How Cryptocurrencies are Helping Entrepreneurs
In a few short years, cryptocurrencies have completely revolutionised the way we think about transactions and finance. It has turned the traditional methods of transacting value on their heads. Thanks to this new and disruptive, decentralised digital money system, we are changing the ways that we make payments, invest, save, and raise capital.
There is a big interest in cryptocurrencies even though knowledge is still developing. Many entrepreneurs are thus delving into this industry, with new opportunities for their business growth, creating value. But how will 2018 pan out for those looking to harness the power of cryptocurrencies in their ventures?
Before cryptocurrencies, the process of an early-stage company raising capital could be cumbersome, difficult, and off-putting. That has all changed now cryptocurrencies are thrown into the mix. The concept of Initial Coin Offerings (ICOs) has enabled start-ups from every corner of the world. It is raising funds quickly and easily from a huge pool of international investors. The market’s reaction can immediately ascertain a company’s worth. There is a process which can be challenging and arduous for such fledgling businesses. In Initial Public Offering (IPO) shares are issued, while in Initial Coin Offering (ICO) tokens are being traded. Tokens bring a large amount of liquidity into the company almost instantly.
This new way of raising capital has completely revolutionised the sector. It has allowed some of the world’s best technical and innovative talent to remove time and money constraints, allowing them to grow their companies exponentially. Take for example, the founder of Ethereum. Vitalik Buterin was a mere teenager when he raised capital for his startup through the ICO process. Wanting to improve on the Bitcoin blockchain and envisioning a platform where other users could build and execute unstoppable applications, armed with a whitepaper and a dream he raised a whopping $18m. Today, Ethereum is valued at $100bn.
When you make a transaction with a cryptocurrency, it allows the individual to do so between peers and without the need for any centralised authority or intermediary. It thus offers a cheaper, faster, and much more efficient alternative to more traditional ways of making payments. If a company accepts cryptocurrency payments, they will see an increase in their efficiency as well as saving money on fees and decreasing the settlement time. What this means for the future is that startups will no longer have to go through the long and drawn out procedure of setting up a business bank account so that they can send and receive funds. The first company to accept bitcoin as a payment method was overstock.com which received an impressive $126,000 in bitcoin within the first 22 hours.
Holding for the future
Many entrepreneurs see cryptocurrency as a wise way to invest funds and hold them until the time is right. For many, it is the opportunity of a lifetime as traditionally, venture capital funds and private angel investors had a monopoly on access to investments in the worlds best up and coming projects and companies. Cryptocurrencies provide a gateway for anyone, anywhere to invest in any project of company that they so wish. It allows retail investors to hold a varied portfolio of high-growth and potential companies. Consider those that invested in Bitcoin back when it was a few dollars a coin- those people are now multimillionaires.
Building on the blockchain
The power of the blockchain offers a powerful network and infrastructure for companies to run technology and operational processes over the platform. It facilitates entirely new business models without the need to entrust data an information to a centralised authority. The blockchain is already changing the way that start-ups create value and the Ethereum platform is allowing companies to build blockchain apps quickly and free of charge. A good example of this is OmiseGO. This payment company has harnessed the power of the blockchain offering banking services for 2 billion global individuals who do not have access to a bank account. The blockchain provides a cost-effective solution. It allows the creation of decentralised applications (Dapp), scaled up to cater to the worlds’ population.
Becoming a part of the blockchain community
The community around blockchain technology pools together some of the world’s best, most disruptive, and most innovative entrepreneurs. Individuals investing, advising, and developing within the existing blockchain are setting an exciting outcome. Slack, WhatsApp, WeChat, and Facebook have all played an important part in building diverse communities of blockchain investors. These developers all integrate and converse on a daily basis. Investments in large tech companies can also happen in minutes. This procedure would take months or even longer if done using the traditional method of venture capital. In 2017, an ICO called Brace Basic Attention sold out of its $35million in 30 seconds- something that is completely unprecedented in the world of business.
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