More than 2,300 American businesses accept Bitcoin – and we are not counting Bitcoin ATMs. The use of cryptocurrencies for business purposes comes with opportunities and challenges. Is Cryptocurrency a Good Investment? Certainly! However, this is a frontier domain, and therefore you have to deal with unknowns. Your company can make cryptocurrency a good investment. That’s a done thing when you have two things under the belt: your company’s goals regarding cryptocurrencies, and a clear idea of cryptocurrency-related aims.
Is investing in crypto a good idea? Or Is cryptocurrency a good investment in 2022? Or Is cryptocurrency a good way to make money?
There is a good reason why some companies currently think cryptocurrency is a good investment.
- Cryptocurrency is now spread sufficiently widely amongst diverse demographic groups. It makes sense your company’s investing in cryptocurrency may give them access to more business opportunities. That’s because users who deem cryptocurrency a good investment are at the cutting edge of transparent tech usage.
- Per one study, 40% of customers paying with crypto are the company’s new customers. Interestingly, their purchase amounts are twice those of credit card users. Introducing cryptocurrency awareness in your company will boost their positioning in the future scenario when central bank digital currencies are the norm.
- Cryptocurrency could empower access to new capital and liquidity pools thru tokenized traditional investments, besides new asset classes. Cryptocurrency provides specific options that fiat currencies do not provide. For instance, programmable money may empower real-time, precise revenue-sharing while magnifying transparency to encourage back-office reconciliation.
- Companies find that vital clients and vendors are interested in engaging thru crypto. Therefore, your company may have to be positioned to get and pay in cryptocurrency to guarantee exchanges with stakeholders.
- Cryptocurrencies offer a new way of magnifying conventional Treasury activities. Cryptocurrency empowers simple, real-time, secure money transfers. It aids in strengthening control over your company’s capital. Cryptocurrency manages opportunities and risks of engaging in digital investments.
- Cryptocurrency could be a good alternative or balancing asset compared to cash. The latter is prone to depreciation owing to inflation. Cryptocurrency, a good investment, has performed quite well in the past 5 years.
Cryptocurrency a good investment: crypto profitability for companies
A number of companies use cryptocurrency to ease payment processes. One way of payment facilitation is just to convert in and out of cryptocurrency to fiat currency, receiving/making payments in a ‘hands-off’ manner.
Third-party vendors are being used to harness cryptocurrency as a good investment. When your company keeps the cryp[to off the books, that means even faster transactions.
In its capacity as a company agent, the third-party vendor accepts/makes payments in crypto thru conversion into/out of fiat currency.
The same vendor will deal with the bulk of risk management, controls, and compliance issues on the company’s behalf. Your company, naturally, would still be responsible for AML/KYC issues.
Here, the most vital thing is that your company understands the vendor’s conversion pricing implications for pricing volatility risk.
The ‘hands-on’ approach
There are a couple of paths your company may follow when embarking on wider hands-on cryptocurrency adoption.
Use a third-party vendor or custodian to keep custody of the cryptocurrency on a blockchain, offering wallet management services facilitating the tracking/valuation of crypto assets.
Cryptocurrency integration into the company’s own systems, managing its own private keys. Cryptocurrency transmission might require a license.
The majority of companies these days are using cryptocurrency in a hands-on manner, utilizing a third-party custodian.
The other approach, self-custody, offers more complexity. What’s more, should your company decide to pursue this path, it will be burdened with greater accountability for transaction support.
Cryptocurrency a good investment: watch this space for Second Layer Protocols
Your company would be interested in the innovative Second Layer Protocols. Scaling applications atop blockchain systems, Second Layer protocols aim at making cryptocurrency transactions faster and more affordable. These protocols are swiftly maturing, and there’s every possibility of their competing soon with conventional payment systems.
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What’s more interesting, they could become more effective and preferable to conventional payment methods.
There are a couple of minor risks with these protocols that your company can find a solution for. However, these protocols are compelling, given that they facilitate payments at faster speeds and at very little cost.
Cryptocurrency a good investment: the path to profitability
Observers rightly view cryptocurrency as the next step in the evolution of the field of Finance. Your company’s organization, as well as mindset, will have to undergo some changes.
Similar to the case of tech upgrades, you would be needing an implementation plan. For the belief cryptocurrency is a good investment to bear fruit, your company will be considering the following:
- The company’s overall strategy;
- Short-term and long term objectives;
- Partners – external/internal, the company will have to co-opt;
- Potential and capacity regarding scaling up of efforts later;
- Integration of digital assets ecosystem security needs with existing cyber/security efforts;
- Managing crypto introduction;
- Acquisition of new resources – capital and human;
- A systematic implementation road map;
- Implementation process evaluation procedures;
- The final stage before launch.
This could turn out to be a complicated enterprise. For this reason, prior to a robust launch, companies opt for piloting crypto use – similar to new tech piloting. A preferred pilot exercise is an internal intradepartmental one. This takes place in the Treasury, given that the latter is accountable for funding administration, within the company as well as in subsidiaries.
The pilot starts with the purchase of some cryptocurrency. Subsequently, the Treasury uses a few peripheral payments. All relevant personnel keeps a watch on the crypto being paid out, received, and revalued.
You and your company are right in expecting more innovation in both blockchain scaling and blockchain fee economics. It would be wise, too, to invest in this promising space. Both institutional and individual investors and traders are welcome to work with InvestBy.
Besides a payment method, what are the other functions of cryptocurrencies?
Cryptocurrency value may be pegged to an underlying asset like the US dollar, privacy coins, governance tokens, non-fungible tokens, and utility tokens.
Are blockchain and cryptocurrencies the same?
No. Blockchain is the tech that permits cryptocurrencies to work. It is a digital ledger of transactions that is ideally decentralized. So naturally, there’s a difference between the tech that drives cryptocurrencies and the cryptos themselves.
Why are there so many cryptocurrencies?
Following Bitcoin’s success, developers tried to improve functionality and new tech and cryptos.