Blockchain and cryptocurrency have seen a monumental increase in their value and popularity in the last few years. Clearly, it has been more than just a craze as new investors are entering the market every day. The industry has also witnessed numerous innovations such as international payments, NFT marketplaces, decentralized finance (DeFi), and identity management systems among others.
While we can be sure that the future of money lies in cryptocurrencies, the blockchain technology on which they operate has been driving change in business operations for some time now. Businesses that use blockchain technology benefit from the fact that it provides a secure and transparent ledger for all the transactions that take place. It can be used across many industries for data management purposes among other advantages that are listed below:
Top Reasons of Cryptocurrency Revolutionizing Business
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Quick and secure transactions
Whether it is blockchains or cryptocurrencies, both of them can make businesses highly efficient as transactions with these are quick, simple and secure. Crypto transactions have an advantage over traditional payment modes like credit or debit cards. While cryptocurrency payments get processed and reflected in the account almost instantly, the same can take more than a day or two sometimes when a credit or a debit card is involved. Additionally, crypto transactions are private in nature and are not recorded by any central authority such as a bank.
The cryptocurrency market is also big on privacy. You do not have to submit your personal details or any government-issued identity proofs to be able to carry out transactions. Your personal identity as well as your financial data is not exposed.
Low transaction fees
On a day-to-day basis, businesses make over thousands of transactions. Even though Bitcoin and other such crypto payment options have just begun to gain momentum, credit card payments are typically more common. However, the transaction fees with credit cards are much higher and thus, a business could save a lot of money with cryptocurrency payments as they offer relatively low transaction costs.
Blockchains are decentralized and thus this technology that keeps the cryptocurrency system running also does not call for a regulatory body to oversee the transactions. As a result, businesses that employ blockchain technology can make use of decentralized transactions. Other than the sender and the receiver, there is no other body or authority monitoring the transactions.
Reduced chances of fraud
The chargeback feature in cards allows payments to be reversed. However, in crypto payments such as the one using Bitcoin, transactions are irreversible. Every transaction is recorded safely on the blockchain and the verification process involves a long audit trail that checks authenticity.
Thus, every transaction that takes place has more accountability which reduces the possibility of financial fraud. However, the fact that blockchain transactions are auditable makes it very useful to trace different assets as well. Hence, a business can conveniently store and manage data that is not just financial in nature.
Increased traceability of the supply chain
Tracking products and tracing supply movements becomes much easier when blockchain-based applications are used. It would leave no room for human errors as supplies can be managed live. Also, as blockchains enable the use of smart contracts, the supply chain industry at an international level could undergo a major change.
When the supply chains become more automated and self-reliant, businesses could spend more time and resources on bringing down costs in aspects and streamlining processes like production.
Cryptocurrencies make the process of carrying out international trades and payments much smoother. Businesses do not have to face hassles and delays on account of currency conversions so they can trade seamlessly with clients across the globe. This opens up endless possibilities while giving a business an extra edge over other competitors.
Improve your core capabilities
The cryptocurrency market is still fairly new. Hence, if your business makes use of crypto or blockchain technologies to improve your capabilities, you could have an added advantage over potential rivals who might be late to the party. When you offer crypto as a payment option, you can also acquire more customers who are keen on entering the crypto world. Cryptocurrencies could possibly be put behind traditional currencies as more and more governments are toying with the idea of launching their own cryptocurrencies. If this becomes a reality soon, your business could be catapulted way ahead of others.
New sources of capital
With cryptocurrencies, as it impact on business owner, you get to access a larger pool of liquidity and capital which can dramatically boost your investment options. A lot of startups have started raising capital through digital currencies by rolling out Initial Coin Offerings (ICOs). These work in a similar fashion to Initial Public Offerings (IPOs) where businesses pay back investors via cryptocurrency coins like Bitcoin or Ethereum.
Potential inflation hedge
Cryptocurrencies and volatility are like two peas in a pod. As the market is witnessing growth, many businesses have started seeing cryptocurrencies as a means to protect their funds against unpredictable market conditions. A cryptocurrency like Bitcoin that has a solid market share is often used to hedge capital against negative market dynamics. It is interesting to note that though Bitcoin itself is very volatile, several investors prefer to put their money on it as this crypto seems lucrative due to its limited supply and ever-growing value.
Improved treasury function and operations
The blockchain technology on which most cryptocurrencies operate can be used in more places rather than just in the field of finance. Over and above crypto payments and transactions, it can also be useful in operations as well as treasury functions.
Privacy in Financial Transactions
There are several new players in the cryptocurrency market today such as Beam, Litecoin, Cardano, Stellar, Tether, etc. The highlight of these cryptocurrencies is that they focus on financial privacy and all transactions, as well as ownership-related data, remain confidential and secure. No third party can access any data about an individual investor’s financial assets.
Smart contracts are digital contracts where certain predefined conditions are already put in place to automatically kickstart the task(s). The purpose of these smart contracts is to make the execution process faster, cut down costs and improve overall security. Blockchains can be great tools in this regard as they automate the execution of pre-set tasks.
Smart contracts that run on blockchain technology are beneficial in supply chain management, healthcare data management, polling systems, documentation, identity access, etc.