8 ways your business can benefit from cryptocurrencies
Bitcoin and the underlying blockchain technology has been invented almost a decade ago. It solved many long-standing problems all at once:
- Allowed the transfer of value over the internet without the need to rely on a third party, like a bank or payment processor
- Created a safe method of payment that can be used over the internet without risks even if the payment address is compromised
- Allowed the storage of value in digital form on the owner's device as opposed to relying on a third party like a bank
- Implemented monetary policies such as issuance of new money and inflation without a central authority
- Incentivized many independent agents (miners) to secure the network
- Removed single point of failure risks by decentralizing the network
- Created a global currency that works seamlessly across borders
- Implemented pseudonymous payments
Since then, the development of Bitcoin and other cryptocurrencies that build on top of the original Bitcoin idea have come a long way. Cryptocurrencies do more than just transfer value, even though it remains the core application so far. Bitcoin and the ecosystem around it are now mature enough to be relied on for business applications.
Is there an advantage in using Bitcoin or other blockchains for your business? This question is still not fully resolved, as many think the impact and implications of Bitcoin's technology on business and society are still unknown. Today, the situation with cryptocurrencies is similar to the state of development of the world wide web 20 years ago. None could foresee the societal impact of the web across all industries.
Here are 8 ways businesses can use cryptos. See if any of them apply to your business situation:
Accept Bitcoin payments
The most obvious option. You can open your business to international customers by accepting Bitcoin and other cryptocurrencies. There are billions of people in the world without access to credit or debit cards, and even in the developed world, many individuals prefer the security and confidentiality of Bitcoin payments. There are several payment processing systems, and many allow you to convert any incoming payments into local fiat currencies immediately if that is required for cash flow or account reasons. There is no need to hold Bitcoin if a company is worried about currency price fluctuation.
As a merchant, you will benefit by not having to pay the 2-5% credit card fees. You could even pass some of that saving off to your clients to attract more customers.
As a non-profit, by accepting Bitcoin payment on a static address, you can provide transparency to your supporters which is very difficult to achieve with traditional methods.
Purchase supplies and services with Bitcoin
Once you start earning Bitcoin from your customers you can use Bitcoin to pay your expenses. You can virtually buy anything online for Bitcoin. You can even pay your phone bills or get gift cards for most businesses with Bitcoin. This way you don't need to worry about conversion fees, or credit card security. If you need to make many cross border payments you will also be able to save significant amounts by switching to Bitcoin (given your partner accepts it), because the cost of a Bitcoin transaction is less than a dollar, compared to US$ 20-30 for a wire transfer, or 3-5% for PayPal payments.
The bitcoin network allows you to record any digitally encoded information at a moment in time in an immutable manner. Such a timestamp can't be changed by anyone and it proves the existence of a certain file or document at that given time. Typically, similar services are provided by lawyers, but that is not a mathematically provable method besides being expensive and slow. If you are handling any information that benefits from you being able to prove that you had a certain piece of information at a certain time, you have a good business case to use timestamping on a blockchain, especially if you need to do it over the internet and at scale.
Run deterministic contracts
The Bitcoin and especially the Ethereum blockchain can execute relatively complex business logic in a manner that is deterministic, also incorrectly referred to as "smart contracts". What this means in practice is that you can have contracts that depend on certain actions and execute certain predetermined actions without human interaction, and without the ability for anyone to change the rules.
Some triggers in such contracts could be completely automated, for example, the passing of time for the purposes of a retirement contract. Others need to be anchored in real-world events, like the delay of an airplane arrival needs to be reported by a trusted human or organization, to execute an insurance contract. Such third-party actors are called oracles.
As a business, you can build your business logic within such a deterministic contract to automate processes, reduce fraud and improve efficiency.
Be an oracle
If you read the paragraph above you know what oracles are. If you're in a trusted position and have access to certain information that deterministic contract operators can use, you can offer your services for a fee to provide such information. For example, in the above example, if you have reliable information about airplane arrivals, you can provide such information to an insurance company that runs a deterministic contract that pays out when a plane arrives late for any reason.
Build products for the Bitcoin ecosystem
The crypto ecosystem requires many types of businesses to serve the various needs of cryptocurrency users. Besides cryptocurrency exchanges, there are various digital and hardware wallets, BTMs (Bitcoin ATMs), nodes, security devices, and other specialized services that will likely gain great demand in the near future.
You can even create and sell merchandise, as the crypto community is a very passionate crowd.
Be a lightning network node
While mining bitcoins can be profitable, it's very energy-intensive. As a business, you would have to compete with farms that are close to the cheapest excess energy sources in the world. However, there is an upcoming technology that will allow for a different type of "mining" of bitcoins, and it doesn't require lots of energy, just a good computer with a reliable internet connection and bitcoins to fund payment channels.
The lightning network is a second layer on top of the Bitcoin network, and it allows for instant, confidential, and extremely cheap payments. This network is based on nodes that can route money to other nodes for a small fee. A typical lightning network payment goes through several such nodes to reach its destination (called hops) and each node can charge a tiny fee to route such payments. Currently, the lightning network only consists of a few thousand nodes, but it's growing aggressively and we will likely see exponential growth once lightning network-enabled wallets hit the app stores. Nodes that open many channels to many services will likely earn small fees from millions of payments, which adds up to significant earnings.
A related future business model is called a watchtower. This is a service that monitors the Bitcoin network in real-time and resolves disputes for lightning network users even if they are completely offline. One could charge a small subscription fee to run such a watchtower.
Raise funds with an ICO
ICO is short for Initial Coin Offering. You can represent any real-world or digital asset with tokens issued on a blockchain. You can either create a clone of Bitcoin (there are hundreds that exist) to create a new coin that represents your asset or use an existing blockchain to issue tokens on it and use those tokens to represent your asset. Then, you can sell those coins or tokens to investors who want to benefit from the increasing valuation of your tokens. This is a successful business model that raised hundreds of millions of dollars for companies that started ICOs.
ICOs are regulated in many countries, so one must be careful to apply local regulations.
In summary, even if your business is not a good fit for any of the above-mentioned use cases, it is reasonable to explore the crypto economy as the industry moving fast, and new business models are made possible at an increasing rate. Being a first-mover here could benefit your corporation greatly.
Need Help Implementing the Use of Bitcoin in Your Business?
Asymmetric, a global growth agency, led by former Army Delta Force operator and corporate executive, Mark Hope, can help you implement these ideas in your business. You can contact Mark by email at firstname.lastname@example.org, or by telephone at +1 866-389-4746, or you can schedule a complimentary strategy discussion by clicking here. You can read all of his articles on Medium.
Mark A. Hope is a co-founder and Partner of Asymmetric Marketing – a unique agency specializing in building high-performing sales and marketing systems, campaigns, processes, and strategies for small businesses. Asymmetric has extensive experience with organizations across many industry segments. If you would like some help in implementing ideas like these in this article, feel free to give Mark a call at 844-494-6903 or by email at email@example.com. Read Mark's other work on Medium.