Regardless of whether you’re a high school student, a young entrepreneur, or retired, if you spend at least some time on the internet, you’ve heard the term “cryptocurrency”. So, what does this term, also known as “digital currency” mean for business? Well, essentially, it allows people and/or institutions to transfer funds instantly, very securely and, most importantly, without a middleman.
Cryptocurrencies are potentially capable of expanding the international commerce, of supporting financial inclusion and they might completely change the landscape of using money.
Faster and Cheaper Bank Transfers
It might seem all cutting edge and progressive, but the way banks move money today is actually archaic. These transfers can take as much as an entire week (correspondent banks and country-specific clearinghouses at both ends). In fact, even cross-border payment data sharing can meet a lot of challenges and obstacles. Cryptocurrency helps in making bank transfers an instantaneous, cheap and safe operation. Furthermore, a protocol can be made that allows the clients to transfer funds from one currency to another with help of a secure digital ledger. This technology helps move the money around the globe in a matter of seconds: it works by first finding the most efficient path between the trading parties (regardless of the number of transactions and how many accounts an individual may or may not have in various banks) and then confirming all required transactions at once!
Helping eCommerce reach its Full Potential
Credit card fraud has turned away many a merchant from good business, which means that many firms actually do not accept international payments. With cryptocurrencies, once a transfer has been made, it cannot be undone, which eliminates the risk of fraud for merchants, allowing them to engage in worldwide trade.
Given the fact that the digital currencies can be sent as easily as email, this means a ton of opportunities for developing countries when it comes to engaging in eCommerce.
Smart Contracts and Programmable Money
The best part of making an asset purely digital is outlined in the automation possibilities. Programmable money and smart contracts are the end products here and escrow accounts are perhaps the best example. Here’s how it works: the money is put into escrow by the buyer, and it only goes to the seller once the title to the property has been handed over to the buyer.
As an example of smart contracts, let’s talk about multisig – here, money can only be disbursed from an account once multiple individuals authenticate.
Why so popular?
So, what’s the reason behind this recent surge in popularity, when it comes to digital currencies? Well, the prime ones are that they are extremely difficult to counterfeit and that the algorithm used to create the cryptocurrencies guarantees user anonymity, as well as security. You can use professional services to sell digital currency or to buy it, without the long delays that are to be expected with typical international money transfers.
Should you go for it?
Well, there is no right or wrong answer here. Essentially, although cryptocurrencies such as bitcoin have a lot of potential to become the new gold, there is still a long road ahead for the cryptocurrencies. As a rule of thumb, accepting bitcoin payments is fine, as long as your business is stable. As a small business that’s still on the road to success, you should opt for waiting a bit longer, as you are probably in way over your head, even without the trouble of trying to wrestle with the ever-fluctuating cryptocurrency market.
The digital currencies have seen huge success over the past couple of years, but there is still a long way to go until these become commonplace. As a small business owner, we recommend that you focus on stabilizing your business, but not without paying attention to the cryptocurrencies – these may well be the way of the future!