The business landscape has undergone a dramatic transformation over recent years, and one thing it certainly hasn’t been immune to is the ever-expanding influence of cryptocurrency. Once considered little more than a passing fad, crypto is now becoming increasingly accepted as a mainstream payments solution, with crypto payment services more highly sought-after now than ever before. And, while there is still some way to go until this becomes complete reality, Bitcoin, Ether and the like certainly seem to be well on their way to becoming the go-to payments and transactions solution for businesses across the globe.
Based on innovative blockchain technology, which is known for its robust security, these digital currencies are reshaping traditional financial models, and various industries are continuing to embrace them with open arms as understanding of their true value in business grows.
Here, we take a look at the rise of using cryptocurrency in business, what’s driving its adoption, and what the future holds for this match made in heaven.
The evolution of crypto
Bitcoin – the first and still the largest cryptocurrency – first entered the scene in 2009 as an experimental digital currency, spearheaded by forward-thinking creator Satoshi Nakamoto – whose goal was to provide a secure and decentralised alternative to traditional fiat currencies. It didn’t immediately catch on, with many influential voices in finance quick to dismiss it, but over the years it has proved everyone wrong and become known as one of the most popular investment choices for people from all walks of life across the globe.
It’s largely thanks to the blockchain tech on which it is based, which has garnered attention for its potential to revolutionise a range of sectors – and as blockchain itself continues to evolve and develop, the associated digital assets are becoming more appealing – not just to investors, but to businesses, too.
A force for change
The growing acceptance of cryptocurrency in the business world is in part down to the increased recognition of blockchain’s impressive security features. Because it offers up a tamper-proof and distributed ledger, it effectively minimises the risk of fraud, as well as enhancing transparency in financial transactions.
In regions with limited access to traditional banking services, cryptocurrencies have proved to be particularly well received, providing a decentralised financial system that empowers individuals who are unbanked or underbanked and supports them in being a part of the global economy.
Globalisation and borderless transactions are also key drivers behind the increasingly widespread adoption, making cross-border transactions quick and easy in a way that traditional banking has never been able to compete with, and without the intermediaries it requires. Not only does this keep transaction costs down, but it also boosts the speed of the transfer process – a particularly attractive feature to businesses with a hand in international trade.
These aren’t the only benefits of cryptocurrency usage that businesses find appealing, however. Smart contracts – self-executing contracts with the terms of the agreement directly written into code – are also made possible with the use of crypto, and work by leveraging automation to streamline a range of business processes, as well as eliminating the need for intermediaries and reducing the risk of errors.
Challenges and considerations
While the adoption of cryptocurrency in business offers numerous benefits, it doesn’t come without its challenges.
Cryptocurrency markets are known for their volatility, with prices often fluctuating dramatically over relatively short periods of time – which poses a challenge for businesses that may be exposed to currency risk.
There’s also some regulatory issues surrounding cryptocurrency at present, although over the coming year, we can expect to see more clarity in this area. Even so, for now, businesses must navigate a complex landscape with a range of different regulations depending on the jurisdiction, and this has likely played some role in slowing the adoption of cryptocurrencies because of the compliance challenge it poses.
Despite the impressive level of security crypto transactions can offer, the broader cryptocurrency ecosystem isn’t immune to cyber threats, and with this in mind, it’s important for businesses to implement stringent security measures to protect their digital assets and guard against potential breaches.
Disclaimer: Investing money carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.
