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A growing number of businesses all around the world are adopting bitcoin (well, it is the first and most famous digital currency created back in 2009) and other cryptocurrencies or known as digital currencies for a variety of transactional, operational, and investment needs. Yet, there are great incentives as well as unknowable risks too.
Explore what are the insights for businesses to consider whether and how to use these digital assets.
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The following statements do not constitute investment advice or any other advice on financial services, financial instruments, financial products, or digital assets. They are meant to provide general information only.
But first, why should you consider using cryptocurrency for your business?
Here are some of the reasons why some businesses are currently using cryptocurrency:
Cryptocurrency may allow access to new demographic groups. Users are frequently clients who value transparency in their transactions. According to one recent study, up to 40% of customers who pay with cryptocurrency are new to the company, and their purchase amounts are twice those of credit card users.
Introducing crypto now may help raise internal awareness in your company about this new technology, which may be useful in the future when the market is ready for digital bank currencies.
More businesses are discovering that important clients and vendors want to engage using cryptocurrency. To ensure smooth exchanges with key stakeholders, your company may need to be prepared to receive and disburse cryptocurrency.
Is cryptocurrency the future of money, or just another long-term scam?
As of March 2022, there were over 9,000 other cryptocurrencies in the market, with over 70 having a market capitalization greater than $1 billion. Analysts predict that by 2030, the global cryptocurrency market will reach nearly $5 billion in value.
Investors, businesses, and brands can't ignore the rising tide of cryptocurrency for long, whether they want to or not. However, you may go through the pros and cons of cryptocurrency before purchasing your first bitcoin or other cryptocurrencies for your business.
Pros | Cons |
High-risk investment, which has the tendency to experience sudden spikes (and drops) in value. | Understanding cryptocurrency takes time and effort. |
The blockchain technology underlying cryptocurrencies is inherently secure. No hacker can access the entire chain in one go, and any information stored in it is safe for good. | The cryptocurrency market is built on speculation, and its small size makes it more vulnerable to price fluctuations. This, in turn, can have a negative impact on coin value. |
Cryptocurrencies offer an alternative to traditional banks. They can be viewed by anyone and anywhere, so you can take part in the financial markets and make transactions with no intermediaries whatsoever. | Cryptocurrencies have yet to be proven as a long-term investment if compared to stock markets and gold, which have already proven themselves for decades. No one knows what will happen to cryptocurrencies in the future. You need to be brave to enter these uncharted waters as an investor. |
The crypto markets are always open. So, for investors who are on the go 24/7, crypto might be the best way to generate returns outside of normal working hours. | Cryptocurrency providers admit that the technology has serious scalability issues where the blockchain has reached "certain capacity limitations" that slow the rate at which transactions can be processed. This can be a frustrating experience for transaction participants, let alone the potential financial losses. |
How to use cryptocurrencies in your business?
Cryptocurrencies can help your business to increase revenue, expand financing options, increase savings, and accumulate no-risk rewards. Some of the highlights are customers can pay in cryptocurrency, also getting a crypto loan.
Including cryptocurrency in your list of accepted payment methods provides several benefits, including lower fees. Accepting cryptocurrency could reduce your fees to less than 1% when compared to traditional credit card payments, which typically cost businesses 2% to 4% per transaction.
On the other hand, a crypto loan may be a good financing option if you're looking for alternatives to traditional lending (perhaps in near future). To qualify for a cryptocurrency loan, you must own some of it and maintain a certain loan-to-value (LTV) ratio. You can use your digital assets as collateral to receive cash or a stable coin instead of selling them.
Since cryptocurrencies have become popular enough that many businesses and individuals now use them, efforts have been made to develop software that will make them easier to access and use. Recently, there has been the development of a wallet app where it allows businesses to easily store the funds that they receive.
We also anticipate that within the next three to five years, or possibly as early as next year, Malaysian businesses would use cryptocurrencies. It would be beneficial for them to try this out as the participation rate is still low and cryptocurrency is expected to soar in value. Numerous new kinds of companies will also be visible (such as digital banks or crypto loans).
You can check the list of registered digital asset exchanges in Malaysia here: https://www.sc.com.my/regulation/guidelines/recognizedmarkets/list-of-registered-digital-asset-exchanges. To know the secrets of crypto-related business in Malaysia, stay tuned for more fresh sharing from us.
Interested in expanding your business with digital marketing? Contact our dedicated team at Asia Digital Media MY for consultation on how digital marketing can help your business grow - tap here to know more.
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