4 Reasons Why Entrepreneurs Should Consider Bitcoin for Their Small-Businesses
Bitcoin is the king of the cryptocurrency market. We'll see 4 reasons why entrepreneurs should consider bitcoin for their small-businesses.
Cryptocurrency has seen its fair share of market ups and downs over the years. In recent weeks, the market volatility has steadied and is seeing new interest from blue-chip companies embracing digital technology in their business, including some big names like Microsoft. In this article, we’ll see 4 reasons why entrepreneurs should consider bitcoin for their small-businesses.
Companies such as MicroStrategy invested 250 Million into Bitcoin, which had a positive impact on the price of Bitcoin. It is becoming clear that digital assets are gaining trust worldwide as a payment method and hedge against inflation.
Bitcoin is widely regarded as the king of the cryptocurrency market. Valued at $10,728.25 U.S. dollars at the end of September 2020, with approximately 18.5 million Bitcoins in circulation. So, the total market cap of Bitcoin is increasing rapidly, with an estimated market capitalization of 200 billion U.S. dollars.
Reasons To Entrepreneurs Consider Bitcoin
According to Google trends, there is a new interest in Bitcoin-related searches attributed to its increasing valuation and acceptance by well-known global companies.
Failure to acknowledge the importance of Bitcoin could have a catastrophic impact on a small business. It is essential to evolve and innovate along with the increasingly popular technology.
What is Bitcoin?
Before deciding whether to accept Bitcoin as a payment method, it is important first to understand what Bitcoin is. Bitcoin is a cryptocurrency that can be used as digital money and was invented in 2009.
Bitcoin is based on a technology called blockchain designed to keep the network secure from fraudulent activity. No bank or company runs the Bitcoin network. All transactions are conducted in a completely decentralized manner. So, there are good reasons to entrepreneurs consider Bitcoin:
Unlike fiat currencies, Bitcoin is 100% digital. This means it cannot be physically held and is often referred to as ‘digital gold.’
How Does Bitcoin Work?
Bitcoin uses a distributed consensus to verify and confirm each financial transaction that occurs on the network. High-performance computers are distributed all around the world called miners. The miners run the Bitcoin nodes that process data on the network.
Transactions are broadcast on the network, which is then by the miners. Once they confirm it, the transaction appears in the next block of transactions in the chain. The miners work to verify individual transactions continuously and verify them to record them permanently on the blockchain.
Miners confirm and verify transactions receive a reward, which is a method to encourage and promote network productivity, leading to an increase in the Bitcoin network’s security.
Every time the miners update the blockchain, each miner receives an up to date and identical blockchain ledger. The ledge contains the entire Bitcoin transaction history now. So, this means the network is completely transparent, making it difficult to sabotage with fraudulent activity.
Benefits of Using Bitcoin in Small Businesses
Bitcoin is a payment network as an alternative to fiat currencies such as the US Dollar. Fiat currencies are all vulnerable to manipulation and inflation over time. Bitcoin challenges the traditional concept of using the banking system as there is no central bank or CEO.
Here are a few reasons why small businesses should consider using Bitcoin.
1. No Transactional Fees: Reasons To Entrepreneurs Consider Bitcoin:
Bitcoin payments do not need a bank as the intermediary to process the payment, which means there is no intermediary to charge a transactional fee. When doing high-value business, even a small 1-2% fee can add up. There is also the processing time it takes for the banks to verify the transaction, taking several days and weeks for overseas payments.
Accepting Bitcoin as a payment method can increase the bottom line in terms of revenue. So, at the end of the financial year and reduce the transaction times with certain payment options.
2. No Foreign Exchange Conversion
Businesses that rely on the import and export goods overseas will understand the cost of converting fiat currency using the foreign exchange market. So, banking institutes charge high fees, which accept as a cost of doing business globally.
These conversion costs can be as high as 18%, depending on the day’s exchange rate and spread fees. Bitcoin is a truly global peer-to-peer currency. So, there is no conversion with overseas payments. What about payment the other party will receive with no conversion loss to convert between local currencies.
3. Fast Transfer Speed: Reasons To Entrepreneurs Consider Bitcoin:
Bitcoin works without an intermediary. To perform checks and balances on the transaction. As mentioned, this can take several days for overseas transactions between the sending and receiving banks. In addition, the blockchain network through the pool of miners verifies each transaction.
According to Statista, the average time for a Bitcoin transaction in September 2020 was 9.2 minutes. Compared to traditional bank transfers, which can take between 1 to 3 working days to process, using Bitcoin as a payment method is reliable, transparent, and quick to receive funds.
4. Decline of Fiat Currencies
Traditional finance transmittance methods pegged to fiat currencies such as the US Dollar depreciate each year. According to statistics, the dollar’s purchasing power has been on a steep decline since its inception.
In comparison, Bitcoin has appreciated over 200% from March to the beginning of October. So, this would make Bitcoin a relatively safe asset to hedge against inflation in the current fiat system.
With this in mind, businesses that do not adopt Bitcoin are losing wealth as each year passes, and the value of fiat currencies declines. The depreciation of fiat currencies can be against accepting Bitcoin.
Reasons To Entrepreneurs Consider Bitcoin: The Bottom Line
There are many considerations before accepting Bitcoin merchants for a small business. As volatile as the market may seem, it is important to understand Bitcoin and blockchain technology and help a small business in these difficult times.
For more information, we recommend resources such as hedgewithcrypto, which have a lot of helpful articles and guides on Bitcoin. Becoming familiar with blockchain technology and, in particular, Bitcoin can help a business plan for future success during times of economic instability.