How to Use Crypto for Your Business

We’ve been talking about how to incorporate cryptocurrency in your personal investment strategy, but we haven’t really addressed how to utilize crypto and blockchain technology in your business. Businesses big and small have been incorporating digital currencies like Bitcoin, and the trend is growing rapidly.

So, how can you use crypto for your business?

Advantages of Cryptocurrency

First, let’s look at some of the key advantages that cryptocurrency transactions through blockchain technology can offer:

Security—Crypto has grown in popularity because blockchain is a very secure technology that provides a high level of anonymity for the user. Your financial history is protected and no personal data is shared during any cryptocurrency transaction.

Low Transaction Fees—Blockchain allows for peer-to-peer transactions, thus eliminating the middlemen like banks or brokerages that would normally charge fees. There may be some transaction fees for certain crypto transactions, but they are very minimal. For the most part, a majority of cryptocurrency transactions are free for both sides.

Instant Payments—There is no processing time or business hours with blockchain. Transactions happen immediately upon your approval, and the digital currency is transferred instantly from one user to the other.

The Future of Crypto in Business

From a business perspective, it’s important to understand where the future of cryptocurrency might be headed. More and more businesses have begun accepting cryptocurrencies as legitimate forms of payment for goods and services. Others have jumped into the NFT (nonfungible token) market to sell digital-only creations like artwork, music and collectibles.

Incorporating crypto into your business model can open up new demographic groups and give you access to new forms of capital that can help you grow your company. You can take a hands-on or hands-off approach to accepting crypto payments:

Hands-off

With a hands-off crypto model, you will convert crypto payments into fiat currency before adding to the books. You accept certain forms of digital currency as payment, but you are turning it back into “regular” money from an accounting perspective. This keeps the books cleaner and also helps avoid the volatility of the crypto market, where token values can change by the minute. You would be paying a third-party for the exchanges, but that may be a small price to pay to keep complex crypto accounting off the company’s balance sheet.

Hands-on

A hands-on model gets more complicated as you would have crypto holdings on your balance sheet along with your traditional financial assets. This can be beneficial in various ways, especially if you believe in the long-term value of crypto. Rather than exchanging it right away, you may hold onto it and sell it for higher value down the road. Or use it for your own purchases just like you are accepting it from customers. Of course, a hands-on approach is much more complex from a bookkeeping standpoint and you will have to understand and utilize more advanced blockchain technology.

Blockchain

Speaking of blockchain, this is another way that many forward-thinking businesses are using the world of crypto to their advantages. Beyond just accepting cryptocurrency payments, you can incorporate ultra-secure blockchain technology for secure proofs of purchases, data storage and other purposes. It allows for more real-time sharing of information while minimizing fears of data breaches and hacks that can damage your business.

At this point, there is still so much speculation surrounding cryptocurrency. The blockchain technology is revolutionary and may forever change how we all do business. Ultimately, you have to decide if crypto strategies are right for your business and the best ways to incorporate digital currencies within your particular business model. The crypto trend is not going anywhere and all business owners should take notice. It’s just not something you want to dive into without doing proper research and planning. It is a complex and volatile market, yet very exciting and potentially very lucrative.

To learn more about how cryptocurrency may fit into your business model and to review your overall business plan, contact Illumination Wealth today.