4 Tips on How to Use Cryptocurrency for Your Business – Innovation Village
For their innovativeness, convenience, transparency, and security, cryptocurrency coins have become a popular asset among individual traders. But these digital assets have yet to become mainstream in the business world, which is populated by business owners who understandably have lower risk appetites compared to individuals who are more drawn to crypto. With more money to lose than if they were to trade the assets under their own names, entrepreneurs may not be warm to the idea of delving into cryptocurrency.
All the same, even though exploring any new type of asset inevitably involves some risk, there may be something in it for your business. In the best-case scenario, your foray into cryptocurrency could make your business’s accounting and finance system more efficient, increase your popularity with your customers, and position you as a forward-thinker in your industry.
To illustrate, here are four practical applications for using cryptocurrency in your business activities, both in the short term and in the long term. Taken together, they form a good case for including cryptocurrency in the transformation and future-proofing of your enterprise.
The first point of action that you can consider is to offer cryptocurrency as a payment option for the goods you sell or the services you offer. Let your customers settle their purchases by using their XMR wallet or other cryptocurrency wallet, and see what difference it may make to your bottom line.
The modern customer always looks for convenience and a solid variety of payment options when they shop. For many, a business’s range of payment choices serves as either a deal-maker or a deal-breaker. If you invest in payment infrastructure that will allow you to accept crypto coins for purchases, you could gain the loyalty of a lucrative new demographic and increase your business’s profitability as a result.
Cryptocurrency may also open new doors for your business in terms of supply chain management and external business partnerships. Some of your most valuable business suppliers or external partners may have already transitioned to using cryptocurrency for their business dealings. Joining them will afford you a convenient new method of settling business transactions, like payments for raw materials and finished goods.
Using cryptocurrency in your supply chain management may also end up being a more viable option for international business activities compared to cross-border wire transfers and other methods that require an intermediary. Exchanging fiat currency through banks often requires a long wait time, as well as hefty banking fees. But by using dedicated cryptocurrency wallets for business endeavors, you and your international partners can settle payments in as little as a day, with minimal transaction fees.
Sometime in the future, you and your contemporaries in your supply chain network may also look forward to using smart contract technology. Smart contracts, or blockchain-based programs that use lines of code to automatically execute functions when certain conditions are met, may play into your future supplier agreements and billing processes. One day, you and your business partners may be able to accept blockchain payments from each other in an instant without any party needing to lift a finger. Best of all, the blockchain technology will allow you to keep an immutable and up-to-date digital ledger of your transactions, erasing any ambiguities about how much you owe each other and when the conditions of the contract have been met.
If it’s an option in your locality and if you already have crypto assets on hand, you may also want to consider pursuing a cryptocurrency loan. This type of loan will allow you to use your crypto coins as collateral for business debt, as long as you maintain a certain loan-to-value (LTV) ratio.
This is a particularly practical option for entrepreneurs who have just acquired cryptocurrency and would rather wait it out before incorporating more non-traditional assets into their cash flow. Choosing this arrangement will allow you to borrow more cash to finance your business, as well as increase your liquidity for your operations. The key is to find a reputable lender whose terms are reasonable and to watch out for volatility in the price movements of your coin, as this may affect how much collateral you have to pledge.
It’s also possible to use cryptocurrency to diversify your business investments, especially in light of unpredictable turns in the global economy. In the near future, inflation may decrease the value of the fiat currency you have on hand. Owning crypto assets, however, may allow you to have a battery of value in your investment portfolio.
Take note that it’s not advisable to bank excessively on cryptocurrency and to convert all of your business’s cash reserves into crypto. Again, the goal should be to diversify and to keep a good mix of non-traditional assets and securities in your basket.
Incorporating cryptocurrency into your business activities will require you to revamp some of your processes, and it will also expose you to a certain amount of risk. But it is your prerogative to accept that risk and to explore new options for doing business as is fitting of your circumstances.
Ultimately, the choice to branch out into crypto may be a rewarding one for your business. For certain, it will distinguish your business brand as a forward-thinking one. Research your options for adopting cryptocurrency into your business, and keep your eyes focused on the digital future.
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