Should entrepreneurs embrace cryptocurrencies?

Sep 15, 2021 9 Min Read
Bitcoin
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Photo by Go to André François McKenzie https://unsplash.com/photos/iGYiBhdNTpE

“If you like gold, there are many reasons you should like bitcoin.”

Disclaimer: The views expressed in this article belong to an independent guest author and not Leaderonomics, its directors, affiliates, or employees. This is not financial or investment advice. Please do your own research and evaluate your risk appetite before investing.
 

The world of blockchain technologies is growing larger and stronger every day. Both from a technological and an adoption perspective, the industry is exploding. With all of this growth and a much more mature market than a few years ago, cryptocurrency prices keep going up.

When prices are up people are excited and that draws more people in. Because cryptocurrencies have been around for a while now it’s starting to become less of a niche and more of a standard.

‘’If you are not long Bitcoin, you’re short Bitcoin’’ Mike Novogratz


Being short on a new rapidly growing technology that is changing money itself, is probably not a good investment strategy.

While in the short term prices can go down significantly, it has always paid off way more to have a long time horizon and simply buy and hold than to be short or not own any Bitcoin.

Since Bitcoin and cryptocurrencies are technologies, the opportunities for entrepreneurs are way beyond just investing. In this article, we will look into some of the options and reasons why entrepreneurs can embrace cryptocurrencies.

Bitcoin fixes this

The story started with Bitcoin and the market has shown that it still is very much about Bitcoin. The largest computer network in the world is a project with the potential to benefit 8 billion people on earth and the whole industry follows ‘’the king of crypto’’. A phrase that is often used among Bitcoiners is ‘’Bitcoin fixes this’’. Let’s dive into what Bitcoin fixes and how entrepreneurs can reap benefits from its powers.

Using the network as a railroad for payments is an obvious way anyone can benefit. For international payments it is far more superior to using international wire transfers. With a payment of any amount settling in 10 min for an average fee of $2,39, there is no reason not to take advantage of buying Bitcoin as a medium of exchange.

The monetary policy of 21.000.000 coins gives Bitcoin its store of value characteristic. Not only being a hedge against inflation, a compound annual growth of 200% (CAPR) is without a doubt, mathematically, the best way to grow wealth.

Entrepreneurs can greatly benefit from Bitcoin as a better medium of exchange and allocating a small percentage of their revenue in a Bitcoin position will increase their capital over time.

If by simply holding a portion of your business cash reserves in Bitcoin you can increase your capital, then there is no doubt that your business can grow quicker than holding those reserves in fiat.

The most underestimated way entrepreneurs can embrace Bitcoin is mining. If your business has anything to do with producing energy, the waste energy can be used for securing the network. This will generate an additional cash flow that otherwise would have gone completely to waste.

Stable Coins: A medium of exchange without volatility

If the volatility of crypto prices are not in your risk appetite, Stable Coins provide you the same efficiency without fluctuating prices. Stable Coins are exactly what they sound like. They are tokens that are pegged to a fiat currency, thus maintaining the same value. The most popular Stable Coins are USDT, USDC, BUSD & DAI but there are many more. Without mentioning them all and what differentiates them from one another let’s take a look at the pros and cons.

Stable Coin Pros:

  • Easy to manage a portfolio by switching from a volatile cryptocurrency to Stable Coins, without cashing out in fiat.
  • Transferrable at any time, for low fees, globally.
  • Easy to use as collateral.


Stable Coin Cons:

  • Although the risk is very small, especially on the bigger coins, technical failure is a risk. This could result in a loss of funds. May it be a failure in the smart contract itself. Or for some reason, the 1:1 pegged value to the fiat currency is not met correctly.
  • Stable Coins pegged to a fiat currency are not a hedge against inflation nor a great investment. Since they are tied to the value of a fiat currency if the fiat currency drops in purchasing power so does the Stable Coin.


The biggest Stable Coins have been operating for a few years now and have been working very effectively. Considering the rate at which the whole industry is growing, it is safe to say that the quality will only improve over time and that any problems now will be solved later. Here is a list of the top 13 Stable Coins from last year with comparisons.

DeFi & CeFi: Compounding Passive income

Decentralised finance is one of the major innovations happening in crypto. It offers users to earn crypto on their deposited crypto collateral in Stable Coins or any other cryptocurrency. The differences between DeFi and CeFi are explained in this video.

For entrepreneurs using either DeFi or CeFi products can create additional cash flow. What if a business accepts crypto payments and they immediately get sent to a DeFi or CeFi service where they can earn up to 8% APY on their crypto?

As an example:
For the whole month, all revenue from sales gets sent to any of these services. At the end of each month when salaries and bills have to be paid, the money is withdrawn from these services and used to pay all costs. An entrepreneur, according to their risk profile, can choose to keep the interest payout within the service to keep compounding their profits or transfer it to self-custody. At an 8% rate yearly, this will have very positive effects on any portfolio.

Just as a reminder, this can be done with both Stable Coins and other cryptocurrencies like Bitcoin or Ethereum.

NFT’s

Branding and design are important points in any business. From company logos to business cards and from product packaging to merchandise, the use cases for Non-Fungible Tokens are incredibly fascinating to connect with your marketing strategy.

Non-Fungible Tokens (NFT’s) exist on a blockchain. Just like any token, like Stable Coins, they can be traded and transferred. The difference between a Stable Coin like USDT and an NFT is that any USDT token is interchangeable with another USDT token, just as a dollar bill in my pocket is the same as the dollar bill in your pocket. But an NFT is unique, even if one hundred of the same NFT’s are made that still means that every single one out of a hundred is unique. NFT’s can be as rare or scarce as the creator wants them to be.

To explain this further let’s create the following example:
You create a digital business card with your logo, contact details, and some form of art which you can mint as an NFT. You can mint any number of these cards at a time but let’s say you mint only one hundred. Any time a new potential customer comes along you ask them to download a wallet application on their phone if they don’t have one already.

When you send your business-card-art-logo-NFT to their wallet they now own that card, and they will bring it wherever they go. They may even show it off to their friends and around the office.

You could even implement a rule that their first purchase at your business will provide them with some sort of discount if they prove to own your NFT. Now your business card also is a promotional voucher.

To make this even more interesting. When your cards run out and you want to mint more, you could create a new art design. Every time you mint a new set of a hundred cards you are creating limited editions. Your business cards have transformed into collectibles amongst your valued business clients. Christmas editions, 10th anniversary, or other important milestones may be fun themes.

Your business cards will live on a blockchain as an NFT stat forever. Certainly, people’s eyes will sparkle and they won’t ever forget you or your company.

Though this is just an example that could be extended way further. One thing is certain, the implementations of NFT’s for entrepreneurs are as wild as their imagination can get.

Crypto Cashback Debit Cards

Everyone loves a bargain. Everyone likes saving money, maybe even more than earning extra money. Economists have tried to solve the ancient mystery that is: If you get cash back on every purchase, are you saving or are you earning? The modern entrepreneur can be happy to hear that Cashback rewards can have a serious positive impact every year.

They are numerous Crypto Cashback Debit Cards out there and there are numerous differences between them. In practice, they all work well. Most cards are powered by VISA or MASTERCARD and that means wherever you are in the world, you can spend your money without any problems.

A misconception may be that you have to spend and hold crypto with these cards, but on most cards you can just deposit and hold fiat. Though Cashback is almost always in the form of a cryptocurrency, some services give you the option to receive all the Cashback you earn in their native crypto or the crypto of your choice.

Since these cards are usually tied to an exchange, regarding whatever (crypto)currency you get your cashback in, it is very easy to trade your cashback for any supported (crypto)currency.

For example purposes: let’s do some simple cashback math.
You are earning 1% cashback with one of the many Crypto Cashback Debit Cards available. In one month your business has spent $5000 on expenses and that generated 50 dollars of cashback. 

If you took that $50 of cashback in Bitcoin, knowing that its CAPR is 200%, there is a good chance (if Bitcoin keeps its promise) that in a year that $50 is now worth $150.

Besides the simple math, these Crypto Cashback Debit Cards are a great way to passively Dollar Cost Average (DCA) into any asset of your choice. The top cards have Cashback rewards varying from 1% to up to 8%.  

Final Thoughts

Cryptocurrencies are empowering technologies.

From doing international business efficiently to storing, protecting, and growing your wealth over time. These technologies have created futuristic landscapes for the new age entrepreneur where there are no creative limitations. The genie is out of the bottle. Only time will tell which companies jumped on this train and made it work for them. Anyway, there is more to benefit than to lose from this industry.

Surely this article gave some insight and may have sparked some ideas. To give a final answer to the question: Should entrepreneurs embrace cryptocurrencies? Yes

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