Trading cryptocurrencies has emerged as one of the most promising strategies to improve the financial sustainability and stability of startups in recent years. Although the world of cryptocurrency may seem like a fantasy to some, the reality is that as more businesses seek flexible financing choices and new ways to empower investments, this world is becoming more practical than ever before. You can leverage cryptocurrency to help your startup grow may seem a little risky with the latest news but crypto’s future is improving. Forbes posted a net gain of over 35% for major cryptocurrencies for March, showing crypto is remarkably resilient.
Cryptocurrency is a kind of digital or virtual money that is both cryptographically secure and decentralized, meaning it functions without the need for a centralized bank or monetary authority by relying on blockchain technology that makes it less permeable to change or hacking. Bitcoin is the most well-known cryptocurrency, but there are others like Ethereum, Litecoin, and Ripple that are gaining in popularity.
There are several ways that startups might use cryptocurrencies to their advantage. This article digs into the 9 ways in which startups can leverage cryptocurrency for growth.
Cryptocurrencies: What are they and how do they function?
Cryptocurrencies are a type of digital money made up of encrypted virtual tokens that are used to protect transactions and control how new tokens are made. With the help of cryptography, users can send sensitive information digitally without anyone else having access to the data.
Bitcoin is the most popular cryptocurrency, but there are others. It’s a peer-to-peer payment system that’s been around since 2009 and is entirely controlled and operated without any central authority. The majority of popular cryptocurrencies also function in a manner similar to Bitcoin.
Transactions are encrypted and stored on a distributed ledger. By using a private key (the equivalent of a password) and a public key (the equivalent of an account number or sending address), it is possible to make and verify financial transactions securely and privately. A decentralized computer system then analyzes the data to confirm the transaction and prevent double-spending. Blocks are added to the blockchain after a certain number of transactions are validated.
1. Accepting cryptocurrency as payment
One of the most obvious ways that startups can leverage cryptocurrency is by accepting it as payment. By accepting cryptocurrency as payment, startups can reach a wider audience and offer an alternative payment method for their customers. This can be especially useful for startups that operate in countries with unstable currencies or where traditional payment methods are not widely accepted.
There are several payment processing companies that can help startups accept cryptocurrencies, such as BitPay and Coinbase Commerce. These companies provide payment processing services that allow businesses to accept cryptocurrency payments and convert them into fiat currency, which businesses can deposit into a traditional bank account.
Enabling cryptocurrency payments provides the following advantages:
- Consumers have more options.
- They may use their cryptocurrency gains to pay for consumer items.
- Using Bitcoin or another cryptocurrency to purchase digital products makes sense on its face.
- Reduced fee structure Potential for a crypto discount (like when paying with cash)
- By accepting cryptocurrencies, older businesses might suddenly seem more contemporary. It is possible to instantly swap coins obtained from transactional businesses into local cash through coin exchanges and a bank wire transfer.
With the speed of light, you can now buy Bitcoin with a credit card on MoonPay.
2. Raising capital through initial coin offerings (ICOs)
Another way that startups can leverage cryptocurrency is by raising capital through initial coin offerings (ICOs). An ICO is a fundraising method in which a startup issues a new cryptocurrency in exchange for other cryptocurrencies or fiat currency. ICOs are a quick and efficient way for startups to raise capital without having to go through the traditional fundraising process using investment banks to underwrite initial public offerings sold through the stock exchange, which are time-consuming and expensive. However, startups should know that ICOs are not regulated, and due diligence is required to avoid the many scams and fraudulent ICOs in the past.
If a startup is considering an ICO, as part of its due diligence, the company should work with reputable advisors to ensure that its ICO is legitimate and compliant with relevant regulations.
3. Offering cryptocurrency as a reward or incentive
Startups can also leverage cryptocurrency by offering it as a reward or incentive to their customers. This might prove a great way to attract new customers and retain existing ones. For example, a startup could offer a discount to customers who pay with cryptocurrency, or they could offer a loyalty program that rewards customers with cryptocurrency for their purchases.
This can help incentivize customers to use the startup’s services and can also help promote the use of cryptocurrency.
4. Using blockchain for supply chain management
Blockchain technology, which is the underlying technology behind most cryptocurrencies, businesses can also use blockchain for supply chain management. By using blockchain technology, startups can create a transparent and secure supply chain that is resistant to fraud and tampering.
For example, a startup could use blockchain technology to track the movement of goods from the manufacturer to the end customer. This provides an immutable record of the product’s journey and would make it easier to identify any issues or defects in the supply chain.
5. Creating decentralized apps (dApps)
Startups can also leverage cryptocurrency by creating decentralized apps (dApps) that are powered by blockchain technology. dApps are applications that run on a decentralized network, rather than on a central server. By creating a dApp, startups can offer a more secure and transparent application that is resistant to censorship and tampering. Additionally, dApps can be monetized through the use of cryptocurrency, which can help startups generate revenue.
6. Using smart contracts for business operations
Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. Smart contracts can be used to automate business operations, such as payments, and can help reduce costs and increase efficiency.
By using smart contracts, startups can create a more streamlined and efficient business model that is resistant to fraud and tampering. Additionally, smart contracts can be executed using cryptocurrency, which can help startups save on transaction fees.
7. Share crypto-related content on your platforms
Your company’s success or failure depends on its ability to gain and maintain visibility and awareness. Since competition is fierce in all fields, it’s important to make the most of your social media presence if you want to attract investors.
Promoting cryptocurrency usage, sharing one’s own experiences with one’s digital currency of choice, offering advice, and notifying prospective investors of the numerous ways they might use crypto to support one’s business are all necessary to raise funds through multiple channels. In addition, you may show your followers how to pay you with cryptocurrency if they are interested in buying from you but haven’t yet since they didn’t know you accepted it.
8. Using cryptocurrency for international payments
Businesses can use crypto to send and receive payments globally without the need for a bank. This can help startups expand their business internationally and reduce transaction fees.
9. Cryptocurrency may be used as a guarantee for a loan
Businesses can use crypto as a guarantee for loans by companies. Several new fintech firms throughout the world now accept cryptocurrency as collateral for fiat currency loans to both consumers and businesses. To put it another way, you can avoid completely selling your cryptocurrency by using it to cover expenses. When the loan is paid back, you will be given access to your cryptocurrency once again.
This is especially helpful for new businesses since they can find money without going through traditional banks. Angel investors and venture capitalists often want a piece of ownership or control of a company in exchange for money. This is a big downside of looking for money from them.
Even if you have a good plan for financing your startup, it never hurts to add in some fresh, innovative, and potentially fruitful ideas; doing so can only strengthen your company and help you gain more awareness. Startups can leverage cryptocurrency in many ways to drive growth and gain a competitive advantage.
Across all industries, there is a growing trend toward using cryptocurrencies instead of just holding them as investments. Make your startup one of the first to use crypto as a good way to invest, and watch as your business grows with the help of these flexible digital currencies.
Angela tries out fresh ideas and writes one-of-a-kind but trustworthy articles. She wants to help readers succeed today and in the future. She is an experienced writer, and her articles have appeared on a number of sites.
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