The development of technology has led to exciting innovations across several industries. In the case of cryptocurrency, however, the number of applications it has is seemingly endless. Despite the potential of crypto, most people still don’t know what is or how it works. Only an estimated 14% of Americans invest in some form of cryptocurrency, showing that by large, the public is not yet invested in the idea of crypto. Despite its relatively low presence in the mind of the public, businesses are already using cryptocurrency freely. This is most evident by how Tesla invested $1.5 billion into Bitcoin, public backing the popular cryptocurrency.
But what is cryptocurrency, and why are multi-million-dollar businesses investing in it? In essence, it is a virtual currency that is encrypted by cryptography, meaning that it is very hard to counterfeit. The advantages of crypto are numerous, but similarly, they also have their disadvantages. On one hand, cryptocurrencies have the benefit of transferring funds directly between parties, cutting out middlemen like banks and credit card companies. These are all accomplished with minimal processing fees which means that there are no fees charged by banks. For the commercial user, this is great as it works out to paying less for things that are bought every day. On the other hand, the anonymous nature of crypto encourages illegal activity such as money laundering and using it to pay for illegal products. Conversely, this anonymity is often claimed to be an advantage from most advocates.
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Businesses are steadily beginning to understand the wide range of applications cryptocurrency presents. For example, using it to pay employees could prove a valuable alternative to the traditional bank transfer. As already aforementioned, using crypto cuts out the banks which effectively saves both the employer and the employee money. This can only be a good thing and it would not be surprising to see this practice commonplace in the future. In addition, paying people in different countries would not be the hassle it is now as cryptocurrency allows instantaneous transactions globally with very low or no fees.
Alongside cryptocurrency also exists the idea of blockchain technology. A blockchain is an electronically distributed ledger that is maintained via a network of computers. Like crypto, it utilises cryptography to secure and verify transactions, which causes improved transparency and trust. The technology is already being used by players such as the gambling industry. When a player deposits to play on the newest slot machines, the transfer of money from player to business is instant as the blockchain immediately verifies the transaction. This real-world application is indicative of how useful blockchain technology can be and is telling of how much it will be adopted in the future.
More and more businesses are adopting crypto as a valid alternative to using cash due to the inherent benefits it provides. It will be interesting to see in the near future how the technology evolves and is adopted.
