How your company can use cryptocurrency for exposure
Deciding to get into the crypto space as an individual involves considering your financial goals, risk, and wallet type. This is a bigger decision for companies, as there’s a lot at stake. There are many people involved, and failure puts the company at risk.
Here are some of the ways your business can use crypto for exposure:
1. Use crypto assets for transactions
Accepting digital assets as a mode of payment is a sure way of increasing your company’s exposure. If your business provides services or products, there are many points of sale options, such as PundiX, which accepts Bitcoin (BTC) and other crypto assets. These novel technologies can also convert these payments into conventional currency to avoid crypto’s price volatility.
Though uncommon, you can also pay your employees using digital currency. However, limited liquidity and price volatility are why this practice isn’t widespread. Nevertheless, many blockchain startups are making strides to pay for advertising campaigns using digital assets.
Overall, employees already in the crypto space are more open to getting paid using crypto assets. In a recent study, 65% of crypto enthusiasts said they accepted payments made using digital currency, while 80% were comfortable with receiving bonuses in crypto assets. In contrast, a survey of non-crypto enthusiasts established that only 31% were willing to accept payments in digital currency.
2. Invest in digital currency
Companies such as Tesla and MicroStrategy made headlines when they made significant investments in BTC. This has led many corporations and institutions to express interest in investing in crypto assets.
Investing in digital currency is an excellent way for a company to gain exposure. However, investing in digital assets as a company is different than when you do it as an individual. For a company, you have to consider tax.
We live in a negative interest rate environment, making it expensive for companies that hold cash. Investing in BTC and other digital assets is a more rational choice for most businesses.
For companies, investing in cryptocurrency is as simple as opening an account on an exchange platform such as Independent Reserve, offering dedicated corporate accounts, and purchasing BTC or any other crypto asset.
3. Join a project or consortium
The banking and finance sector is one of the earliest blockchain technology adopters as it offers many benefits, including transactional infrastructure. Many banks have joined consortiums to build blockchains they can use in their day-to-day operations to test the technology.
One such example is the collaboration between JP Morgan and the National Bank of Canada. These two institutions collaborate on a Quorum blockchain project to assess if you can use it in debt issuance transactions.
Companies from any sector can join consortiums. Industries like waste management, healthcare, supply and logistics, finance, etc., establish blockchain and cryptocurrency groups. For instance, Blockchain Research Institute (BRI) collaborates with over 60 organisations to find and develop practical applications for blockchain technology.
4. Create a cryptocurrency service or product
If your company has access to extra cash to invest in growth, it can develop a crypto service or product.
For instance, Deloitte has created Blockchain labs that partner with clients to convert blockchain concepts into commercial applications. The company has created more than 30 blockchain-associated prototypes in all sectors, from reward programs to loyalty payments and identity verification.
Fund managers and financial advisors in many organisations also learn about crypto to offer new cryptocurrency-based investment products and advise their clients. For instance, the Chartered Financial Analyst institute has incorporated cryptocurrency and blockchain courses into its curriculum.
5. Launch a new token or raise funds via an ICO
ICOs (Initial Coin Offerings) are alternatives to equity fundraising or crowdfunding through an IPO or a venture capitalist. New companies can use an ICO to source funds. Established organisations also use ICOs to encourage investment and create new markets.
ICOs also provide a way for businesses to develop digital assets that they can use for their services and products. For instance, Polymath, a startup company based in Toronto, specialises in assisting companies in launching their blockchain-based services and tokens and negotiating regulatory obstacles.
The best way a company can use crypto for exposure depends on its available resources and funds and the type of business. Options such as emerging blockchain technologies and modes of payment apply to all sectors; hence, any business can use them.
One of the ways a company can learn about cryptocurrency is by joining a crypto community or group or attending meetups. As the industry continues growing, these opportunities will increase, and many companies may find they have to get involved or get left behind.