What you need to know about cryptocurrency is that, although new to the marketplace in relative terms, electronic currencies are firmly established and will likely become even more commonplace in the future. If you are not currently using it, it’s worth doing some investigating to find out how it could help your business.
Using cryptocurrency for business transactions has several advantages over traditional payment methods. There is a significantly lower risk of fraud and identity theft because payments are securely encrypted and do not undergo processing through a third party. This is referred to as a peer-to-peer transaction between the party who is paying with it and the one accepting it.
Because financial transactions made using cryptocurrency are not at the mercy of a third party intermediary, there is no risk of the intermediary intervening and invalidating a particular transaction. The costs are also lower as you can avoid the fees that these institutions charge for their services.
Let’s skip the technical jargon
Bitcoin was one of the first and now most common forms of electronic currency. Despite its name, bitcoin is not actually a treasure trove of tokens stocked in a warehouse somewhere. Unlike paper bills and metal coins, there is no physical representation of cryptocurrency. Beyond that, there are similarities to traditional currency like dollars and cents.
Paper money issued by the U.S. federal government has no actual intrinsic value in and of itself. The worth comes from the government backing and a mutual belief system among citizens that it is a legitimate proxy for buying and selling goods and services.
Cryptocurrency is not backed by a particular government. It works through the use of cutting edge encryption technology that is universal with no need to calculate an exchange rate and therefore well suited for international business. In the case of Bitcoin, the security of the system is guaranteed by a technology called blockchain.
Is it right for your business?
Many businesses have chosen to begin accepting cryptocurrency because it reduces the cost of fraud and paying a third party intermediary. When asking yourself whether or not to get involved with this technology, remember it’s about your audience. For example, perhaps you may be considering growing your company into a global entity, in which case cryptocurrency may be a good option.
You may have a lot of questions about this technology and what you need to know before making it part of your financial plan so seeking the guidance of a business consultant in Los Angeles can help you find the answers and dive into the world of cryptocurrency.