The value of most cryptocurrencies, especially Bitcoin, has increased greatly. It peaked at an all-time high of $64,000 in May 2022. These increases in cryptocurrencies have prompted many investors and business owners to navigate into the crypto world more than ever.
The digital currency is not regulated, which has brought about some speculations about it. Still or it is still difficult to neglect the market with the tremendous benefits it holds.
In this article, we will be sharing some crypto facts that businesses should know.
It Doesn’t Require a Middle Man
Cryptocurrencies take the middleman from the business deals as it requires just the sending and receiving party.
The coin is not subject to any government agency. There are no hidden transactions and additional fees. Using cryptocurrency is also cheap and easy to use for international payments as it is not subjected to any government agency.
Bitcoin works under blockchain technology, a digital ledger where all the Bitcoin transactions are recorded, and records are available for people to see. All online ledgers of transactions are also stored in it and cannot be manipulated.
Using Cryptocurrencies Can Be Risky
Trading cryptocurrency or using it for business is risky as you can lose all you have in minutes. This is because bitcoin is autonomous and not regulated by any regulating body. It is also volatile.
For example, the cost of Bitcoin dropped very much in the past months, only to set a new record in the next few weeks. It dipped again at the beginning of 2018 and presented in October 2021. The coin has reached a new high of over $63,000.
What will happen if you sell your goods at a particular price before the market drops? That automatically leads to a loss.
Cryptocurrency price is unstable and cannot be predicted. The price movement is one of the greatest risks in trading bitcoin because many factors can influence the price.
One of them is increased regulatory scrutiny. In the future, if the regulations get very stiff, it could lead to the fall of the value of bitcoin and other cryptocurrencies.
Meanwhile, most businesses and companies are offering crypto exchange services for their services. In more severe cases, some investors have even been stuck with cryptos that they cannot withdraw.
For this reason, the Financial Industry Regulatory Association advises investors in ICOs to ensure that their trade includes how they can get back their money if they can withdraw in tokens for refunds or resell the coin in another market.
The unregulated nature of the market makes recovery of funds due to theft or fraud rarely possible. So business owners need to have ICOs or understand the risk involved before going into crypto trading.
Your Business Reputation Can Be at Risk
The fact that cryptocurrency can be anonymous and regulated is good, but this can also affect the reputation of your business. Imagine what happens when the digital wallet of your business is hacked, or the tokens are stolen.
You may lose your customers and company reputation, especially when you are supposed to send money to your clients.
Since cryptocurrencies depend on blockchain technology, it is supposed to make them safe from theft, but nothing is 100 percent protected. The truth is that hackers can gain access to your digital wallet and buy with all your tokens, which can affect your business negatively.
Price May Keep Increasing
Legitimacy is now seen as one of the main causes of the rise of crypto. Before, no one wanted to talk about cryptocurrencies. But now, even morning shows are chanting the crypto market.
Bitcoin experienced a great boost when Japan legalized it as a legal method of payment. Even El Salvador has now taken Bitcoin as a legal tender. This news keeps leading to a rise in the price.
Other factors such as cryptocurrency fundraising have been introduced. People now started fundraising by selling bitcoins instead of stocks and making a lot of money from it.
Another reason why crypto prices may keep increasing is the hard fork. A hard fork occurs when a blockchain is broken into two after the introduction of a new rule.
When this happens, previous transactions remain on both coins, while new transactions do not. Check Invezz for more details.
Bitcoin cash is a typical example of a hard fork. The coin created millions of dollars when released.
The new financial opportunity crypto has created and how it keeps meeting new highs has made it very popular with investors and business owners.
It is not surprising that cryptocurrency will become the new financial breakthrough. However, one has to be careful when trading to avoid any massive loss.
As investors, you have to balance your chances of winning versus losing all your funds.
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