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While the fully decentralized, Bitcoin-only future hasn’t yet materialized, 88% of businesses predicted significant growth in the next decade towards B2B payments using Distributed Ledger Technology (DLT).
Many signs point to the wisdom of those predictions. Already between 2014 and 2020, B2B blockchain and cryptocurrency payments grew in usage by 40%. They are expected to increase by 21% between now and 2030, as businesses increasingly favor an innovative payment approach with many benefits, including the option for a single or integrated payment with enhanced protection and privacy.
Distinguishing Fact From Fear
While investors cannot ignore the cryptocurrency crash that occurred on May 9th, which was the largest in recent history, it is important to understand the causes underlying the crash. Experts attribute the crash to macroeconomic factors such as a tightening money supply, inflation, rising interest rates, and new regulations–all of which drive concerned investors to withdraw from the crypto market, thereby lowering the prices. Keeping a close eye on these larger trends is crucial to understanding the past and predicting the future of crypto.
Although the crypto space is understandably surrounded by plenty of hype and speculation, those who wish to make the most of it should keep a level head and remember some tried and true investing principles.
These include strategies such as:
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“Set it and forget it”: avoid checking investments during volatile market dips.
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Avoid selling too fast.
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Invest in crypto after having taken care of other financial priorities.
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Remember that such fluctuations have happened before, in all asset classes.
When integrated into a well-planned investment portfolio, crypto investments can deliver rewards that are well worth the perceived risks.
While some companies still remain shy of this high-tech method for transferring funds, it will be increasingly hard to distinguish resistance based on fear and inexperience from valid, technological reluctance. Learning about the industry and setting up safe processes from the beginning will ultimately lead to the improved financial freedom necessary in a changing global economy. The perception of Bitcoin as a bubble phenomenon is waning; both Millennials and Generation Z, who are quickly taking over the market share, increasingly prefer its usage.
In the creator economy of emerging independent technological micro-entrepreneurs, using blockchain and crypto assets will become the preferred method for transferring funds between companies and a source of quick and handy income that will become an alternative for many industries. Not only that, but digital ledgers have the potential to become useful for much more.
What is Blockchain and What Are Its Benefits?
In essence, blockchain technology records and transmits records of transactions by a code-based system of complex cryptography, eliminating the need for mediation by central banks or third-party entities. All blockchain-enabled transactions are made transparent and validated through a proof-of-work mechanism that protects data from being lost or altered, rendering the role of supervising intermediaries obsolete. It is primarily used for the exchange of cryptocurrency, the most famous of which is Bitcoin.
There are numerous clear benefits to using this form of payment for inter-business payments. Once a user has submitted a payment, a digital “block” is created, which scrambles the information being distributed on the network, encrypting the transaction. The “block” must then be unscrambled by competing computers which must provide verification within the network, including information such as the confirmation of funds, the credibility of both sender and receiver, and the legitimacy of the request. Only then is the transaction authorized and recorded in the digital ledger, updating instantaneously.
This instills a greater sense of security and privacy while providing complete transparency with financial transactions. Bitcoin-enabled payments could accelerate payment processes by cutting out the need for banks, which can take up to five days for international transfers, and prevent “false positives” and fraud. It also has the potential to lower costs and translate universally into greater financial freedom and inclusion.
Going International
The freedom with which cryptocurrency can be exchanged makes the technology particularly appealing for doing international business. Especially for remote countries, such as seen with increasing usage on the African continent, the usual financial roadblocks such as costs incurred for currency exchange and the amount of time and information required for money transfers is instantly eliminated, making the process 96% faster. Additionally, making a number of smaller payments across borders is simply more efficient with crypto, a capacity that could soon diminish the barriers to more international business.
Cutting Costs
By eliminating the need for wire transfers, credit cards, and currency exchange fees, Blockchain lowers the potential revenue lost through electronic payment by 75%. Blockchain charges a 10 cent fee and Bitcoin a one-time $50 charge for use of its services. This is a significant cost-saving alternative that companies would do well to take advantage of.
Cutting Out the Middleman
The decentralization enabled by the blockchain means that a company maintains control of its funds at all times. This allows for payment between smaller businesses and larger ones, the former of which might not otherwise be able to afford repeated transaction fees with banks. Additionally, it’s possible to pay large amounts of separate invoices in different cryptocurrencies at once. The end result is a more inclusive economy, and ultimately more business opportunities.
Enhanced Peace of Mind
For the savvy business owner, placing funds in a system that was created to ensure security, privacy, transparency, and the inability to tamper with data is a smart payment solution. These firm receipts and transactions create more trust between companies who frequently do business with peer-to-peer transactions.
As an added benefit, exploring the other functions of the “Web3 universe” with DLT means that businesses can take advantage of added features like joint records of transaction, which makes future audits a non-issue.
Investment in the Future
Cryptocurrency and digital wallets are becoming a favored method of capitalizing on stored funds and investments. Leaving a company’s cryptocurrency in a digital wallet enables them to earn up to 10% of saved interest. On a much larger level, the removal of institutional gatekeepers means a freer market founded on the stability of a single currency.
Growth in blockchain and cryptocurrency technology for use in B2B payments will continue to accelerate and form a large portion of the economy, making the adoption of this payment transfer system essential for the future of any company wanting to stay on top of innovation and the limitless possibilities of market trends from 2022 onwards. A careful investment strategy and a keen understanding of macroeconomic trends will help investors make the most of these possibilities.
Author Bio
Patrick Parker is a five-time tech founder and the CEO of SaaS Partners. From business ideation to product development to building scalable marketing strategies, SaaS Partners is a support system and launch pad for entrepreneurs.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.