‘El Salvador’s congress made bitcoin their official currency in June 2021, making it the first country in the world to do so’. News like these let us realize the pace of growth of cryptocurrency and blockchain technology. With every passing day, the volume of transactions is increasing through cryptocurrency. For example, transaction volume in the NFT platform(Non-Fungible token) rose to $2 billion in the 1st quarter of 2021 from a market value of $250 million in 2020. In addition, sectors like NFT marketplaces, IoT (Internet of Things), Decentralized Financing, cross-border financing, and others have witnessed robust innovations in recent years.
Through cryptocurrency, running businesses get more efficient as blockchain provides non-manipulable ledgers for all transactions. Furthermore, by improving transparency, enhancing effective data management systems, and decentralizing security, blockchain benefitted many aspects. These benefits enable big corporations to accept cryptocurrency as their mode of transaction.
Let’s scrutinize the benefits of cryptocurrency and blockchains, which make cryptocurrency popular modes of transactions. And thereby revolutionized the way of doing businesses:
- Cross-border payment: Cryptocurrency makes cross-border payment easy. Such a feature helps companies receiving payments from any part of the world, making the businesses more competitive.
- Secure and quick transaction: Transactions by cryptocurrency are not recorded by intermediaries, such as banks. This safeguards the identity of the parties to the transaction. Besides, immediate settlements are reflected in the seller’s account because money gets transferred electronically without third-party intervention. Thus, transactions made by cryptocurrency are safe, easy, and quick.
- Reduction of Fraud: For every transaction, blockchain generates a long-term audit trail. This audit trail enhances audibility and accountability and reduces the chances of a fraudulent transaction.
- Low transaction fee: Credit cards and debit cards are the alternative modes of payment to cryptocurrency. These cards come with transaction fees. Businesses can save this money by adopting cryptocurrency, which comes with a much lower transaction cost.
- Supply chain monitoring: Blockchain-based applications facilitate tracking products at various stages of the supply chain. Smart contracts for payment are revolutionizing the supply chain industry by automating the data update system.
- Increase in competitiveness: Many businesses still don’t accept cryptocurrency as a mode of payment. As a result, businesses accepting cryptocurrency payments are enjoying an edge over their rivals.
- ICOs (Initial Coin Offering): ICOs are becoming a popular way of raising capital for companies. ICOs work very much like traditional IPOs(Initial Public Offering). But ICOs have broader access to capital and liquidity pools because they can raise money from foreign countries.
Generally, companies raising money through ICOs, pay back their investors through popular cryptocurrencies like bitcoin and Ethereum.
- Hedging Inflation: though currently, cryptocurrency is experiencing fluctuation in price. But it has been estimated it will get stable as miners make their profit. Moreover, since popular cryptocurrencies like bitcoin are experiencing an uptrend, many investors and big businesses invest in bitcoin to hedge their investment.
Since cryptocurrency is a comparatively new mode of transaction, businesses are still formalizing better Crypto adoption strategies. Nevertheless, transparency, accountability, and anonymousness offered by cryptocurrency are changing the world in a commendable way.