"In the following decades, cryptocurrencies will coexist side by side with traditional currencies, but it is plausibles that within 30-40 years, they can replace them completely"
- Meni Rosenfeld
Chairman of Israeli Bitcoin Association
10 Ways You Can Use Bitcoin to Make Your Business More Efficient
Now more than ever, business owners are looking to leverage new technology to increase profit margins. With Bitcoin making headlines recently, some business owners see cryptocurrency as merely a trendy commodity. However, cryptocurrency has real, significant business implications and many are saying it is poised to revolutionize how we use currency. Here are eight areas where you can bolster your business with cryptocurrency right now:
Emergency international purchase orders
As the economy becomes increasingly global, odds are that your company orders supplies from overseas. This opens up your options substantially, but payment to other countries can have some serious limitations. For example, say you need to order equipment from a vendor in South Korea. A wire transfer may cost you over $50 and take 5 days to go through.
With platforms like BitPay and initiatives like the Bitcoin Organization’s BTGPay, you can use cryptocurrency to send payments in seconds that are cleared in minutes and cost less than a penny. By the time a wire transfer would have gone through, the equipment will be at your door.
One of the biggest downsides of selling online is being dinged with chargebacks. Platforms like BTGPay guarantee 100% chargeback protection: payments you receive simply cannot be reversed (though you can choose to send the money back.) This makes it possible to sell, as a big-ticket example, a condominium in New York City to a buyer in China.
On-the-go international payments
When you do business internationally, currency conversion is a regular, but expensive activity. Many business owners can relate to the difficulty of trying to find optimal conversion rates for their domestic fiat currency, to the vendor’s international currency. Converting cryptocurrency to EUR costs less than a tenth of a percent, and is done instantly, while converting USD to EUR can cost as much as 7% and take days.
Offering cryptocurrency as a payment option will make your business more friendly to traveling customers. For example, if a surgery centre in Mexico accepts payment in cryptocurrency, customers can pay without having to pay high rates to exchange their own national currency.
Several companies, including Japanese conglomerate GMO Internet, have begun paying bonuses in cryptocurrency with the goal of encouraging their employees to become literate in cryptocurrency and blockchain. Cryptocurrency can also be used as an alternative to wire transfers for payment to international employees. In addition foreign workers in your domestic facilities may desire payment in cryptocurrency, especially if they intend to send some of their earnings to their home countries – emittances is a $530 billion industry for a reason
See this article for more on using cryptocurrency for payroll.
Negotiating conversion rates
When you do business internationally, currency conversion is a regular, but expensive activity. Many businesspeople can relate to the difficulty of trying to find optimal conversion rates. However, converting cryptocurrency to EUR, for example, is both cheaper and easier than converting USD to EUR
Access to unbanked vendors
More than 2 billion people in the world are currently -unbanked-, meaning they don-t have access to a bank account. Organizations like Kora are making it possible for these people to use cryptocurrency to transact. If you have an art business, you could purchase handicrafts from an artisan in Thailand, sending cryptocurrency to their mobile phone
Holding as commodity
Because the value of cryptocurrency is based entirely on the market, recent speculation has made it an interesting commodity to hold. Upon receipt of cryptocurrency, you can use a service like Uphold to hold it, or easily convert it to over thirty currencies and commodities, from US dollars to Bitcoin to actual gold.
On the flip side, you as a buyer sometimes work with untrusted parties and want to make sure that you won-t be scammed by vendors. With Escrow services, you can use a third party to mediate transactions. Once you deposit your bitcoin, the seller will ship the item, and you can release the escrow to them.
Crypto currency is considered property in most countries, so it can be purchased and held as a deferred tax asset (an asset that may be used to reduce taxable income.) For example, say you have $10 million in revenue and $9 million in expenses. Of the $9 million, $8 million are from actual cost of goods sold and $1 million is from future warranty and return expenses. Tax authorities often say you have $2 million in profit even though you only expect $1 million after future expenses; they may not allow you to deduct for future costs and want you to pay taxes on $2 million today. However, if you purchase BTG for $1 million to use it later to pay for warranty and return expenses, you may be able to record that amount in the financial statements as deferred tax asset (speak with a tax professional to see if this is an appropriate strategy for your business.)