The value of one bitcoin recently hit a record high of 5,500 U.S. dollars, a staggering rise of over 200% in value this year alone. So, if you haven't been paying attention to the rise of cryptocurrencies and the underlying blockchain technology, it's time to take notice.
If it's still a foreign concept to you, cryptocurrency is simply any form of currency that is decentralized, and strictly digital. With cryptocurrency, there is no need for intermediaries such as banks, and the currency can be exchanged between parties without oversight or mediation. Although bitcoin is the most well heard of, many others have entered the game, and it seems that cryptocurrency is on the rise.
The technology that makes bitcoin (and similar cryptocurrencies) possible is called blockchain. Blockchain technology can be used for far more than just cryptocurrencies, but we'll get into that later. Let's start with the basics:
According to Don & Alex Tapscott, authors Blockchain Revolution (2016) “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Think of it like a Google Doc. Say you have a document shared with several other people. You all have access to this document from your individual computers, and any time someone makes an edit, it updates on all of your documents simultaneously. Similarly, the information in a blockchain is held in a shared and continuously updated network, with no central database. This means that the information held in the blockchain is public, easily verifiable, and most importantly cannot be corrupted by hackers.
Why should businesses care about cryptocurrency?
Thought it's still relatively new, its looking like cryptocurrency is here to stay. So from a business standpoint, getting in on this early could have huge advantages.
For one thing, blockchain and cryptocurrency is currently operating outside of government control. However, this won't last long. Governments around the world are buying in on cryptocurrency, which means that it is important to act now to fully capitalize on all of the benefits of cryptocurrencies.
There are still a lot of new cryptocurrencies popping up in the market, despite the fact that most people have only heard of bitcoin. In fact, there are currently over 1,200 different cryptocurrencies in circulation. These smaller players have the potential to grow as big as bitcoin, so knowing about them and getting in early could pay off (literally) in the long run.
There are also many annoyances that come with regular financial institutions, such as transaction fees and delays. Because digital currencies are not owned by anyone, there are no fees or overhead attached to making transactions.
Though cryptocurrency is still in its infancy, many people see it as the currency of the future, and we are seeing an increase in it's growth and adoption everywhere. It has in fact become a legitimate global currency in many places such as Singapore, India, China and Russia, who have all moved to adopt their own digital versions of their currencies. We are also seeing an increase in consumer awareness and use of cryptocurrencies as people begin to realize that they will benefit from this method of payment too. Because of this, companies who are aware of this trend now will have a huge leg up in the future, and know how to make the transition to cryptocurrency as a mainstream method of payment.
What's the deal with blockchain?
Blockchain technology has huge potential to impact not only financial transactions, but a whole host of other industries. Several large companies are already investing in blockchain technologies. For example, Walmart, Nestle and IBM have teamed up with the goal of using blockchain to maintain secure digital records and improve their data management processes across a complex network that includes farmers, brokers, distributors, processors, retailers, regulators, and consumers.
Blockchain has huge benefits for small businesses as well. By allowing for smart contracts, which are drawn up and executed by decentralized communities, blockchain cuts the middlemen out of the picture and reduces the costs and inconveniences of doing business. Companies like Slock, which is an internet-of-things platform, is already using smart contracts so that customers can rent anything, from bicycles to apartments by unlocking a smart lock after both parties agreed on the terms of the contract. Other examples of how blockchain can be used for small businesses include networking and IoT, managing digital identity, and distributed cloud storage.
As you can see, even though blockchain was originally created and used for bitcoin, it's potential goes far beyond cryptocurrency. Being aware of it's uses will allow businesses to stay ahead of the curb, and find ways to incorporate these up and coming technologies into your business before it hits the mainstream.