4 Things Every Entrepreneur Needs to Know about Cryptocurrencies
Cryptocurrencies are only gaining momentum. The market is more mature, there are fewer market uncertainties, and the application of cryptocurrencies – and the underlying blockchain technology – makes coins and tokens more appealing.
Entrepreneurs and businesses are actively utilizing cryptocurrencies for different purposes, from accepting payments to funding new projects or products. You too can leverage cryptocurrencies as an entrepreneur. Before you do, here are 4 things every entrepreneur needs to know about cryptos.
1. Coins and Tokens
First, it is important to understand that coins and tokens are two different things. Coins are used more for transactions, since they represent currencies and hold values based on market conditions. Bitcoin and Ethereum are the most popular coins on the market, but there are actually hundreds of coins currently being traded and used.
You can view the prices of cryptocurrencies and just how many are there on the market on Coins.live. The site provides live updates of cryptocurrency prices 24/7. It lets you observe market trends and see the changes in crypto prices.
Tokens, on the other hand, are used to represent access, whether it is access to a product, share of your business, or projects. Tokens are traded differently, and it is always based on the same blockchain network used by cryptocurrencies. You can, for example, introduce a new token based on Ethereum or established blockchain networks such as Basic Attention Token (BAT).
2. Not Every Token Is the Same
Next, we have to take a closer look at tokens. Tokens are generally used by businesses as a way to get funding. While tokens are more closely associated with projects and new products, there have been startups that run their entire funding round on a blockchain network.
There are actually two types of tokens to choose from. The first one is known as a utility token, which is basically the kind of token that can be traded directly. You can sell utility tokens to a friend or through a cryptocurrency exchange.
The second type is known as security tokens. As the name suggests, security tokens are traded in a more regulated market, with association with real assets or value outside of the blockchain network being mandatory for this type of token. Security Token Offerings, or STOs, are also regulated by the SEC, and you have to be certified to participate in the trades.
3. It's Not Just for Funding
While tokens are almost exclusively for fundraising activities, coins are widely used in different applications. A lot of entrepreneurs now diversify their portfolio by investing in cryptos. Considering the current market volatility, there are plenty of opportunities to bank profits from cryptocurrency trading indeed.
Cryptocurrencies are also used as payment methods. More businesses now accept coins online and offline; yes, retail spaces are accepting crypto payments thanks to the low (or zero) transaction fees and fast processing. According to multiple studies, businesses that accept crypto payments connect with wider customer segments as a result.
In fact, cryptocurrencies, and the release of branded tokens, can be used for digital marketing purposes. Whenever new tokens are introduced, the buzz surrounding the brand behind those tokens generates plenty of exposure. You can use an ICO as a way to generate publicity and expand your digital marketing reach.
One last thing you need to know before exploring the world of cryptocurrencies: there is a growing number of stablecoins entering the market. Stablecoins are basically coins that are designed to be tied to traditional assets such as gold or US dollars.
The next time you consider entering the cryptocurrency market or using tokens to raise funds for a new product, these facts will help you navigate the market better. Utilizing cryptocurrencies as an entrepreneur becomes easy when you know your way around coins and tokens.