Is your business ready for Bitcoin, Blockchain and Cryptocurrency?

Is it just us or does everyone seem to be talking about ‘blockchain and cryptocurrency’? If you Google ‘this week’s top business news’ there will be at least one or two blogs talking about it. 

Maybe you listen to podcasts or read industry newspapers and magazines to keep up with the latest business news and topics. I bet there have been countless episodes or articles on the subject of cryptocurrency. 

There’s even courses on the topic of cryptocurrency, maybe you have attended one or two already? 

Bitcoin, blockchain and cryptocurrency are the buzzwords that are very much ‘on trend’ right now. 

Class yourself as a bit of a geek and love reading the stats and facts?  

Here are some interested stats and facts about the cryptocurrency industry: 

• Since 2008, Bitcoin has consistently been making a profit (except for 1 year). (source) 
• Bitcoin can’t be banned; it can only be regulated. If you have an internet connection and a Bitcoin wallet, you can engage in Bitcoin. (source) 
• There are more than 1,300 cryptocurrencies (but Bitcoin is king). (source) 
• Most people still have limited knowledge of what cryptocurrencies are, or if they’re legal. (source) 
• The identity of blockchain’s creator is not yet known. (source) 
• Major banks are exploring implementation of blockchain solutions. (source) 
• 0.5% of the world population uses blockchain. (source) 

If your business has been toying with the idea of getting involved with cryptocurrency, you have stumbled across the right blog. 

We will help you to get your head around this often-confusing topic, looking at both the advantages and disadvantages and help you decipher whether your business is ready to take it on or not. 

Getting our heads around the terminology 

First things first, let’s get our heads around the terminology and what exactly each term means. This seems like a sensible place to start. 

Bitcoin 

Bitcoin is a type of cryptocurrency (also known as virtual currency or digital currency). In simple terms Bitcoin (and other types of cryptocurrency) is money that is 100% virtual.  

Think of Bitcoin as being an online version of cash, which can be used to buy either products or services, just like traditional ‘paper’ money.  

Most shops are yet to accept Bitcoin and some countries have even ‘banned’ the use of it (even though technically speaking you can’t ban it but that’s a whole different topic altogether).  

How does Bitcoin work? 

Bitcoins are computer files which are stored in a ‘digital wallet’ app on a phone or computer. You can send whole or parts of Bitcoins to other people who also have a ‘digital wallet’. 

How are new Bitcoins created? 

Computers basically have to work out ridiculously hard sums, and when they have worked out a sum they are then (occasionally) rewarded with a Bitcoin, which the owner can keep and store in their ‘digital wallet’. 

Some people will set up computers for the sole use of working out sums for Bitcoins and this is what is known in the industry as ‘mining’. 

Sums are getting harder and harder to work out for computers, to stop too many Bitcoins being generated. Nowadays, if you set up your computer for mining Bitcoins, you could be waiting years until you get a single Bitcoin. Yes years! 

Blockchain 

Every single Bitcoin (and other types of cryptocurrency) transaction is recorded in a public list which is called ‘blockchain’. 

Blockchain makes it possible to trace the history of Bitcoins and transactions. This stops people spending what they don’t have, making copies or undoing transactions. 

Think of it as a Google spreadsheet which contains rows and columns of data. However, with blockchain, instead of rows and columns you have blocks. A block in a blockchain is a collection of data.  

Anyone can access the data, but no one can edit it and the first block in the Blockchain is always called the ‘Genesis Block’. 

Cryptocurrency 

Cryptocurrency is an internet-based medium of exchange which uses cryptography* in order to conduct financial transactions. 

*Cryptography is the method of protecting information through codes so that it can only be read and processed by those who it is intended for. 

One of the reasons why cryptocurrency is so desirable, is that it’s not controlled by any central authority (for example with traditional ‘paper’ money, it is controlled by banks). 

Theoretically, cryptocurrencies are immune to ‘old ways’ of government control and interference. 

Are there other types of cryptocurrency? 

Yes, whilst Bitcoin is the most talked about and ‘known’ cryptocurrency, there are other types out there: 

• Litecoin (LTC) – launched in 2011 and created by Charlie Lee, an MIT graduate, and former Google engineer. 
• Ethereum (ETH) – launched in 2015 and enables Smart Contracts and Distributed Applications to be built and run without downtime, fraud, control or interference from a third party. 
• Zcash (ZEC) – launched in 2016 and they say if Bitcoin is like HTTP for money, zcash is HTTPS. 
• Dash (DASH) – launched in 2015 and originally known as darkcoin, Dash is basically the more secretive version of Bitcoin and offers more anonymity. 
• Ripple (XRP) – launched in 2012, ripple offers instant, certain and low-cost international payments. 

If you want to learn more about the different types available, we would recommend checking out Investopedia’s blog (obviously after reading our blog…). 

Benefits of using cryptocurrency 

So, we’ve already bought up one key benefit of cryptocurrency which is that it works on a ‘peer to peer’ basis meaning no third party (e.g. bank) is needed. 

What other benefits are there? 

• Safe against fraud – An individual’s cryptocurrency is digital and therefore cannot be counterfeited. 
• Immediate settlement – Think about buying property such as a house, third parties must be involved meaning delays and payment of fees. With cryptocurrency, contracts can be designed and enforced to eliminate third party approvals. 
• Wave goodbye to fees – General rule of thumb is that there are no transaction fees with cryptocurrency transactions, and this is because miners are compensated by the network. However, this could change. 
• Safe against identity theft – Credit cards work on a ‘pull’ basis, the shop initiates the payment and then pulls the designed amount from your account. Cryptocurrency works on a ‘push’ basis, you send exactly the amount you want to. With credit cards you are giving third parties access to transactional history and personal data, with cryptocurrency you aren’t. 
• Use internationally without problems – Cryptocurrency is not bound by any exchange or interest rates, transaction charges or other additional ‘country’ charges, meaning it can be used internationally without running into any problems. 

Disadvantages of using cryptocurrency 

Bet you have reached this part of the blog and are thinking, Bitcoin and cryptocurrency sound great. How do I sign up? 

Hold your horses. Before getting too carried away, lets now look at the disadvantages of using cryptocurrency. 

• Scalability scares – One of the biggest concerns about cryptocurrency is scalability. More and more people are using it, but numbers are still pretty low when compared to a payment giant such as VISA. 
• Speed of transactions – At the moment cryptocurrency cannot compete with the likes of VIAS when it comes to the speed of transactions and that is all down to the infrastructure needing to be massively scaled. 
• Security – Like all digital technologies, cryptocurrency is vulnerable to attacks from hackers. Hackers always find a way to breach security. Saying this, there are companies who are working on this, using enhanced cybersecurity measures that go far beyond what traditional banks have in place. 
• Regulations – Until the technology is adopted by governments and regulated, there will always be a level of risk when it comes to investing in this technology. 

Advantages for businesses 

Now we have covered the general advantages and disadvantages of cryptocurrency, let’s have a look into business specific advantages: 

• Stand out from your competition – Hardly any businesses accept cryptocurrency as a form of payment. This is a great opportunity to stand out from the crowd and get one step ahead of competitors. Be ahead of the curve. 
• Lower costs involved – Traditional payment methods often have some sort of additional processing fee; you don’t have this with cryptocurrency. Just think of the money you could save on additional fees, which you could put into other areas of your business to help growth. 
• Early adopter benefits – Blockchain technology will eventually become mainstream and as with any emerging trend those who adopt it early will enjoy a substantial advantage over those who join later. When email marketing first came about, the conversation rate was around the 90% mark, nowadays its around 1%. Food for thought. 
• More confidentiality for customers – when you make a purchase with a debit or credit card you leave behind you transactional history which often includes personal data. With cryptocurrency you can decide how much information to give meaning customers can enjoy a more confidential payment process. 

Which companies are already accepting cryptocurrency? 

Many businesses are already ahead of the curve (so to speak) and already accepting cryptocurrency such as: 

• Subway 
• Virgin Atlantic 
• Tesla 
• Dell 
• Microsoft 
• McDonalds 
• OkCupid 
• Wikipedia 
• Etsy 
• Shopify etc 

You may be thinking that they are all big brands, of course they are using cryptocurrency, they have a lot more money and resource than SMEs. 

Whilst this may be true, there are smaller companies that are using cryptocurrency, for example Fetch Portraits which is owned by a dog photographer and Hotmaple who sells (you guessed it) maple syrup. One of our clients is already using it.

Get in touch

If you want to know more, or would like some further information on cryptocurrency, please fill in your details below and one of the team will be in touch. Alternatively, give us a call on 0333 200 0714.