Bitcoin, as well as other notable digital assets, are usually associated with profiteering, bubbles, and speculation. Blockchain technology, the driving engine behind cryptos, and its ever-increasing adaptation is changing the way people perceive cryptocurrencies.
The fact that governments around the world are making use of the technology and even developing their own digital assets tells us that the world of business is in for a major shift.
Although fiat currencies and traditional banking won’t disappear anytime soon, cryptos are threatening to fundamentally change the economies around the world.
Banking
Intermediaries will no longer be necessary, as crypto is peer-to-peer. As banks’ core functions are no longer necessary, many predict that housing money in banks will no longer be needed. However, the current value of crypto lies in the fact that it easy to transfer.
Banks make a great portion of their earning on the movement of money through check fees, wire transfer fees, and credit card fees. There’s no doubt that cryptocurrency is a threat to the banking industry.
However, more and more banks are employing the blockchain technology in order to stay on top of the game. Many claims that what crypto is doing to banking is what email did to postal services.
Crypto-Banks
The technology has led to the emergence of the crypto-bank ecosystem. The security, privacy, and transparency the blockchain technology offers enable this new form of banking.
For instance, crypto-banks manage credit facilities by directly linking the user and the borrower through decentralization.
As long as a borrower has a good credit rating, they have a much better chance of receiving money. The direct linking process allows crypto-banks to execute services quickly. Bank holidays, business hours, and business days do not pose an additional obstacle.
Loans are generally processed within a day. Crypto-banks are even employing AI to protect themselves, as well as borrowers, from bias that stems from human involvement.
There are more and more
crypto-banking projects on the market. Galaxy Digital LP is one of the more
notable examples. The bank was set up by former Wall Street fund manager and
billionaire investor Mike Novogratz.
While this particular diversified
merchant bank is not involved in issuing crypto-loans, it is dedicated to
blockchain technology and digital assets.
Datarious is another notable example. In their Initial Token Offering, they have raised $1.6 million. Unlike Galaxy Digital, Datarious is focused on providing credit services.
Payments and Transactions
With cryptos, there are almost no
processing fees. They are threatening to radically change the way payments are
done. Aside from banks, there are various other secondary vendors in the
industry.
Cryptocurrency is impacting
companies that help move money and facilitate in-person payments and online
transactions. Now, one party can transfer money directly to the other.
The multiple layers of
intermediaries are becoming obsolete. Third-party processors can be a big
burden to small businesses and large corporations alike. We can see more and
more examples of that chain being broken.
Even though state-issue cryptos are
becoming a reality, no major cryptocurrency is tied to any nation. They allow
businesses to cross borders between countries with astonishing ease. Bitcoin,
and a few others universally accepted cryptos, make that possible.
To attract more customers, many businesses are relying on cryptos to offer customers more payment options. The lack of processing fees is alluring to both customers and businesses.
While Paypal and credit card processing companies charge a 2% to 5% fee per transaction, merchant crypto-wallets charge flat monthly fees for as little as $30.
With cryptocurrencies, transactions
are almost instantaneous. The average Bitcoin transaction takes several minutes
to process. With ETH, it takes 20 seconds on average. Considering that credit
card payment processing can take 2 to 3 days, the discrepancy is huge.
Studies show that most customer complaints revolve around the speed of service. With that in mind, it’s no wonder more and more small businesses are turning to crypto as a payment option.
Investing
The world of investing is in for a
seismic change as well. Brokerages and banks make money off the transactions
they facilitate in the investment world. It’s another cost that parties have to
assess against all transactions.
This is another area where the
peer-to-peer system comes into play. In order to bypass a brokerage, the
parties need another way to facilitate the payments and record the transfer of
ownership.
Moreover, they need a way to find
each other in the first place. While crypto doesn’t yet have all the solutions
for tackling those obstacles, it is slowly disrupting the way investments are
made.
So far, crypto has shown to be a
profitable asset to invest in, rather than a means of investment. Duo to their
volatility, cryptos are attractive to investors that seek high rewards through
high risks. However, since flagship cryptos have begun to stabilize, the
situation is changing.
Accredited investors prefer to invest in bitcoin long term through crypto funds. While the average person doesn’t have the ability to invest in crypto funds, crypto exchanges and trading platforms have made it possible even for complete novices to invest in cryptos.
Seasoned Bitcoin enthusiasts are ardent advocates of long-term investing in their favorite currency because, as a limited asset with no inflation, it has the potential to become a digital replacement for gold.
The Bitcoin community has jokingly coined the phrase ‘HODL’ which serves to remind investors not to sell their digital assets during turbulent times and focus on the long run. The decades-long history of Bitcoin has proven them right so far, and more and more accredited investors are jumping in on the ride.
Crowdfunding has also gained
prominence, thanks to the development of cryptocurrency. Investors are often
reluctant to invest in new products and services. Now, investors are able to
make smaller investments instead of large ones by using digital currencies.
ICOs are becoming a popular tool for startup ventures. They offer an in-demand source of capital.
Conclusion
Across all industries, there are more and more companies that are capturing the advantages of cryptocurrencies and blockchain technology.
However, since crypto comes with certain levels of uncertainty in terms of government regulation, many businesses are still reserved and have opted to focus solely on blockchain technology instead of cryptocurrencies.
Once the governments around the world take a crystal clear stance on Bitcoin, we will be able to see the full scope of the crypto revolution.
* The information in this article and the links provided are for general information purposes only and should not constitute any financial or investment advice. We advise you to do your own research or consult a professional before making financial decisions. Please acknowledge that we are not responsible for any loss caused by any information present on this website.
Source: https://coindoo.com/cryptocurrencies-impact-on-businesses/