If you’re not living under a rock, you know all about the crypto currency craze and may even be considering getting in on the action, or (smartly) considering how it will affect your entrepreneurial plans. Crypto-currency is definitely daunting. It’s seemingly hard to understand, and not for the faint of heart, especially for entrepreneurs who feel they aren’t tech savvy at all. Don’t be intimidated! We’ve done the legwork for you and are going to explain what exactly this is, and how you can expect to use it for your small business, or entrepreneurial dreams!
The Who & The What
Firstly, what is crypto-curency, and how does it work? This is going to be a very simplified explanation that will serve as a good base for further research. Crypto currency is essentially digital currency; in the case of bitcoin, it’s virtual coins worth (as of now) $40,000 each. How? Simple economics- supply and demand! Because the network of people who own and invest in bitcoin is so large, and there’s a finite number of coins that can be mined by computers, its value has skyrocketed since its introduction in 2009.
What gives bitcoin its value in the first place? Blockchain technology– blockchain tech is essentially a database full of little packages of transaction data (blocks) that are permanent, and viewable by anyone. Now you might be thinking, how does this translate into one bitcoin being worth $40,000? Simply because bitcoin has been around the longest, and has the largest network, but it’s not the only one anymore. Companies like Ethereum, LiteCoin, and of course Dogecoin have popped up in the past couple of years and are quickly gaining traction, with billionaires like Mark Cuban and Elon Musk supporting them.
What’s it to you?
So how does cryptocurrency affect entrepreneurs and small business owners? Even if you weren’t interested in investing in cryptocurrency, it is making its way into the mainstream with companies like Paypal, Square, and Tesla buying in. Once big companies like this take up crypto, you can expect to see it come into the mainstream consumer market relatively soon. If you’re planning on starting your own business, you’ll have to consider how this will affect your business planning and organization. Entrepreneurs need to be adaptable, and staying on top of consumer trends is key to creating a strong brand that grabs a customer’s attention. (Check out Anjali Varma’s tips on creating a strong brand presence here) While you may not want to start accepting crypto currency for your goods or services, consider how you can use the technology behind this to help your business.
One of the biggest benefits of using crypto currency is it gives you the freedom to carry out transactions on an international level without having to depend on any middlemen (ie; banks, international exchange companies etc). Blockchain technology ensures anybody associated with a chain of transactions can verify its authenticity, meaning transactions can be approved more quickly, and freely. This article put it best, as “the freedom to carry out transactions on an international level without having to depend on any middlemen, saving time and money.” Transactions have the ability to be safer, faster, and easier within cryptocurrency networks! More importantly, this is an ever growing industry, with no signs of slowing down. Infrastructure is being built around it, and more tools to safeguard and manage crypto assets are being built every day. As an entrepreneur, adaptability is essential and while crypto may seem like a big leap in the future, it’s here; and now is the time to lean in (with caution and knowledge of course).
However, because it is so new and complicated, you need to be extremely careful. Unfortunately there are many malicious individuals, and even fake companies that attempt to take advantage of unknowing or fast moving entrepreneurs. If you want to read some unfortunate stories (and see proof this can happen to anyone), check out this article! While cryptocurrency transactions are safer, owning it is not so safe; if anybody gets into your virtual wallet, they could steal all your coins without a trace! Because of the nature of crypto, there’s not much anybody can do about it after the fact. In general there is a greater risk of being hacked or targeted for criminal activity, since it is still largely unregulated. As crypto becomes a part of mainstream business, it also calls the attention of politicians, and lawmakers. Changing laws and tax rates mean crypto investments and transactions will likely begin to be taxed at higher rates.
Crypto-currency is the future, and while it is risky and expensive to invest, there are other ways you can anticipate its rise in your business, and it starts with educating yourself. Get familiar with what’s new, and stay informed on how the business sphere is changing. Technology is advancing faster than ever, making it even more important for you to stay updated. If you already have a small business, don’t fear! It’s never too late to update yourself and your business for new advancements, never stop improving and never stop learning!