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For businesses to grow and scale, they need to find new and innovative ways to improve their products and services and make their business processes more efficient. One way that many businesses are achieving these goals is by tapping into the world of cryptocurrency.
Cryptocurrency adoption among businesses and consumers has never been higher. It can help businesses reduce costs, increase efficiency and build better relationships with customers. With this in mind, many startup founders and business owners who still haven’t jumped on the bandwagon are asking themselves how they can get started. In this post, we’ll cover the top five ways to use crypto and the power of blockchain technology to scale up your business.
What are cryptocurrencies, and how do they work?
Cryptocurrencies are a type of digital currency made of virtual tokens encrypted to secure their transactions and control the creation of new tokens. Cryptography is a technique used to protect electronic information by converting it into a code that no one except the intended recipient can read.
There are different types of cryptos, but Bitcoin is by far the most well-known. It was created in 2009 as an open and decentralized peer-to-peer payment system run and managed on a decentralized blockchain platform.
Most popular cryptos work similarly to Bitcoin. All transactions are encrypted and recorded on a decentralized or distributed ledger. Transactions are made and verified using a private key that acts as a password and a public key that acts as an account number or sending address. A decentralized network of computers then processes the data to verify the transaction and ensure that coins aren’t being spent twice. Once a certain number of transactions have been verified, they’re added to a block, which is then added to the blockchain.
Benefits and risks of using cryptos for businesses
Cryptocurrencies offer a number of advantages for businesses. They’re fast, secure and transparent. They can also help businesses reduce costs by eliminating the need for third-party intermediaries like banks or payment processors (think SWIFT). All you need is a good crypto wallet and an exchange to buy or trade your cryptos and you’re set.
However, there are also some risks associated with using cryptocurrencies. For example, the prices of some coins are highly volatile, and they’re not currently regulated by any government or financial institution. This means that businesses could potentially lose a lot of money if the value of their crypto holdings goes down or the exchange platform they use lacks strong KYC processes.
Five ways to use crypto to scale your business
Now that you know a little more about how cryptos work and their advantages and risks, let’s look at some of the ways businesses can use them to scale up.
#1. Use cryptos as a way to diversify your company’s investment portfolio
While many are still skeptical and consider cryptos too volatile an investment to put all of your money into them, they represent a way to diversify your portfolio. This is because the price of cryptos is not directly tied to that of other assets, meaning that when the stock market crashes or real estate prices tumble, crypto prices may not be affected and could even rise, offsetting your losses to some degree.
Of course, this doesn’t mean that you should put all your eggs in one basket and invest all your company’s money in crypto. Far from it! But it does mean that they represent a way to protect and grow your business investments by hedging against risks in other markets.
Additionally, if you get some good investment counseling and actively manage your crypto holdings smartly, they have the potential to grow a lot in the short term. This is a strategy that many hedge funds and institutional investors are already using to generate profits and protect against losses in other areas of their portfolios.
Of course, before making any investments, it’s important to learn all you can about the crypto market and do your own research to decide when and where to put your money.
#2. Use crypto payments to save on transaction fees
One of the most obvious ways businesses can use cryptocurrency is for payments. Crypto payments are fast, cheap and secure. And because there are no intermediaries involved, businesses can save on transaction fees. This is a major advantage for businesses that operate on tight margins or do a lot of international business.
Cryptos are also borderless due to their decentralized nature, and they operate 24/7. This makes it the ideal payment method for customers who live overseas in different time zones, eliminating the need to go through complex and fee-burdened fiat currency exchanges to receive your payments.
#3. Use crypto as collateral to secure loans
Another way businesses can use cryptocurrency is as collateral to secure loans. Many new fintech companies worldwide are offering almost instant personal and business loans in fiat currency and receiving crypto as collateral. This translates into using your crypto to pay for your business expenses without actually having to sell your crypto. Once you pay the loan back, you’ll receive your cryptos back, safe and sound.
This is especially useful for startups that may have trouble getting traditional bank loans due to a bad or lack of credit history. By using crypto as collateral, businesses can get the funding they need to grow without giving up any equity or control of their business, a major downside to looking for angel investors or venture capitalists.
#4. Use crypto to cover payroll for in-office and remote workers
Paying employees in cryptocurrency is becoming more and more popular, especially with remote workers. Cryptocurrency can be sent anywhere in the world almost instantly, and it’s very cheap to do so. This makes it an ideal way to pay employees who live in different countries around the world without worrying about currency conversions rates, conversion fees, and other international transaction fees.
This means that offering crypto to cover payroll can be an attractive bonus that will make it easier for you to find the best talent anywhere in the world, especially those in countries that have complex currency exchange laws and restrictions.
Moreover, because cryptos are decentralized, businesses don’t have to worry about dealing with banks or other financial institutions, and neither do your employees. This can save a lot of time and money for both you and your team while helping you secure enterprise-quality talent. This is particularly important if you’re starting a small business.
If you’re thinking of running a fully remote business that you can manage from anywhere in the world, using crypto to manage payroll is as important as setting up a virtual office and having a good Internet connection and a decent laptop. Also, in the not-so-distant future meetings and business, in general, will also be carried out in the metaverse,
You can also use crypto to pay your in-office team. While crypto may not be as attractive a substitute for local or domestic banking in most countries, it may still be attractive for your employees. At the very least, you can consider the possibility of paying them their salary in normal fiat currency while paying bonuses or other incentives in crypto.
#5. Develop a token economy for your company
Tokenization has become a thing for businesses in recent years. While you can do it in several different ways, developing a token economy for your business boils down to creating a digital currency or token that can be used to power some or all of your company’s operations.
This has several advantages:
- First, it allows you to raise funds through an Initial Coin Offering (ICO), which can help finance your business without giving up any equity.
- Second, it gives you a way to reward employees, customers and partners with tokens they can exchange for goods, services or other currencies.
- Third, it gives you a way to create a loyalty program that can help you keep your best customers and incentivize them to continue doing business with you.
- Fourth, it can help you build a community around your brand and give people a reason to emotionally invest in your company’s success.
- Fifth, you can use it to develop new applications and services that run on top of your token economy, providing even more value for your business.
- Sixth, you can use your new token to launch an NFT to build a community around your brand. And before you think that it’s too much work to launch and grow your NFT, there are actually NFT marketing agencies and services like Bitmedia.io that can help you.
- Finally, it can help you track data and marketing analytics related to your business more efficiently.
A token economy can help you with cost management and scaling up your production so you can benefit from economies of scale. You can use the money saved to either expand further or reward your employees and stakeholders.
Of course, developing a token economy is not without its challenges. It can be complex, and there are some legal and regulatory considerations to take into account. But if done correctly, it can be a powerful tool to help you scale your business in a future-proof way.
The bottom line
Cryptocurrencies offer a number of benefits for businesses, including faster and cheaper transactions, easier cross-border payments, and the ability to raise funds through ICOs and secured loans. Additionally, you can use cryptos to hedge against risk in other investments and power a company’s operations through a token economy. While there are some risks associated with crypto investing, they represent a valuable opportunity for businesses to grow, protect their investments and improve their relationships with all the stakeholders involved.