Digital currencies are changing how transactions are handled and although they’ve been here for a while, people are still trying to understand the impacts. If you are like most people, you probably know that digital currencies are considered digital gold for this age.
For most entrepreneurs, it’s important to pay special attention to ensure you have a good chance to keep up with the competition.
Cheaper and faster bank transfers
Today, banks move money slowly and international money transfers can take a few days with correspondent banks. There are also challenges with sharing of payment data across borders but digital currencies are set to make money transfers an easy process.
With the use of several protocols, it’s possible to transfer money from one currency to another securely and cheaply. This technology makes funds transfer across the globe a walk in the park and it can happen in a matter of seconds.
The distributed ledger technology makes transactions to be made in real time. Soon, digital currencies may become a better alternative to debit card networks and ACH.
Secure payment option for poor people
The mobile technology has taken developing countries by storm and this has proved that developing countries in Africa can handle sophisticated technology in day to day life. At the moment, more than 50% of all daily transactions in Kenya take place through MPESA which is a mobile money payment platform.
As long as you have a mobile phone, you can easily send and receive money from other users on the platform. While there are charges associated with mobile money platforms, the fact that its widely used makes it a good option for most businesses.
As such, digital currencies are quickly becoming a game changer for people without conventional currencies. Despite the fact that using currencies like bitcoins may expose the citizens to currency risk, it can be a good option for high inflation countries. Basically, having digital currency is a safer way of moving money as opposed to carrying cash around.
With the current trends, buying some bitcoins is a worthwhile investment and it can be exchanged at a better price in future. This not only opens doors to the global financial currencies even for people without bank accounts.
Smart contracts and programmable money
When an asset has been digitalized, you can move it in an easy automated way. With the rising levels of international transactions, smart contracts change the way business is done by ensuring you get what you bargained for without risking your money.
With platforms like Escrow and Multisig, the money is only disbursed when you have received what you have purchased. In addition, the accounts may require authentication from 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.
Online markets are marred with fraud revolving around credit cards and this makes some sellers turn away some business. The fact that you can’t undo a transaction with bitcoins makes it possible for merchants to conduct business without the fear to lose money. Besides, sending money is as simple as sending an email which makes online shopping smooth and enjoyable.
This means that a small startup can easily engage in international business and accelerate their growth.
Every time you are paid through a credit card or a debit card, you have to deal with the transaction fees. While the fees are not huge for big businesses, a young startup may experience cash flow issues when the fees add up.
Digital currencies are a smart option that can lower or eliminate the fees completely. Under normal circumstances, the transaction will be processed for less than 1% since the number of parties handling the transactions has been reduced.
Adoption will continue to grow
The impact of digital currencies is being experienced now and the technology is getting better. As more businesses adopt the technology, major shift in the market as it becomes a basic application. As the economy changes and entrepreneurs break away from traditional systems, better financial models will be adopted to make transactions seamless.
The banking sector has a higher probability to experience a radical revolution. As such, banks that are accustomed to traditional systems will have to adjust their modes of operation to fit in the market. However, some banks like Barclays have already incorporated blockchain technology in their operations which is an amazing way to minimize operational costs.
Startups offering mobile wallets and other payment services are continuing to penetrate into a territory that has been formerly dominated by banks. Even the growing markets, most banks seem to struggle with adopting the technology.
Disruption of traditional transactions
Digital currencies have constantly improved its popularity and its set on a path to change the way transactions are handled. The market transparency that comes with using digital currencies is among the things that are influencing the trend. For most people using digital currencies, the public ledger is an attractive feature that guarantees transparency.
With this trend, companies offering traditional financial services have to become more transparent or lose their market share to companies that can adapt.
Companies that offer online loan services will be better positioned to serve their customers better thanks to the blockchain technology. The full implementation of the currency will ensure you receive your loan easily and quickly. In addition, the cost of borrowing will become lower as the operational costs decrease.
While the implementation of digital currencies is still in its infant stages, it has developed quickly and may soon replace traditional transactions. Over the years, the digital currencies have become more stable and they have a chance to become a symbol of currency stability.
In business, you need to adapt to the prevailing conditions in the market lest your business gets overtaken by events. If you haven’t considered getting ready to incorporate the digital currency innovation into your business, you might not be prepared for the future of business transactions. Besides, it’s likely your competition is accepting digital payments.