Many entrepreneurs find e-commerce and everyday business is easier with Blockchain and Bitcoin. Bitcoin and blockchain were created in 2009 by Satoshi Nakamoto, an alias, whose real identity remains a mystery.
Small businesses can benefit from:
- Faster transactions as in same-day and sometimes even same-hour payments transferred into your company’s bank account.
- Lower to no fees attached. Bitcoin transaction fees are usually between 1 percent and zero per transaction. You can send or accept bitcoin payments without any fees attached.
- No conflicts over bitcoin payments since they are final and cannot be contested.
- No international business hassles, as bitcoin isn’t associated with any one company, country or government.
Regarding business transactions, companies usually have to wait for payments to be transferred into their bank accounts. But with Blockchain the digital ledger transactions are recorded on, taking care of all of the transactions with no bank involved, bitcoin payments are speedier than credit card payments. Bitcoin was the first cryptocurrency, though several others are now available.
You can purchase bitcoins through your bank account and a bitcoin exchange, such as Coinbase. You can also buy bitcoins with Paypal or a
credit card at websites like Virwox. Some companies use bitcoin payroll services, while other businesses, such as Amazon, Starbucks, Microsoft, Dell and Overstock.com accept bitcoin payments.
- In your business
- Personal investments
- Fundraising for your business
First, regarding investing in Bitcoin, the CEX 10 exchange has seen a surge of activity in November 2017. On November 28, Bitcoin hit $10,000 for the first time after a 1,000% increase in its worth this year. Bitcoin’s rise in value exceeded the predictions of several high-profile economists. If the trend continues, the cryptocurrency may reach $25,000 within the next 5 years.
In addition, the U.S. Commodity Futures Trading Commission recently approved bitcoin futures trading on three exchanges. CME, CFE, and the Cantor Exchange. So, individuals can now bet on the value of the cryptocurrency without investing in it directly.
Also, over 100 cryptocurrency-focused hedge funds have been created in 2017, which are acting as a conduit for large amounts of fiat money
being converted to bitcoin and other cryptocurrencies. Even traditional hedge funds and investment institutions are getting in on the action, to the extent that there are services that allow them to safely do so.
The recent fluctuations in bitcoin’s price are the result of a combination of several developments. In late October, CME Group, the world’s largest exchange owner, opened up to bitcoin trading. Additionally, a controversial bitcoin blockchain hard fork was suspended in early November, and Bitcoin Classic ended up shutting down in favor of Bitcoin Cash. However, I must caution, if you do invest in bitcoin, do not invest more than you can afford to lose. Most experts warn the market could turn at any time and bitcoin’s value could plummet, causing huge losses.
Secondly, many Start-up companies are using bitcoin to raise money and avoid the transparency needed in a stock market float. Consider Bitcoin if you want to start a digital-currency-related business but you don’t want to bother with venture capital. Right now, it’s remarkably easy to fund a startup that is related in any way to digital currency, thanks to ICOs (initial coin offerings). Essentially, ICOs are crowdfunding campaigns for anything bitcoin related, for example, if you decide to start a company and sell digital tokens in your company to anyone online.
Unlike equity crowdfunding or traditional IPOs, ICOs aren’t regulated by the SEC. And unlike traditional venture capital, entrepreneurs raising money through ICOs don’t have to give up any ownership of their startups to the people who buy their tokens, which is one reason they’re so popular. Since there’s no regulatory oversight, they’ve been used to raise funds for unusual projects such as a dental industry blockchain solution and offerings with names like TulipToken, BananaCoin, and Jesus Coin. ICOs have become a huge method of startup financing, though they are still controversial, and China has banned them.
Thirdly, if you have a startup in the financial or the related technological industry, blockchain can be faster and more reliable than the current systems banks and governments use to move money around the world. There are many people who are skeptical about cryptocurrency but do believe in blockchain.
IBM began processing payments over its own proprietary blockchain between banks in the South Pacific. The tech giant plans to include 13 banks in its network. IBM blockchain transmits money in the form of Lumens, a virtual currency created by the non-profit Stellar.
For the first time, Mastercard is offering the ability to send money over a blockchain rather than by swiping a credit card. After developing its own version of the bitcoin technology Mastercard is opening up its blockchain to specific banks and merchants as an alternative, and potentially more efficient, method of paying for goods and services. Mastercard is also targeting cross-border payments between businesses as the primary purpose for its blockchain, which can only be used by invitation. Mastercard’s blockchain operates independently of a cryptocurrency and instead accepts payments in traditional local money.
Mastercard has one advantage that the bitcoin blockchain doesn’t have, that is their settlement network that includes 22,000 banks and financial institutions around the world. Mastercard hopes to provide the benefits of blockchain technology, including a more secure and transparent way of making and tracking payments, within the existing financial system, without the hassle of digital currency. Businesses could cut costs by using the blockchain to send cross-border payments, which usually pass through several foreign banks on their way overseas, racking up fees along the way. Mastercard’s blockchain, however, could cut out those middlemen and connect a purchaser’s bank directly to that of the supplier, remitting the payment more efficiently. Although the transaction itself will register on blockchain instantaneously, the funds are still moving through the
same system Mastercard uses now.
Also, Visa partnered with the blockchain startup Chain to develop its own system for similar business-to-business payments.
Today blockchain is in an embryonic stage, but tomorrow it will be mainstream along with IoT (internet of things) and AI (artificial intelligence). Blockchain is paramount for the financial sector. So, CIOs need to improve their understanding of the impacts of cryptocurrency and Blockchain and the other big generational technologies that will revolutionize financial services.
By Myeshi Briley,MS,HS-BCP
President of Spring-Klein Chamber