The presence of cryptocurrency in business and within society is not showing any signs of slowing down. From governments adopting crypto as a form of the national currency to more and more businesses being able to conduct transactions through crypto, digital assets are becoming increasingly popular as a currency option.
Indeed, there are over 2,300 businesses that provide for and accept transactions in Bitcoin, including Bitcoin ATMs. In addition, companies and consumers are using digital assets like Bitcoin for investment opportunities and to execute transactions. But as seen in the recent news about the collapse of FTX at the end of 2022, the increased acceptance and use of crypto don’t come without risk.
FTX was one of the largest exchanges in cryptocurrency, but due to some alleged misconduct and fraud, investors lost billions quickly.
Digital assets and cryptocurrency fall under a decentralized finance platform that eschews central control and the use of intermediaries to aid in conducting transactions. Instead, cryptocurrencies are peer-to-peer transactions that provide greater control and transparency in every executed transaction.
To discuss the benefits of cryptocurrency and how it may provide your business with additional growth potential, understand the definition of a few terms like cryptocurrency first.
What Is Cryptocurrency
A cryptocurrency is an electronic asset that can be traded and utilized to execute transactions as a currency.
Most of the time, transactions are recorded through distributed ledger technology, which provides both parties in the transaction an opportunity to verify and record the transaction.
As opposed to traditional currency, which gains its value from a central authority that controls the amount of currency in circulation, cryptocurrency derives value from the number of digital assets available and the demand the public has for the asset.
Types Of Digital Assets
Cryptocurrencies are the most widely known digital assets, but there are a variety of options for your business to consider.
The main types of digital assets range from cryptocurrency to stablecoins, which are digital assets produced and controlled by a Central Bank. The main types of digital assets include the following;
- Central Bank Digital Coins
Understanding the types of digital assets and how they each may benefit your business requires you to have a strategic plan and policies in place for eventualities that may affect your ability to operate.
Benefits To Your Business Of Adopting Cryptocurrencies
Cryptocurrencies may give your business growth opportunities by expanding access to new customers and demographic groups. Additionally, crypto may expand your pool of available capital and liquidity pools.
Crypto will allow your businesses to have an adaptive, more responsive interaction with customers looking for secure, real-time money transfers. Also, the implementation of crypto to execute transactions provides greater control over the capital of your business and aids in managing risks with digital investments.
Another key advantage of adopting cryptocurrencies in your business operations is the exposure to more flexible options for conducting and executing transactions.
Finally, the ability of cryptocurrency can be used as a form of collateral in securing business loans. Many lenders are increasingly open to holding crypto as a form of collateral for traditional fiat currency loans, adding a dynamic option for business funding.
How Businesses Are Adopting Cryptocurrency
Although it’s only becoming more widespread, businesses are adapting to the idea and adopting the various uses that cryptocurrency is providing. The fact that more and more businesses and industries are accepting utilizing crypto indicates an evolving business climate. What was once a relative outlier has grown in acceptance in recent years.
And that trend toward greater inclusion and use is only accelerating as consumers become more comfortable with cryptocurrency. Some ways businesses adopt cryptocurrency in their operations range from greater access to funds to broader access to potential customers and better management and control over the supply chain and other logistics.
Even though cryptocurrencies are expanding in popularity and use, businesses are wary of the volatility of individual coins like Bitcoin. To protect against that volatility, some businesses are developing their tokens and coins better to control the value of the coins in their ecosphere.
As cryptocurrencies and other digital assets become more mainstream, businesses should develop a comprehensive strategy for adopting and utilizing these digital assets to create even more growth opportunities than currently available.