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Cryptocurrency Contribution Towards Business Development

Cryptocurrency Contribution Towards Business Development

A collaborative effort from the public and private sectors is required to promote business development and facilitate an increase in the use of bitcoin or other digital assets for a broad set of business purposes. The below-mentioned portion will address how bitcoin can contribute to the economic growth of a country by discussing several examples of businesses that are already making contributions (such as developing new products). Check how to use bitcoin with a mastercard and a traditional visa.

The United States Census Bureau recently reported that US retail e-commerce sales for 2017 were $453 billion, with online shoppers spending an average of $1,200 each. In this context, it’s easy to see that any increase in the adoption or utility of digital assets has enormous implications for individual businesses and entire economies. 

Especially when it comes to other blockchain technologies, such as smart contracts, which are becoming more common and used in various industries, the tool allows buyers and sellers to enter binding agreements using innovative contract technology without having to meet face-to-face at an auction or a broker or attorney. Let’s discuss the implication of cryptocurrency in businesses. 

The Financial Fragility of Small Businesses:

A recently released study by the New York Fed’s Levy Economics Institute found that more than half of small business owners who took out loans said their cash flow and profits have fallen in the past year. Another report by the Small Business Administration estimates that 60 per cent of those small firms with less than $10 million in sales have less than $5 million in cash on hand.

With most small businesses holding at least some fraction of their assets as liquid assets, it is a safe bet to assume virtually all are exposed to at least some market risk, including market capitalization fluctuations. Thus, all small businesses have some exposure to financial market fluctuations. However, many small businesses also need additional liquidity to finance their growth.

The Impact of Cryptocurrencies on Small Businesses:

One early and essential use case for bitcoin was a store of value in foreign countries with capital controls or unstable national currencies. It is where small business owners utilize bitcoin to protect against inflation risks. They can also take advantage of larger global markets to help grow their business by hedging against currency fluctuations and gaining a foothold in foreign markets through trading. 

Cryptocurrencies help in executing decentralized contracts:

Meaningful use cases for cryptocurrency in small businesses are starting to emerge. For example, blockchain technology can allow organizations to execute decentralized smart contracts that can be applied to various industries and have various possibilities. These include those who process payments, manage supply chains, or issue shares and bonds.

In the case of small businesses, the use cases continue to expand as small businesses are being put in a position where they could benefit from utilizing cryptocurrency as an easy way to execute contracts with other small businesses through intelligent contracts and potentially open up foreign markets as well.

Cryptocurrencies are devoid of chargebacks:

Cryptocurrencies are digital, which means they’re intangible, which is one of the primary reasons they’re free from chargebacks. It isn’t the case with credit cards. When you accept a credit card payment, you’re opening yourself up to the risk of a chargeback. 

Chargebacks regularly occur when a customer requests their money back after a purchase. It can often happen if a dispute or an item or service doesn’t meet the customer’s expectations. With cryptocurrencies and smart contracts, this isn’t an issue because there is no way for a customer to seek repayment outside of the contract terms agreed upon by both parties involved in the sale/transaction.

Better management of capital:

Another significant benefit that cryptocurrencies can provide to small businesses is the ability to manage capital better by making investment decisions rationally and mathematically. Since bitcoin can be divided into smaller units, it can serve as a more divisible currency than fiat currencies such as the dollar/euro or gold. For example, it can allow businesses to subdivide their business investments into smaller bite-size chunks ($1,000 or $500) that are easier for small businesses to justify investing in. It also allows for better capital allocation because it allows financial planning and investments in future projects based on probabilities and statistics.

Faster transactions increase the productivity of the businesses:

An essential benefit of cryptocurrencies related to small businesses is their ability to be instantaneously transacted. Transactions are confirmed in minutes rather than days for traditional fiat funds. As a result, it significantly speeds up the time required to execute contracts, purchases, and sales, to keep a business on target with its growth plans and overall goals.

Small businesses are not immune from the impact of digital currencies such as bitcoin on the global economy. They too, have an opportunity to leverage these technologies and create new products or services that can increase customer trust and improve their competitive advantages.

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