Finance

The Effects of Cryptocurrency on Businesses

Cryptocurrency holds significant potential, and its disruptive power is certainly undeniable. It may sound geeky to the ears of a layman, but the internet users in the 21st century know the importance of cryptocurrency. So far, bitcoin mining is changing the verification methods of documents and processing of payments. 

Being inseparably linked to finances, investing in this type of cryptocurrency has led to one important question. How does investment influence businesses? Well, there are some transformations that cryptocurrency introduces in business activities, such as the following.

  • Smart Contracts

Smart contracts automatically enforce agreements between two companies with a digital ledger without depending on third parties. Many banks are using these contracts to improve the efficiency of clearing and processing payments through automation. More complex examples include risk assessments by merchant processors and real-time auditing. Some of the cryptocurrencies that offer these contracts include:

  • Decred 
  • Ripple
  • Ethereum
  • Bitcoin
  • Nxt 
  • Funding

Cryptocurrency disrupts how companies raise money. With coin offerings, businesses can easily and quickly raise cash from global investors. A company’s valuation is reflected by the market, a process, which has been challenging for entrepreneurs who are just starting out. Shares are offered as a form of a token and can be traded right away, bringing more capital to a business.  

However, other companies and platforms are now making things simple for businesses to raise capital through cryptocurrency. For example, DropDeck is a debt and royalty financing site for fast-growing enterprises with a token-incentivized mechanism to fund and evaluate businesses across the world. Other platforms that offer the funding are Ambisafe, Smith + Crown, and Dispatch. 

  • Secure Transactions

There are some elements, which secure cryptocurrencies from theft. For instance, Cryptography influences the transfer and creation of digital coins. Bitcoin mining depend on a distributed ledger, which is regarded as a blockchain. This type of ledger gives investors a record of every transaction, which can be hardly tampered with because there are no rooms for failures. 

In addition, it’s important to learn how to store your currencies so you can keep your investment safe. You may store your coins on digital wallets or exchanges. Wallets come in different forms, and each one of them has technical requirements, security measures, and benefits. As for exchanges, you need to research on the storage options before investing. Examples of exchanges you may consider are Flexcoin and Mt. Gox exchanges. Apart from using ledgers, wallets, and exchanges, you can also:

  • Get prepared for volatility
  • Diversify investments
  • Customer Loyalty

Loyalty from customers is important for any business. To nurture a good relationship between customers and business, most entrepreneurs create customer-loyalty programs. However, such programs come with bookkeeping hurdles and technological headaches, creating more data for businesspersons to manage and track. In such a case, cryptocurrency is the ultimate solution for entrepreneurs to establish effective programs, which can help in rewarding loyal clients with incentives. Automatable transactions in ledgers may also help you properly adjust customers’ status and keep track of their interactions. 

The Bottom Line!

Today, cryptocurrency has moved from being a speculative investment to a more viable alternative. While digital currencies are used worldwide, entrepreneurs across the globe utilize them to enjoy a lot of advantages, such as gaining customer loyalty, funding, and secure transactions.