What comes to mind when you hear the term cryptocurrency? For some of you it still all sounds like monopoly money, but I assure you it is very real and becoming more and more mainstream by the day. In order to start on the same page, we’ll use investopedia.com’s cryptocurrency definition: “a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.” There are thousands of different digital currencies in existence, but the one you’ll be most familiar with is called Bitcoin. Bitcoin was invented in 2008 and has had a slow rise in popularity since then.
When Bitcoin first came into the national consciousness it was more like an online scavenger hunt that it was an actual currency. However in the decade since it’s creation bitcoin and other cryptocurrencies have become essential players in the transaction of money between businesses.
There is still some concern in the business world about the reliability of cryptocurrency. I am sure it will take decades of data to convince individual investors of the viability of this currency. In the meantime, businesses are using cryptocurrency today to make business-to-business transactions. Here are a couple of reasons this mode of payment is attractive to business leaders around the world.
Unlike a traditional cash system, Cryptocurrency has no borders. This means that money transferred from a company in India to a company in the United States does not need to undergo the hassle of currency conversion and exchange rates. This completely eliminates certain fees making the transfer of money more cost-effective.
Additionally, the completely online model of cryptocurrency ensures that payees receive their money immediately. Without the need for paper checks or wire transfers, the processing time and additional fees are nearly eliminated.
Some people have concerns about the security of digital money. I understand why you might feel this way about a technology that is unknown to you. But, I assure you it is more secure than the cash system we currently operate under. It is possible for hackers to steal bitcoin, but it’s also possible for hackers to steal money right out of your bank account, or thieves to steal money right out of your safe. People will always find ways to steal, but the blockchain technology used to track cryptocurrency exchange makes hacking very difficult.
There was a time when some businesses didn’t take credit cards because it seemed too risky. There was a time when we never could have imagined purchasing things online and putting our personal information out into the digital unknown where it could be stolen. And now there are many of us who can’t imagine cryptocurrency becoming mainstream.
The banking industry can tend toward the more conservative side of the spectrum. And when we fail to adjust to the times, the people move on without us. I believe that we, as the financial institutions that people trust, can change that script and lead the way when it comes to new technology and innovative ways to serve our customers. Whether we like it or not, cryptocurrency is here to stay, our challenge is to adapt and lead in every new phase of the financial landscape.
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