Friday, December 9, 2022
Published 1 Month Ago on Thursday, Nov 03 2022 By Amira Saadeh
Released as open-source software in 2009, Bitcoin was the first decentralized cryptocurrency and became the largest by market cap. But the concept of digital asset mining was proposed 27 years before this, in 1983. Today, there exists over 12,000 cryptocurrencies, and some companies accept them as valid payment methods, such as big tech giant, Apple Inc. With that, it might be wise to include investing in digital assets in your next business plan.
The new generations, millennials and up, are distrustful and value transparency in transactions above all else. Digital asset mining and trading rely on blockchain, a distributed peer-to-peer database with strict rules for adding data. Blockchains ensure the secure transaction of cryptocurrency from one holder to another through a significant amount of computing power. You can see why the newer generations are interested in cryptocurrency. So, integrating cryptocurrency blockchains would, in theory, bring in new clientele.
Let’s take the Hong Kong-based hospitality group, The Pavilions Hotels & Resorts group, as an example. According to its managing director, Scot Toon, the group has secured a different market, such as travelers, by enabling cryptocurrency payment.
While some establishments take cryptocurrency (i.e., Bitcoin and Ethereum) as a form of payment, chances are your competitors aren’t involved with cryptocurrencies yet. Your company could be the first to dip its toes in digital mining and trading. This could set your company apart from your competitors. A customer that prefers crypto transactions will gravitate towards companies and businesses that offer it. And they will ignore those who don’t, despite providing the same services.
Banks charge fees per transaction. Digital asset mining and trading, however, does not. The initial setup for accepting cryptocurrency does require up-front costs that are not cheap. But after that, all you’ll be paying for is management and maintenance, which won’t cost you as much. And over the years that your company will operate, the setup will return whatever you paid in the initial investment.
Furthermore, an excellent benefit to digital asset transactions is the lack of need for foreign currency. Paying bills in a foreign currency will cost you more than if it were local currency due to the exchange rate. The same goes for accepting payment in foreign currency. Accepting cryptocurrencies will eliminate or at least reduce that. Both you and your customer will be satisfied with the business.
As mentioned before, cryptocurrencies are built on blockchain technology. This technology is excellent for consumer protection. But that’s not all. You can make payments securely to your vendors and suppliers without worrying about the safety of the transactions.
There’s a common scam where the customer claims not to receive their package and requests a chargeback through a reversal of bank payments without going through you first. Using cryptocurrency will stop this, as there is no reversal of transfer.
Everybody wants things done fast. And traditional payment methods are not quick, especially if the amount is significant. Cryptocurrency eliminates this idle time. The transfer is seamless due to the accurate data about the client and provider. Eliminating the banks will facilitate and quicken the processes.
You have two approaches to consider when venturing into the cryptocurrency world. But first, you need to ask yourself: How deep down the rabbit hole am I willing to go? The first option is a hands-off one. It mainly concerns digital mining and trading as a pit stop for money. The second option, however, is the hands-off one. It involves integrating cryptocurrency into operations and treasury functions.
If you choose this approach, you will accept crypto payments, but the money will arrive in flat currency. This method will keep the digital assets off the books. The process may require the fewest adjustments and may serve to reach a new clientele and grow the volume of each sales transaction.
Companies with this business plan hire a contractor to oversee the processes. These contractors accept and make payments in crypto by converting the money in and out of flat currency.
In addition, if the venture fails for one reason or another, this approach to digital asset mining and trading offers the least disruption to the internal functions of a company. But remember that hiring a third party does not absolve you from all responsibilities regarding risk, compliance, and internal controls issues. You will have to pay careful attention to issues surrounding the use of cryptocurrency (i.e., anti-money laundering (AML) and know your customer (KYC) requirements). You will also have to mind the restrictions outlined by the Office of Foreign Assets Control (OFAC), the administrator and enforcer of the economic and trade sanctions imposed by the US government.
Choosing this approach means you will entangle your company with crypto mining and trading. This method seeks to integrate crypto into operations and treasury functions. Risk-to-reward aspect here is proportionate.
Within this approach, you can decide which path to take:
They’re concerned with the maintenance of crypto custody on a blockchain. In addition, they provide wallet management services facilitating the tracking and the valuation of digital assets.
In this case, crypto mining and trading are integrated into the company’s system. The corporation will then manage its private key. With that said, going down the self-custody path means your company will have greater accountability for the work supporting the transactions.
Whichever way you choose to go, employ a professional in this field. Precautions are better than damage control. As a business, you do not have to accept all cryptocurrencies, chiefly Bitcoin and Ethereum. Most importantly, consult your legal team before embarking on this endeavor to make sure everything is above board.
Digital asset mining and trading are the paths of the future. Cryptocurrency users are rising in number. So as a business owner, it would be best to consider enabling cryptocurrency as a valid payment method. It will introduce your company to new customers. You will remain ahead of your competitor by implementing a cryptocurrency payment. And finally, this payment method has proven to cost less, increase the speed of transfers and trades, and allow for better security methods. You have one of 2 approaches for the implementation. The first involves hiring a third-party vendor to handle transactions. But the money gets to you in flat currency instead of cryptocurrency. The second involves either hiring a third-party vendor or having your corporate treasury handle the affairs. Either way, the money remains in cryptocurrency. The second option, however, does open you up more to legal repercussions. With that said, consult your legal team and accountants to see what works for you and your company. There’s no such thing as universal advice.
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