A lot of people wonder what exactly cryptocurrency is and how it’s used. Cryptocurrency is a lot like dollars or other currencies but it is a digital medium of exchange. The difference – advantage or disadvantage depending on how you look at it – is that digital transactions are made in encrypted blocks without any intermediary, unlike traditional exchanges where, for example, the bank acts as an intermediary. And these digital method transactions occur anonymously, thanks to the use pseudonyms.
The first cryptocurrency that came to market, and the most famous and widely accepted today, is Bitcoin, which is now one of the most important and fastest growing cryptocurrencies. In its early days a Bitcoin was worth only a few cents. Today, one Bitcoin is roughly equivalent to about $575. And Bitcon is no longer alone, other currencies have come to market including Etheriu and Litecoin, which have gained attention from the public and medium, large and multinational companies.
Initially, cryptocurrencies were being widely used for illicit business. One of the most notorious cases was Silk Road, an online black market where drugs could be readily purchased that saw transactions worth over $ 1.2 billion in just 2.5 years. But without being alarmist, it should be remembered that these type of scandals also occur within more “traditional” transactions as well.
On the positive side, cryptocurrency has many advantages that are attractive to the businesses that increasingly getting onboard with this digital medium of exchange. How can digital currency be beneficial for a company? Used well, cryptocurrency can grow both your market and help expand into others:
- It is incredibly easy to make a transfer. You just need a smartphone or PC with internet access. The QR code of the recipient's digital wallet is scanned and the amount is adjusted and ready.
- Privacy. Names do not appear on transfers and bank cards.
- Fees are really low to make a transfer either nationally or internationally.
- No cost for users sending or receiving or any fees associated with electronic wallets that store digital currency.
- It is extremely safe. To date, hackers have failed to decrypt a single transaction. It is so safe, it is believed that only companies like Google could possibly decrypt it and even then, to do so and would take years of effort.
- Market coverage is unlimited because it does not discriminate. Many websites only accept credit card payments, there are countries where PayPal and other payment methods are not available. With cryptocurrency, that’s all left behind.
While it has great advantages and facilities, there are also some drawbacks to consider:
- An Internet connection is required.
- The price is set by supply and demand, so it’s entering a volatile market.
- Some cryptocurrencies are not accepted by the governments of certain countries, as in China, Ecuador, India, Vietnam, Thailand and Bolivia.
- You can only use one cryptocurrency, since it is not possible to unify them.
Currently there are many companies that accept cryptocurrency for your transactions, Bitcoin mainly thanks to its reach in several markets. Companies such as Microsoft, Lenovo, Steren, Xiaomi, Applemania, DigitalLife, Honor, and ESET accept cryptocurrency. Also, banks and financial firms such as BBVA Ventures, Goldman Sachs, American Express, Master Card and VISA are supporting this model of digital transaction and many of them have already invested in startups related to cryptocurrency as indicated in this article from CNN Expansion.
Not just big companies like Microsoft and financial institutions are providing support for digital currency, more and more medium-sized enterprises and many entrepreneurs are taking advantage of cryptocurrencies like Bitcoin. Expert Andreas Antonopoulos (quoted in the article by CNN Expansion above), said “the opportunity is immense because Bitcoin can provide network access to 4,000 million people who today have no access to banking services.”
In Mexico, cryptocurrency is already gaining more followers. Several companies, including 7-Eleven and Gandhi accept Bitcoin as a payment method. Also, many restaurants, cafes and other businesses throughout the country have already decided to implement the digital currency for their transactions. And you, are you ready to make the jump to digital currency?
Luis Tierrafría is Web Developer for Mijo! Brands, a leading digital agency with offices in CDMX and Puerto Vallarta. For more information visit or contact us.