3 Reasons You Should Always Consider Crypto For Your Small Business

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While most people have heard of Bitcoin, only 10 percent of people understand how cryptocurrencies work, let alone how they came into being. While you don’t need to fully understand the technology, it is extremely important that you understand how cryptocurrencies can benefit your small business. Some of the benefits of “cryptos” for small businesses include improved workflows, lower operating costs, reduced fraud, and increased trust between vendors and customers.

As a backdrop, the creation of cryptocurrencies in 2009 was a direct result of the financial crisis of 2008. This crisis developed in large part due to years of questionable promotion and use of financial instruments such than underfunded credit default swaps, subprime home loans and mortgages. – backed titles. Traditional banks, investment firms, and financial institutions have driven these assets up and down, causing the US economy and others around the world to fall.

To avoid a complete economic collapse, it took hundreds of billions of dollars in bailouts and artificial interest rate resets to zero or less, thanks to central banks around the world. These Herculean efforts were made to support economies and save large banking institutions deemed “too big to fail”.

The emphasis by policymakers and central bankers on safeguarding Wall Street from mainstreet small businesses and retail investors has shown how federal fiscal weaknesses and poorly managed monetary policies can lead to serious fallout. geopolitics. We’ve all seen it and none of us wanted it to happen again.

In the process, an alternative monetary model was created. It was intended to benefit individuals and give us a chance to fight against “smart money” and the capital constraints of large banks and large finance companies.

Cryptocurrencies came into being following the publication of a white paper presenting Bitcoin and how it works. Built on a tamper-proof blockchain to prevent fun financial affairs, cryptocurrencies hold the promise of financial freedom and tax equality for adopters. Cryptos have many features which include: eliminating the need for third party controllers such as banks; instant transaction settlement times; significantly lower transaction costs; and low friction transfers to anywhere in the world with an Internet connection.

Virtually any small business can find value in these crypto advantages.

Despite the volatility within cryptocurrencies, the underlying fundamentals supporting their use case and value remain. Consider these three macroeconomic trends that aren’t going to go away anytime soon:

Governments continue to print money at record rates.

The US Federal Reserve authorized the US Treasury to increase the printing of US dollars in February 2020. Since then, the total money supply (M2) has increased by 31% in less than 18 months to reach $ 21 trillion in circulation. . It is not necessary for a Nobel laureate in economics to know that when money is printed and injected into markets in ever increasing quantities, the result is an ever lower value for every individual dollar.

Cryptocurrency stablecoins such as USD Coin and Dai are pegged to the US dollar but have remained stable despite dollars flooding the markets. Right now, your unused stablecoins left on a cryptocurrency exchange – a desktop or mobile app for buying and selling digital coins / tokens – can generate annual returns ranging from 4% to 12%, which is a solid rate of return for any small business.

Inflation continues to rise and the cost of goods increases.

Last month, the US Bureau of Labor Statistics reported that June’s inflation rate rose 5.4 percent. This is the largest year-over-year increase since 2008 in the price of consumer goods. Critics often denigrate the Consumer Price Index as an inaccurate measure of “real inflation” because it is based on changes in the cost of a basket of goods and services, but politicians have randomly changed the composition of this basket over the years. It is not a consistent comparator.

Despite these flaws, it’s hard to ignore June’s 5.4% jump – on top of the 5.0% increase we saw in May 2021. These numbers exclude the double-digit increases we have. observed in the prices of houses, used cars and gasoline. at the pump. As a small business, you are on the front lines of inflation with few options for protection. However, due to its scarcity of just 21 million tokens, Bitcoin is a viable inflationary hedge that can easily be bought or sold in fractional amounts for small businesses that might need quick access to cash.

Unbanked consumers are turning to cryptocurrency.

Many people take things like chequing accounts, employee simplified pensions, Roth IRAs, and secured loans for granted. Currently, there are over 1.7 billion people in the world who do not have access to any of these financial options, not even a basic savings account.

Whether because of political corruption, local laws against such services, or unreliable infrastructure, the “unbanked” have virtually no banking or financial choices. The lack of financial infrastructure opens the door for virtual currencies and digital wallets on mobile devices, which avoid intermediary institutions and corruption. Consider that last month El Salvador granted Bitcoin status as legal tender in that country. Its president, Nayib Bukele, led the charge of this initiative to help economically the 70 percent of the population of his country who are unbanked.

The world is shrinking as global consumer access expands for small businesses – cryptocurrencies are part of this expansion. Cryptocurrencies eliminate foreign exchange fees, wire transfer fees, and allow almost instant payment settlement wherever your customer lives. Once plugged into cryptocurrency, hundreds of millions of unbanked consumers will likely welcome crypto-friendly businesses like yours. You can prepare your business now to embrace that future.

Many mainstream media focus on the fear, uncertainty, and doubt – commonly referred to as “FUD” in crypto circles – associated with cryptocurrencies. It is extremely important to remember that Bitcoin did not create these negative geopolitical conditions and circumstances. It was created as a possible alternative solution. Cryptocurrencies are worth considering for small businesses, as politicians and financial power brokers continue to look after their own interests rather than yours.

Disclosure: I own a modest amount of Bitcoin, Ethereum, Cardano, and XRP.

The opinions expressed here by the columnists of Inc.com are theirs and not those of Inc.com.

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