Although it’s been bubbling under the surface for a few years, cryptocurrency really burst onto the scene late in 2017 when Bitcoin’s rapid rise to nearly $20,000 per coin spurred a massive development of digital currencies and widespread interest in the blockchain-supported technologies. Since then, however, Bitcoin has levelled off somewhat – but interest in this new digital currency still holds a lot of interest – for both consumer and business alike.
But what is Cryptocurrency?
Cryptocurrency is simply a digital currency that is traded and shared over the internet relying on encryption technology to transfer value. Cryptocurrencies like Bitcoin, Litecoin, Dogecoin, NEO, Ripple, Ethereum and others, operate independently to traditional banking systems and can be used in many countries as a store or exchange of value like cash. Most of the times, cryptocurrencies are used in the buying and selling goods and services online.
The bigger Picture
Although posing as a great new way for small businesses to accept customer payments, or even pay their own suppliers, it’s the larger businesses who are starting to take notice of a disruptive financial trend. Not because of the cryptocurrency itself, but because of the decentralisation of financial standards and currencies. Debates abound on the value and longevity of cryptocurrency in its current form – and we’re not going to provide just another blog on the topic – there are loads of studies that already exist about the validity of cryptocurrency and it’s long-term effect on consumer behaviour and habits. What we are going to do is look at a far bigger picture. One that involved the wholly-digital. For organisations who are not yet innovating operationally and thinking long-term, especially within the finance function, they are at serious risk of becoming outdated very quickly.
We’re not suggesting to switch to digital – what we are suggesting is to open your eyes.
Change is all around us.
Think about this.
This week, Google turned 20. Only 20. Surely they’ve been here for all of our lives? Nope. Only 20 years. Entire operating systems have been built in the cloud – integrating with the ether – and yet, we can hardly remember a time when we didn’t work in the way we did today.
Commercial habits are changing – Online reviews impact 67% of respondents’ purchasing decisions, millennial consumers trust their peers over ads, 85% of Shopify sales are generated by social media happen on Facebook. Customers want everything on demand – from what they watch, to what they consume, to their delivery preferences. It’s no longer a perk – it’s the norm. Organisations are being forced to switch strategy as quickly as consumer habits update.
Which brings us back to Digital.
There are already some major organisations accepting cryptocurrency as payment. PayPal now accepts Bitcoin as a form of payment, as do Microsoft, Shopify and food producer Subway.
And before you rush out to set your system up for the next Bitcoin, there may be a number of reasons why other companies aren’t currently accepting digital currencies – some of which include the volatility of the cryptocurrency value (through large swings in value that makes it difficult for smaller retailers to absorb market changing losses), and tax implications – especially regionally.
But one thing you should be doing, if you aren’t already, is considering your operational infrastructure, and more importantly – the functional success of your finance department and the contribution it holds to your digital strategy as an organisation. How easy is it for you to access the records that you need, when you need it? How easy is it for you to capture, integrate, easily access, and analyse high-quality data in your business?
Gone are the excuses that data storage simply costs too much – the costs of data storage, cloud infrastructure, and processing power have dropped by as much as 100-fold over the past decade. What used to be unique is, again, the norm.
Adopting a digital mindset with your finance function means that you are gearing your team, and your business up for a higher-value business advice positioning through tools like dashboards, predictive reporting founded on Artificial Intelligence and digital trends. Your forecasting and planning becomes laser-focussed through more responsive, agile systems that automated on-demand answers.
So, although cryptocurrency may not be your next improvement, a more digitally-focussed finance function may be.