It’s now clear that digital currencies are here to stay. They are making profound changes to the way transactions are executed and more and more people finally understand how they work and what kind of impact they have and what effect they’ll have in the future. We can rightfully say that digital currencies are digital gold for this age, and not only because there is some mining involved. To help you fully grasp the scope of impact that digital currencies will have on business, we’ve prepared the following list of aspects that have already undergone significant changes and that are expected to change even more in the future.
Cheap and faster transfers
In this time and age, when speed and promptness are so desirable, traditional banks can’t provide the kind of service that digital currencies allow. Namely, banks move money slowly and international money transfers can take a few days with correspondent banks. Next, there are challenges related to sharing of payment data across borders, something that digital currencies can completely eliminate. The use of several protocols enables us to transfer money from one currency to another securely, cheaply and quickly. This technology makes funds transfer across the globe a walk in the park and it normally takes just a few seconds. That’s why it’s quite likely that digital currencies will soon become a better alternative to debit card networks and ACH.
Security issues
It may come as a surprise to you, but developing countries also use sophisticated technology on a daily basis, including mobile money payment platforms to handle their transactions. It’s not only those living in developed countries that can use a mobile phone to send and receive money from other users. The fact is that this method is widely used all over the world, which makes it a good option for most businesses.
The role of digital currencies could be to substitute currencies used in high-inflation countries. Though digital currencies expose the citizens to certain risk regarding their value, it’s still a much better option for moving money, especially in comparison to carrying cash around. With the price of Bitcoin rising, it might be smart to invest in some of the best bitcoin mining hardware right now and earn Bitcoin that can be exchanged in the future for a more favorable price. Another benefit would be being able to do business without having a bank account.
Smart contract and programmable money
Once your asset is digitalized, you can move it in an easy and automated way. Since the levels of international transactions have been rising steadily, smart contracts are changing the way business is done by ensuring you get what you bargained for without risking your money. Namely, certain platforms make sure that the money is only disbursed when you have received what you have purchased. Also, the accounts may require authentication for more than one individual. With digital currencies, security is critical, but these platforms can also be great to ensure that you don’t lose money when making international transactions.
Boosting e-commerce
Numerous frauds revolving around credit cards are having a negative impact on online markets. As a result, some sellers are discouraged from offering their products and services online. On the other hand, you can’t undo a transaction with Bitcoins, which means merchants can conduct business without the fear of losing money. Furthermore, sending money is rather simple, which makes online shopping smooth and enjoyable, and we all know how important user experience is. Using digital currencies for online shopping allows even the smallest startups to easily engage in international business and accelerate their growth.
Transaction fees
Various transaction fees accompany every transaction that includes a credit card or a debit card. Nominally, such fees are not huge for big businesses, but small companies and startups may experience cash flow issues when the fees add up. On the other hand, digital currencies lower or eliminate the fees completely. The main reason is that the number of parties handing the transactions is reduced, thus allowing the transactions to be processed for less than 1%.
Acceptance and adoption
It goes without saying that technology will continue to develop at a rapid pace, which means that the impact of digital currencies is definitely going to be even bigger. Also, as more businesses adopt the technology, major shift in the market can be expected, as well. With the economy changing and entrepreneurs breaking away from traditional system, more suitable financial models will be adopted to make transactions seamless.
A radical revolution is highly likely to be experienced by the banking sector. Many banks are accustomed to traditional systems and now they need to adjust their modes of operation to fit in the market. On the other hand, there are some forward-thinking ones that have already incorporated blockchain technology in their operations, thus paving the way for the others and minimizing their operational costs. Also, companies offering mobile wallets and other payment services are continuing to penetrate the fields previously dominated by banks.
Disruption of traditional transactions
The popularity of digital currencies has been constantly improving and the benefits brought about them are becoming increasingly accepted. Next, the market transparency that comes with using digital currencies is one of the things that are influencing the trend. Most people using digital currencies find the public ledger an attractive feature that guarantees transparency, which is why companies offering traditional financial services need to become more transparent. Otherwise, they won’t be able to keep up with the changes.
In many ways, the implementation of digital currencies is still in its infant stages. However, at the same time, we can say that digital currencies have been around long enough to give us a clear picture of future trends. Traditional transactions will soon be replaced, especially as digital currencies become more stable. When it comes to business, only the companies that understand the impact and the opportunities provided by digital currencies will be able to survive in what will likely be an even more competitive business world.
