CRYPTOCURRENCIES CAN GIVE YOUR BUSINESS A LIFT

More can be done to promote digital currency

WHEN talking about money, one of the fundamental principles is how it can determine the wealth of a person or country. Money is, perhaps, the best recognised form of currency.

Another form of currency that is gaining recognition is cryptocurrency, a medium of exchange like normal currency, but digital. It is generated with a very high degree of data security.

Encryption is used to create units of cryptocurrency and verify fund transfers. A unit of cryptocurrency is digital, rather than a typical, physical unit of currency. It may be used without going through financial institutions, such as banks and credit unions.

The most commonly traded cryptocurrency to date is bitcoin, which may well be the next step in the evolution of the financial services industry. These days, a lot of financial technology companies featuring bitcoin payment systems are popping up and there will be many more in the future.

The bitcoin revolution has changed the business landscape. Bitcoins are created and held electronically. No one controls them and bitcoins aren’t printed. They’re produced by people and, increasingly, businesses, running computers all around the world, using software that solves mathematical problems. The price of a bitcoin is dictated by market forces and is the most popular form of digital currency.

Based on research by Coinmarketcap.com, the market cap for cryptocurrencies has surged to almost 800 per cent, which is US$158.5 billion (RM669.5 billion) this year compared with last year. The development of digital currencies must be supervised and synchronised with the tax system to prevent illegal transactions and money laundering.

Other forms of cryptocurrency include Ripple, Litecoin and Ethereum. Most forms of cryptocurrency have common features, including blockchain structures.

However, different types of digital coins are used for different purposes. A blockchain structure is one that is based on groups of transactions that are verified. A blockchain is a massive database that is always growing. There are cryptocurrency “miners” and these people perform complex mathematical processes to ensure that the transactions are valid. Data on digital currency transactions are kept in digital ledgers. An IBM report revealed that 15 per cent of banks use blockchain technology to help improve security, update real time and help in information sharing transactions across businesses and institutions.

If you’re an online entrepreneur, you should know that cryptocurrency can help your business grow. You may want to use it as a convenient and discreet payment option for your customers. Even if you don’t offer this payment option, it’s important to understand that your business rivals may do so (or may already be offering the digital currency payment option) and that digital currency is very appealing to certain consumers.

These days, niche industries are going global due to the evolution of various markets. With bitcoin, the world’s economy may be transformed. As it becomes a popular alternative for consumers, online entrepreneurs need to figure out how to best use it. In 2015, some 100 companies, such as Expedia (an online travel booking agency), PayPal and Ebay (credit card, payment processor, auction) and Amazon (an online company that sells almost anything) have accepted bitcoin as payment.

Entrepreneurs may want to consider adopting cryptocurrency for their businesses. However, they must proceed with caution. The price of a digital currency fluctuates based on market reactions.

For example, if a new and large company enters a niche, the price of bitcoins may change due to a larger player entering the fray.

Efforts to promote and raise awareness on digital currency have been carried out by the Malaysia Digital Economy Corporation and Malaysia Global Innovation and Creativity Centre , but more should be done.

Collaboration and engagement with entrepreneurs around the world will help Malaysian entrepreneurs be aware of the potential of cryptocurrency for their businesses. Adding a digital currency feature on a company’s website will give the company an ultra-modern edge, which is attractive to tech-savvy consumers.