Why Should Businesses Consider Using Cryptocurrency?
Cryptocurrency is a rage these days with 36% of small and medium US businesses accepting Bitcoin for financial and other transactions. Given the surge.
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Key takeaways
- Cryptocurrency is a rage these days with 36% of small and medium US businesses accepting Bitcoin for financial and other transactions.
- Just between the years 2019 and 2020, Bitcoin users increased by 13 million users, owing to the benefits of the cryptocurrency.
- Be it international transfers, speedier processing of payments, maintaining the integrity of payments, cryptocurrency can bring a turnaround on the entire payment process of your organizations.
Cryptocurrency is a rage these days with 36% of small and medium US businesses accepting Bitcoin for financial and other transactions. What can provide more validity for the usage of bitcoin given the fact that AT&T, Subway, KFC, Burger King, Microsoft and Wikipedia are accepting them? Given the surge of acceptance of cryptocurrency in businesses worldwide, we can rightly say that by the next decade cryptocurrency may cover the entire globe.
Recently, the financial transaction giant Paypal started offering the option to their customer to pay and accept through cryptocurrency. If bitcoin becomes the standard for 377 million active users of Paypal, the demand for cryptocurrency may see a huge hike.
The demand for cryptocurrency can see a maximum surge in the markets globally if all the financial transaction companies use it as a standard of payment. Out of all the industries, cryptocurrency demand can rise maximum with the financial transactions sector accepting its usage. With two of the biggest payment-making platforms VISA and Mastercard accepting cryptocurrency for payment transactions, the demand is rapidly rolling up.
Let’s delve a little deeper into why cryptocurrency is being widely accepted by industries.
- Immutable nature of transactions
Transaction data can’t be forged when cryptocurrency is used. As every change in data is replicated as a change in different blocks and needs to be validated at multiple ends before the change is accepted, tampering with transactions is almost not possible.
- Increased ease of payments
Bitcoin users can conduct payment transactions from their mobile phones from anywhere in the world just by being connected to the internet. Moreover, the customers making payments need not furnish their personal information every time as in the case of debit/credit cards.
- Greater benefits for merchants and vendors
It is a common scenario where merchants and customers conflict over fraudulent payment disputes. Payments are stuck in the pipeline of transactions creating a headache for merchants and vendors. Bitcoin payments are irreversible. So, the merchants can rest assured that they would get the payment of their products or services. There are no chargeback risks or chances of fraudulent payment disputes with bitcoin. This provides greater confidence to clients and customers and greater peace of mind for merchants. Just between the years 2019 and 2020, Bitcoin users increased by 13 million users, owing to the benefits of the cryptocurrency.
- Lower transaction fees
Transaction fees are much lower with cryptocurrency than credit/ debit cards.
How To Use Crypt For Your Organization? #
- Forming the cryptocurrency advisory group
Even before an organization inducts crypt in its operations, an advisory group consisting of members from different departments must be formed. The CFO can be the most likely team leader. The group must be tasked with finding out
- The current state of payment transactions in the organization
This would include time taken for making payments, payment deadlines missed, revenue sharing time, accuracy and transparency of financial transactions and the desired gains through acceptance of cryptocurrency (One needs to remember that cryptocurrency enables real-time payments with minimum company-client disputes, accurate and real-time revenue sharing for the organization).
The crypt advisory group needs to find out is how much the company would benefit from that. They also need to understand the level of crypt awareness and the level of crypt skills within the organization. The group also needs to find out how much increase in liquidity and new capital can be attained using crypt through tokenized traditional investments.
The group must find answers to the following questions — The level of crypt awareness and the skills training required for the adoption of crypt in the business — How the customer and employee experience will change with crypt payments being the mode of transactions — The orientation levels of crypt in the business- whether cryptocurrency would be just used for making portion or whole of payments ( payment level orientation) or whether the company can hold them on their balance sheet i..e making crypt the means of assets, capitals, expenditures and other transactions of the company ( complete financial orientation)
Important Elements of the Crypt Roadmap For The Organization #
Once the following questions are addressed the company needs to create a roadmap for crypt induction in the organizations. The crypt induction should not be done for the whole organization in one go.
A portion of the payment transactions of the organization must be changed to cryptocurrency first. Then the outcome must be assessed on the parameters like — Increase in transparency — Improvement in payment time — Improvement in customer satisfaction — Cost of training the employees in the process for usage of crypt — Reduction in payment disputes and conflicts — Improvement in control of the process head over the financial operation — Improvement in control of the finance department over the capital involved in the process — Volatility risks of the crypt and how it is affecting the transactions and the revenue (measured over a period of time)
Once the payment transactions are assessed on these parameters, one can slowly induct cryptocurrency for entire payment transactions in the organization.
The Volatility Risks of Cryptocurrency #
It has been found over the past few years that changes in market sentiment are hugely affecting cryptocurrency value. So, organizations need to be prepared for this.
What Organizations Can Possibly Do To Offset The Loss From Cryptocurrency? #
Consider cryptocurrency more as stocks. #
Keep an equal volume of cryptocurrency as involved in the financial transactions of the organization as your asset. At times, when crypt is nosediving (of course that shouldn’t be the case), hold your assets and carry your transactions as normal even if that means paying more than what you had invested earlier. When the right times come and crypt is sky rising, sell those assets to negate any loss suffered. So, the organization shouldn’t just be involved in using cryptocurrency for their payment transactions (for attaining transparency, greater control over company capital, real-time payments and others), but should also invest in keeping cryptocurrency as some of their assets.
Well, what this means is that crypt would be entering your balance book.
Complete financial orientation is strategically more viable than payment level crypt orientation of the organization
Before going into complete financial orientation, a few questions need to be answered — Should the crypt be outsourced to a third party or should it be maintained by the company?
? Does the treasury have the necessary knowledge to monitor and manage crypt payments?
? Is the treasury in complete agreement before crypt is accepted?
? While inducting crypt as a new asset class, it must be assessed
(a) Whether the institutional investors in the company are ready to accept it as a legitimate new asset class
(b) How it correlates to other assets of the organization measured in terms of asset price inflation, volatility and performance history
(c) What are the valuation methods for this asset as compared to other assets?
(d) What would be the proportion of this digital asset as compared to other assets so that the balance sheet looks good?
(e) How the financial policy for this new asset class would be framed?
(f) What are the other measures that need to be put in place before accepting crypt as a hew asset class?
Choosing A Third-party Vendor To Manage Your Crypt #
While choosing a third-party vendor to manage cryptocurrency transactions one must assess — The vendor’s security protocol and control over the entire process
Below, I have mentioned certain essentials that the vendors must enforce at all cost — The digital asset must be spread in more than one digital wallet — Proper security protocols for private keys must be there — Hot and cold wallets must be used — All the cybersecurity regulations and policies must be strictly enforced — Vendor’s pricing conversions must be reliable and accurate — The vendor’s previous performance and due diligence must be excellent — Appropriate licensing and compliance
Creating the SLA with Your Vendor #
While creating the SLA with your vendor, you need to ensure that all the above points have been addressed at a minimum.
Implementing cryptocurrency in your organization process is easy if you have the required crypt skills and know-how. The profit that can be attained by inducting cryptocurrency into your organization is immense. Be it international transfers, speedier processing of payments, maintaining the integrity of payments, cryptocurrency can bring a turnaround on the entire payment process of your organizations.
What are you waiting for? Start priming your organization for using cryptocurrency today!
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