An increasing number of companies worldwide are using bitcoin and other digital assets for a host of investment, operational, and transactional purposes. As with any frontier, there are unknown dangers, but also strong incentives. In exploring loads of questions and insights, enterprises should consider as they determine the beneficial use of digital assets to companies..
More than 2,300 US businesses accept bitcoin, according to one estimate from late 2020, and that doesn’t include bitcoin ATMs. An increasing number of companies worldwide are using bitcoin and other digital assets for a host of investment, operational, and transactional purposes.
The use of crypto for conducting business presents a host of opportunities and challenges. As with any frontier, there are both unknown dangers and strong incentives. That’s why companies venturing to use crypto in their businesses should have two things: a clear understanding of why they are undertaking that action and a list of the many questions they should consider.
Rationale behind the adoption of Crypto by companies
It is observed that crypto transactions are beneficial in recent times, the following are the reasons behind the approbation of Cryptocurrency;
Crypto may provide access to new demographic groups. Users often represent a more cutting-edge clientele that values transparency in their transactions. One recent study found that up to 40% of customers who pay with crypto are new customers of the company, and their purchase amounts are twice those of credit card users.
Introducing crypto now may help spur internal awareness in your company about this new technology. It also may help position the company in this important emerging space for a future that could include central bank digital currencies.
Crypto could enable access to new capital and liquidity pools through traditional investments that have been tokenized, as well as to new asset classes.
Crypto furnishes certain options that are simply not available with fiat currency. For example, programmable money can enable real-time and accurate revenue-sharing while enhancing transparency to facilitate back-office reconciliation.
More companies are finding that important clients and vendors want to engage by using crypto. Consequently, your business may need to be positioned to receive and disburse crypto to assure smooth exchanges with key stakeholders.
Crypto provides a new avenue for enhancing a host of more traditional Treasury activities, such as. :Enabling simple, real-time, and secure money transfers
– Helping strengthen control over the capital of the enterprise
– Managing the risks and opportunities of engaging in digital investments
Crypto may serve as an effective alternative or balancing asset to cash, which may depreciate over time due to inflation. Crypto is an investable asset, and some, such as bitcoin, have performed exceedingly well over the past five years. There are, of course, clear volatility risks that need to be thoughtfully considered
However, as with any technology changes on r upgrade, there is a need for an implementation plan. That plan should include, but is not limited to, these types of questions:
What is the overall strategy?
What are the short-term and long-term objectives?
Will the decisions and actions the company takes now allow for flexibility and scaling of efforts later?
How can the company integrate the security needs of operating in the digital asset ecosystem with existing security and cyber efforts in the company?
What resources will the company need above and beyond those it currently has? What new expertise might it need?
What will the implementation road map look like?
How will the company evaluate progress as it implements? Does the company have the necessary processes in place to monitor the execution of transactions and vendor performance?
In conclusion, this can be a complex endeavor. That’s why, before engaging in a more robust launch, some companies have chosen to pilot the use of crypto just as they would pilot a new technology. One type of pilot a number have chosen is an internal intradepartmental pilot. It’s based in Treasury, since Treasury is typically responsible for internal funding of the company and its departments and subsidiaries. The pilot can begin with the purchase of some crypto, after which Treasury uses it for several peripheral payments and follows the thread as the crypto is paid out, received, and revalued.