We all have already heard about Blockchain with reference to cryptocurrencies. However, the term Blockchain may seem like an abstract with less real meaning but in without Blockchain, bit-coin or any other cryptocurrency cannot really exist. Now, the questions arise what actually blockchain is, and how does it work?
Blockchain maintains and keeps the record of all the data exchange between two individuals or groups or entities. While any exchange happens in cryptocurrency, these records are called “Ledger” and the exchange is a “transaction”. Each successful transaction is added to the ledger as a block. Blockchain uses a distributed system to validate every transaction. This system is a peer-to-peer network that verifies the transactions. During this transaction, the sign of the sender is verified and the transaction is added to the blockchain.
In order to understand this process completely, we need to know the concept of “keys”. Every user gets a set of keys and these keys make a unique identity for the user. Keys are called primary key and public key, and when they get clubbed, they make a unique signature. Public key helps others to identify one’s account whereas primary key gives authority to sign and approve any transaction digitally. In other worlds public key represent the wallet address and primary key let you able to authorize a withdrawal, transfers, and other actions.
Cryptocurrencies have emerged in the mainstream market when bitcoin reached the value of $20,000 per coin. Nowadays people are getting used to of bitcoin or other cryptocurrencies, but is cryptocurrency really good for small business or startups?
It does not matter whether it is a startup or well-established business; there are several benefits of using cryptocurrencies in any kind or scale of business.
The transaction fee is less: — Startups and small businesses often pay high transaction commission to mediator parties, but cryptocurrencies provide a central intermediary process, which reduces the transaction fee. For a few transactions, the processing fee may not affect too much, but in the case of businesses where the number of transactions is high will definitely increase the overhead cost.
Secure transaction: — The decentralized system protects merchants from any fraudulent activity and chargeback. A transaction of cryptocurrencies cannot be revered thus reduces fraudulent cases.
Help to increase sales: — Cryptocurrencies transaction process enables startups to expand their business around the globe and also opens doors for international buyers for whom their services or products were once not accessible.
Instant payment: — Credit card payments may take days or even weeks sometimes, whereas cryptocurrency offers instant transactions.
Competitive advantage: — Transactions though cryptocurrencies are easy, secure, instant, and worldwide, and being an early adopter such currencies provides a competitive advantage over competitors.
Cryptocurrencies are have become world widely embraced and businesses have already started using transactions through such currencies. It has many advantages over conventional methods of payments, and startups should be keeping a keen knowledge about the technology and consider how they can use cryptocurrencies for their benefits.
co-author Research Pixie (A market research startup firm)