Tech businesses are often on the cutting edge of new technologies. It probably is unsurprising that cryptocurrency and tech business go together like dollars and cents. One unexpected thing about crypto, however, is how it is changing the business landscape in the industry, and driving decision making and growth. Here are the top 10 ways cryptocurrency is impacting tech companies.
1. Unlocking New Options
Experts predict cryptocurrency revenue will reach $37.9 billion by the end of 2023. The annual growth rate is expected to be around 14.4% as more people tap into the unregulated payment option and brands become more accepting of digital cash. When an enterprise lets customers pay with cryptocurrencies, customers who would not have purchased from them may suddenly consider the company an option for their needs.
2. Reaching Global Partners
Cryptocurrency tech business benefits include not dealing with exchange rates and rules about money transfers. While you want to ensure you do not break any laws and consult with an international business finance attorney if uncertain, receiving tokens instead of a check or credit card payment frees you up to do instant business around the globe.
The currency may be particularly attractive to service-based businesses, such as tech companies offering software as a service (SaaS). With SaaS products, you can sell the program immediately and give a person access in minutes. You can also automate many processes, saving your staff time and effort.
3. Staying Legal
Fraudulent crypto exchanges were only a quarter of 1% in 2022, but the value of cryptocurrencies fluctuates more in some organizations than others. Staying legal means you must report any earnings to the IRS, but evaluating just how much tokens are worth at a given time may be challenging.
Small businesses must set up a digital wallet on a currency exchange to take crypto. The steps could be prohibitive to startups and smaller tech firms. However, the extra effort could pay off down the line in additional customers.
You also have to understand each country where you operate. Some have a tighter handle on unregulated funds than others. Limit yourself to opening the doors to one or two countries at a time until you fully understand any regulations. Most enterprises like crypto because it has fewer regulations than other payment methods.
4. Handling Inflation
Experts argue whether or not cryptocurrency is a hedge against inflation. One thing those who use Bitcoin and other tokens point to is the limited supply of how many are available. They fall into the supply-versus-demand crowd and state the limited availability makes the currency less likely to fall when the U.S. dollar falls in value.
For most tech firms, crypto is just another tool in their arsenal. Putting all your eggs in one basket is never a good idea, but tokens can be one of the baskets where you save funds for a rainy day. Only time will tell if the effort pays off and the currency maintains its value against more traditional coins.
5. Avoiding Swindlers
Around 82% of small businesses point to cash-flow issues as the underlying cause for closure. If you have ever landed a lucrative contract only to have the person dispute the charge with their bank or bounce a check, you know how devastating losing any money can be when you are just starting your business.
Tech firms can avoid these scenarios with digital cryptocurrency because the payments are irreversible. The person cannot send you funds and then decide to dispute it. There is little recourse if they have buyer’s remorse.
You may still choose to work with an unsatisfied customer, but it will be on your terms rather than them just stealing away with your money after taking advantage of your services. Crypto is highly attractive to new startups for this reason and can prevent cash flow issues in the early days.
6. Improving Investment Opportunities
Some cryptocurrency tech businesses might want to create their own token using Initial Coin Offerings (ICOs) to secure enough funding. Think of the ICO like an initial public offering, as the two are quite similar. Investors pay money to help the company start and later see a return on their investment through the value of the tokens.
You could also invest access funds into ICOs and support them by offering their payment as one of the options for your customers. Buying early for lower prices means people could make more profit on the coins.
Of course, there are never guarantees. Several cryptocurrency companies have gone under and investors lost all their money. Only invest money in ICOs you can afford to lose.
7. Saving on Transaction Fees
Some business take cryptocurrency to save on transaction fees. Crypto often has lower rates than traditional payment methods. That said, you will have to pay two separate sets of fees to accept or use tokens. You will need a wallet to receive money and move it around — which comes with a price — and then you will have to pay a fee to most blockchains where the currency resides, such as Bitcoin or Solana.
Make sure to crunch the numbers to see how the fees stack up compared to credit card processing fees. Including all the numbers in the equation helps prevent mistakes that could impact your bottom line.
8. Gaining Control
Cryptocurrency is decentralized. No government or banking institution has control over the funds. Thus, it is harder for people to manipulate transactions.
However, because of the uncontrolled nature of crypto, black market players often use Bitcoin and other tokens to fund nefarious work. When working in cryptocurrency, firms should be aware of the potential for illegal activities.
9. Improving Security
Blockchain players often have some of the best security in the industry. It is much harder for people to gain access to the funds, other than those who own the tokens. The entire system is based on encryption. Each block connects to the previous ones, making it nearly impossible for a hacker to tamper with the information.
You have likely noticed all the big credit card company and bank security data breaches in recent years. Yet, most crypto companies remain fairly reliable and safe.
10. Being Transparent
Although how everything works is rather technical, if a brand is on the same blockchain technology and you give them permission, they can see if a customer paid or what invoices are outstanding. This is most obvious in medical sectors, where insurance providers can tap into a patient visit and automatically pay claims.
Cryptocurrency and Tech Business
Embracing crypto seems to make sense for tech businesses. The cutting-edge nature of tokens and money that is not physical goes hand in hand with developing more advanced, modern methods of doing things. Consider which are the best ways for your brand to embrace cryptocurrency and jump on the digital wallet bandwagon.Eleanor Hecks is editor-in-chief at Designerly Magazine. She was the creative director at a digital marketing agency before becoming a full-time freelance designer. Eleanor lives in Philly with her husband and pup, Bear.