How Bitcoin Can Help Businesses Embrace Digital Transformation
Financial transactions have undergone a revolution in the past years. With preferred payment methods leaning more and more towards digital currencies, it is clear now that Bitcoin and cryptocurrency play a significant role in the digital transformation of businesses.
As one of the most successful entrepreneurs in the world said: “Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient”. These words were said by Bill Gates, co-founder of Microsoft, investor and philanthropist, and an advocate of Bitcoin, crypto, and the main reference on digital transformation.
One of the main ways in which businesses can utilize Bitcoin for digital transformation is through the use of Blockchain technology. Blockchain technology is pretty versatile and can be used in many industries. Some of the adoptions include:
Blockchain is being used in the banking sector, due to its high security and impenetrability. What is more, it makes transactions faster, and more transparent.
One of the early adopters of blockchain in this area is the investment bank, J.P. Morgan. The bank representatives believe that:
“J.P. Morgan has been an active player in the blockchain ecosystem. Our blockchain solution allows them to reduce the payment processing and verification time for large payments.
By leveraging Confirm — a global account information validation application on the blockchain by J.P.MorganSM — partner banking institutions, including Taiwan banks, will be able to request confirmation of the beneficiary account information and receive responses directly from other participating banks receiving the requests in near real-time. Once the information is validated, the payment may be sent through J.P. Morgan’s global clearing solution”.
One of the sectors that experts believe Bitcoin and blockchain can have a major impact on is the Supply Chain industry. All manufactures and consumer products need to be produced, shipped, and reach the shelves of retailers, whether brick and mortar stores or online e-commerce platforms. Supply chains today account for massive amounts of data processing and transactions made using different currencies.
According to McKinsey, blockchain and Bitcoin can actually improve both processes by default, identifying three key aspects:
- Replacing slow, manual processes. Although supply chains can currently handle large, complex data sets, many of their processes, especially those in the lower supply tiers, are slow and rely entirely on paper — such as is still common in the shipping industry.
- Strengthening traceability. Increasing regulatory and consumer demand for provenance information is already driving change. Moreover, improving traceability also adds value by mitigating the high costs of quality problems, such as recalls, reputational damage, or the loss of revenue from black- or grey-market products. Simplifying a complex supply base offers further value-creation opportunities (see sidebar, “A complex supply chain of unknown parties”).
- Reducing supply-chain IT transaction costs. At this stage, this benefit is more theoretical than actual. Bitcoin pays people to validate each block or transaction and requires people who propose a new block to include a fee in their proposal. Such a cost would likely be prohibitive in supply chains because their scale can be staggering. For example, in a 90-day period, a single auto manufacturer would typically issue approximately 10 billion call-offs just to its tier-one suppliers. Also, together all of those transactions would significantly raise demand for data storage, an essential component of blockchain’s distributed-ledger approach. In addition, creating and maintaining numerous copies of data sets would be impractical in the supply-chain environment, especially in permissionless blockchains.
Again, accurate record-keeping, security, and transparency are key in the healthcare sector, whilst dealing with highly sensitive personal data. Hence why, the technology has found its use in this area, too. According to NewsMedical: “Blockchain can create a single system for storing, constantly updated, health records for secure and rapid retrieval by authorized users. By avoiding miscommunication between different healthcare professionals involved in caring for the same patient, innumerable mistakes can be prevented, faster diagnosis and interventions become possible, and care can be personalized to each patient”.
What about Bitcoin itself? Why consider using Bitcoin or another crypto for your business?
As per a study done by Deloitte, “more than 2,300 US businesses accept bitcoin, according to one estimate from late 2020, and that doesn’t include bitcoin ATMs. An increasing number of companies worldwide are using bitcoin and other digital assets for a host of investment, operational, and transactional purposes”.
The study has concluded with a list of things that crypto can do for businesses. According to Deloitte, the benefits of crypto include:
- Crypto may enable you to reach new clientele. One recent study found that “up to 40% of customers who pay with crypto are new customers of the company, and their purchase amounts are twice those of credit card users”.
- Introducing crypto as soon as possible could raise awareness of the technology in the company and, in turn, position it as a pioneer in this important space for a future that could include central bank digital currencies.
- Some innovation options are simply not available with fiat currencies. For example, “programmable money can enable real-time and accurate revenue-sharing while enhancing transparency to facilitate back-office reconciliation”.
- Simple, real-time, and secure money transfers.
- Crypto could work well as a hedge against inflation. Volatility issues need, of course, to be taken into account.
Can I pay my employees in Bitcoin?
Recently, the news came that the Atlanta-based cryptocurrency payment processing company Bitpay launched Bitpay Send, “a mass payout service that enables organizations of all sizes to pay employees, affiliates, and freelance contractors”. Its aim is to help employers and other types of organizations to pay workers in crypto. And although this way of paying employees is still not easy and requires some further development of the infrastructure around it, the demand is growing.
Why crypto matters to digital transformation
Collaboration; Internet of Things; Data — Safe, encrypted, and fast-flowing data. Fast, collaborative, payments. With cryptocurrency, “there is an ever-increasing level of connectivity. Everyone on the blockchain network is connected”.
From the discussion above, it is evident that both cryptocurrency and blockchain technology is going to play a pivotal role in the digital transformation of companies. Although traditional banks still exist, and they will likely exist for a long time to come, they, too, are embracing the new tech. If you have a business that could benefit from adopting the new paradigm, do not wait much longer.
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