Why Your Business’ Livelihood Depends on Getting Acquainted with the Concept of Cryptocurrency
The arrival of the digital revolution brings with it far-reaching implications that leave no industry untouched. Stubborn practitioners of traditional business processes may find themselves left behind in the wake of full-scale financial chaos.
In the course of events, fundamental changes have occurred, primarily in the technology industry. The emergence of smartphones, cloud computing and breakthroughs in digital technology signal the end of an era and the beginning of a new one, where the ability to adapt to constant change is a requisite for success.
Businesses lead by rigid executives who take pride in their proclamations of, “this is how we do business” in the face of needed change will have to overcome a number of obstacles to remain relevant.
In general, cryptocurrency means money or financial liabilities, exchanges and mutual settlements which are provided via the power of information technology. From a legal point of view, the decisive feature of electronic money is that it is a means of payment as well as an obligation to be fulfilled.
Benefits of Using Cryptocurrency
The use of cryptocurrencies by businesses, not in any way connected to information technology, have a number of benefits at their disposal.
- First, it can be used as a means of payment.
- Second is that it is the simplest and most popular form of monetary decentralization.
- Third, such payments are easy to send, track and do not require additional expenses.
- And last but not least – payments carried out by individuals are easy to account for, regarding tax and accounting purposes.
What are the Downsides?
Currently, there is no single or constantly updated list of organizations accepting bitcoin payments. But there are already over 100,000 companies around the world, including Microsoft, PayPal, and Overstock who do. In Japan, where bitcoin is recognized as an official means of payment, about 260,000 retail outlets now accept the Mobile Payment for Air Regi POS application (launched in July 2017). In Spain there are 7,000 ATMs for the exchange of bitcoins to euros and 3,000 more of these ATMs are now available in Poland.
True, the speed of cryptocurrency transactions depends heavily on the commission amount. Every transaction with cryptocurrency, no matter the platform or ecosystem, is charged a small performance fee. Such commissions can include:
- Fees related to the payment method.
- The transaction fees of the network itself
The more the commission – the faster the payment. This benefits businesses as the speed of transitions can affect a company’s revenue. With faster transactions, cash turnarounds increase and the volume of revenue and profits are directly affected.
However, this option is still mostly used by companies to obtain additional press attention. After all, headlines such as, “My Company INC has begun to accept cryptocurrencies as payment” are newsworthy.
Why Businesses Should Consider Integrating the Use of Cryptocurrencies
Business owners can raise additional funding with the help of an Initial Coin Offering. Which is basically an option to collect additional funding by selling a fraction of a company’s value, converted into tokens for private investors. During the April – June 2017 period, various companies around the world collected an additional $797 million using ICO’s to expand their businesses. The mechanism is already legally regulated in the US where the Exchange and Securities Commission equated ICO Tokens (the type of securities you forge in exchange for additional funds from private investors for your business growth or innovation) to securities at the end of July 2017.
Another even more promising way to use cryptocurrency in business is for making payments between legal entities. At the moment, cryptocurrency payments between legal entities have no legal or tax regulations. One of the selling points for any cryptocurrency is its untraceability in terms of centralized financial systems. Which means that you can avoid disclosing any and all financial transactions inside or outside of your business, allowing you to avoid banks altogether.
The World of the Future Today
In order to assess the advantages of using cryptocurrencies for mutual settlements between companies, comparing international transaction speeds with those of traditional banks is a good place to start. Financial banking transfers crossing country lines can take up to a working week to complete. Cryptocurrency payments typically take about ten to fifteen minutes and can be executed anytime, without reference to a banking day.
By increasing the speed of their transactions, eliminating fees to banks and getting rid of any financial institution as a middleman, companies can benefit the most and even increase profitability by integrating cryptocurrencies. From a legal point of view, these tools are a bit complicated yet completely untraceable from outside the platform.