Businesses just breaking out into the financial or retail industries are likely to have heard of the term ‘cryptocurrency’ by now, but very few truly know what it is or what benefits it could bring.
While Bitcoin has been a hot topic as of late, some of the ‘altcoins’ that have cropped up since bitcoin’s initial release in 2009 are certainly giving it a run for its money as far as capability is concerned. One, in particular, is Ethereum, and we’re taking a deeper look at exactly what Ethereum is and the benefits it could have for small businesses.
What Is Ethereum?
In simple terms, Ethereum isn’t actually a cryptocurrency at all. In fact, it’s a decentralised platform in which the cryptocurrency ether can operate and be used for smart contracts on the platform. Smart contracts are a form of contract that can be run without any possibility of fraud or third-party interference and rely on a kind of automation. Through smart contracts on Ethereum, any contract cannot be fulfilled until the conditional part is completed, after which the payment or resulting service will be provided automatically. There is no need for human interference and ensures that a contract is enforced correctly.
Just like Bitcoin, Ethereum runs via Blockchain technology and while Bitcoin’s price is higher, the Ethereum price sits at a more stable value. In general, this could make it far more attractive to businesses starting up, but what other benefits could it bring?
What Benefits Could It Bring?
For small businesses, in particular, the use of Ethereum could give them an edge over their competitors, but is that reason enough alone to pick up the cryptocurrency? Probably not, however, there are still plenty of other reasons that Ethereum could prove beneficial for small businesses in particular.
Fast and secure transactions are particularly important for small businesses, especially when that kind of commodity can be difficult to come across for companies using third-party operators like banks and financial institutions for their financial activity. There are very rarely any additional fees due to this lack of intermediary and what’s more, the blockchain from which Ethereum operates offers consumers and businesses alike transparency with their transactions, increasing security and preventing fraud and hacking. Cryptocurrencies are digital assets more than they are a currency, however, this shouldn’t stop small businesses from utilising this brand new technology for their benefit.
Why Ethereum And Not Bitcoin?
With Bitcoin sitting as the most popular cryptocurrency to date, some of you may be wondering why we’re suggesting an alternative cryptocurrency at all and the answer is this – Bitcoin is extremely volatile. Ethereum is a much more stable network from which to operate, though there is a level of volatility that needs to be taken into consideration here too, Bitcoin’s price can change dramatically in barely a second. Due to its growing popularity and the insecure state of the market, businesses across the globe are searching for a more stable alternative, and Ethereum could be exactly that.
Any business can utilise the Ethereum network to create their very own cryptocurrency. Through this, small businesses could use this as a currency, it could be used to represent a share or asset and they can easily be used for smart contracts just like ether. In particular, however, one of the biggest benefits of Ethereum for small businesses is the fact that it can open them up to crowdfunding without needing to pass through a third party. This will ensure that they get to keep everything they’ve raised without any taxes, fees or potential fraud.
Whether small businesses opt to use Bitcoin, Ethereum or any of the other altcoins available on the market, the popularity of cryptocurrencies is quickly rising. The potential that they hold for the future is practically impossible to predict and so time will tell as to whether Ethereum could truly be the next big thing for small businesses.