As cryptocurrencies and other blockchain technologies continue to disrupt the world of business finance, entrepreneurs must avoid the temptation of jumping in without fully understanding what this evolving body of technology means for their businesses.
Cryptocurrencies are proving to be one of the hottest topics in financial technology in recent memory. The potential behind these digital coins and the technology that fuels them continues to cause excitement around the business world, with many entrepreneurs looking for ways to jump in on the trend.
Still, even with all the potential benefits that come with cryptocurrencies and blockchain in general, the industry remains a shaky one. Repeated waves of crypto scams have pushed authorities to institute stringent regulatory measures, sometimes curtailing the development of the technology.
However, even in regions such as Europe and the US, where regulations have been especially tight, there’s been no stopping businesses and individuals that want to invest in blockchain and cryptos. To help illustrate the current state of affairs, eToro, a cryptocurrency social trading platform, has already set its sights on the North American market with a U.S. launch before the end of the year. The company’s move illustrates the scope of organizations within this space looking to expand their existing operations to capture new markets in the cryptocurrency world.
Consequently, an increasing number of entrepreneurs across the world are considering whether they should begin investing in cryptos and blockchain technology and how these tech trends could benefit their businesses in both the short and long term.
What Is Blockchain?
To understand whether you need to be investing in cryptocurrencies, the first step is to actually understand just what cryptocurrencies are and how the system works.
Put plainly, the blockchain is a decentralized, incorruptible ledger from which Bitcoin and other altcoins operate and is what makes these currencies decentralised. This technology is hosted across a network of nodes without any one central power and holds the full history of every transaction that has ever taken place within its bounds. The blockchain checks, verifies and records each withdrawal, payment and trade process, all without the need for any third-party interference.
What could it do for your business?
For small businesses, the spectrum of opportunities spans a great breadth – from the use of blockchain technology in everyday business activities to the use of initial coin offerings, or ICOs, as a means of raising capital.
The potential that blockchain technology can hold for any business is huge, but knowing exactly what the benefits are will better help them implement the technology correctly and most effectively. Blockchain can help improve the security of transactions, lower overall fee costs and even reduce potential lag or downtime of your supply chain. With faster and more accurate transactions that are far less prone to hacking, fraud or theft, businesses could utilize this technology to its fullest and improve business-to-client transactions.
Blockchain technology not only ensures that there is no third-party interference with payments, but it also provides transparency – something that most consumers are demanding nowadays. Data regarding shipments, payments and other information can be updated in real time, giving businesses better access to this information and ultimately cutting down administration time and costs.
Are there downsides?
Faster transactions, increased security and a much more efficient supply chain are all good reasons as to why business across the globe are opting to invest in cryptocurrencies – but what about those businesses that aren’t quite ready to take the plunge? Apart from the instances of periodic volatility, what could be deterring them from this investment?
The hesitation appears to come with the simple fact that cryptocurrencies – and the blockchain by extension – are still a pretty gray area, especially where legal matters are concerned. Bitcoin was only introduced in 2009 and only really took off in recent years. As a result, legislation and regulation aren’t widely found. This occurs simply because regulators can’t seem to wrap their heads around what it is or the effect it could have on the economy. Without fully understanding its finer elements, it’s difficult for governments and businesses to utilize cryptocurrencies and form regulations and laws around their use. However, this is starting to change.
With only China, Russia, Thailand, Vietnam, Taiwan, Colombia, Ecuador, Bolivia, Bangladesh and Kyrgyzstan having banned cryptocurrencies – or at least Bitcoin – there are plenty more looking to regulate this space instead of issuing outright bans. Only time will tell as to whether these regulations help or hinder the growth of the crypto industry.
Businesses across the globe can benefit from blockchain technology, if not cryptocurrencies themselves. Understanding the full potential they hold can better prepare businesses to bring in the technology to improve everyday business processes.
Howard Goldstein is the Chief Executive Officer of Priceless Funding Group. Mr. Goldstein has been in the business lending industry for over 20 years in a career that has helped hundreds of businesses launch and grow. Mr. Goldstein aims to help business owners get the capital that is needed with the terms that are deserved.