting flexibility and functionality.
Besides these three, other popular cryptos also continue to thrive over the past years. Due to the notable growth of Bitcoin and its remarkable success in the field of finance, some other forms of cryptocurrencies emerged to counter its popularity. These include Cardano, Tether, Binance Coin, Dodgecoin, XRP, Bitcoin Cash, USD Coin, and many others.
Why Businesses Should Invest In Cryptocurrency
As with any other venture, the application of cryptos in businesses present both challenges and advantages. However, the focus below would be on the advantages of investing in cryptocurrencies. Here are some of them.
- Safety Against Counterfeit
Cryptocurrencies are widely known for being difficult to counterfeit. These digital currencies use cryptography for security, and because of this feature, they’re almost counterfeit-proof.
Another good thing about digital currencies is that, unlike traditional currencies, which are controlled by the government, they’re neither issued nor controlled by any central authority. This means no certain government owns them. Such status makes them invulnerable to any political interventions and manipulation. This means they could maintain their purchasing power without any threats of depreciation caused by some political power.
- Long-Term Store Of Value
Another good reason to invest in cryptocurrencies is their known capability to provide a reliable, long-term store of value. As they couldn’t be printed or seized, this makes them a secure store of value.
Unlike fiat currency, digital currencies generally have a limited supply, which is capped by mathematical algorithms. Hence, it’s more difficult for government bodies to interfere with its operations and dilute its value through inflation. Thus, their value could remain uninfluenced by bank failures, hyperinflation, and other economic disasters.
- Transparency In Transactions
As transactions involving cryptocurrencies are usually recorded and monitored in a public ledger, they couldn’t be altered after being confirmed. Also, crypto transactions are verified and, therefore, couldn’t be hacked or manipulated by any person or company. This makes them highly free of any risk of corruption and fraud.
- Accessibility And Ease Of Use
Of the billions of people accessing the internet every day, some of these have no access to banking services, so they’re clued in on the cryptocurrency industry. Today, many programs and apps are facilitating the use of digital currencies, bringing more people closer to decentralized money.
One of the reasons for the apparent demand for cryptocurrencies today is their ease of use. Cryptocurrency transactions could be completed anywhere and anytime, even at night, on weekends, and during holidays. One only needs to have their smartphone and an internet connection to make payments and transfer money. This makes cryptocurrencies a fast and easy means of exchange that could be used in all corners of the world.
- Fast Transaction Time
Normal transactions involving bank transfers, especially international ones, would usually take a long time to complete. In some cases, it’d take several days or even a week to make a successful transfer from one country to another. With the use of cryptocurrencies, however, days could turn into just a few minutes, even with cross-border transactions. And what does fast transaction time equal to? Good business.
- Minimal Transaction Costs
Cryptocurrency and blockchain transactions are known to involve minimal costs. This is because all transactions are done online, meaning there’s no need for a physical building for cryptos and blockchain technology to operate. Along with this, there’s no more need for the payment of employee wages, rent expenses, and utility bills. Costs that would’ve otherwise been spent on these aspects of the business are saved up, resulting in low costs in crypto transactions. This could invite people to start using these new financial tools in their transactions.
- New Opportunities
Cryptocurrency applications in businesses may allow access to new categories of customers, especially those who value transparency in transactions. It’d also allow businesses to receive payments in other options.
- High Liquidity
Well-known cryptocurrencies and those with large market cap, such as Bitcoin and Ether (Ethereum), are said to be highly liquid. They’re being traded on many exchanges worldwide and could be easily purchased and sold in the market. Also, trading platforms’ technological organizations allow for the use of different tools and strategies, like algorithm-based trading and automated buying and selling at specified prices.
- High-Profit Potentials
Despite posing numerous risks due to their volatility, digital currencies could prove to be a lucrative investment for an enterprise. Recently, cryptocurrencies have been reaching new heights and are continuing to rise and grow. But there’s still a chance these prices would easily plummet. Nevertheless, if they continue with this upward trajectory, there’s a vast opportunity for huge profits if the company decides to sell.
Bitcoin and other popular cryptocurrencies have already shown great potential for appreciation and growth, and they’re believed to still go a long way. But aside from these established cryptos, smaller and less popular digital currencies are thought to have even larger opportunities for growth and appreciation, especially after they eventually gain recognition and widespread use. This potential for appreciation and growth is what makes these digital currencies attractive, especially with the tendency of fiat money to depreciate due to inflation.
Takeaway
As more and more businesses seem to be accepting cryptocurrencies nowadays, applying them in your business may perhaps bring you great incentives, too. Investing in digital currencies could protect your business against counterfeiting, threats of fraud, and even inflation. When it comes to transactions, cryptocurrencies and blockchain are said to be advantageous due to the minimal costs, transparency, accessibility, and ease of use associated with them. The claimed high liquidity, high profitability, and reliability as a store of value of these digital currencies are also a plus.
However, just as there are advantages, investing in cryptocurrencies may also pose risks. So before allowing your company to endeavor into these new financial tools, it might be best to do your research, consult experts, think carefully, and prepare.
David Palmer
David Palmer is a financial technology expert. He has been involved in the industry for more than five years. David is also a digital currency investor. During his spare time, he writes blogs to share his expertise in blockchain technology and cryptocurrency investments. David is married with three children. He loves outdoor adventures and sports.
