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In the article, “Bitcoin as a Disruptive Innovation,” Schumpeter’s theory is used to portray BitCoin as disruptive innovation. This research also compares bitcoin to other forms of currency that have been widely accepted since the beginning of time. The following post will give an in-depth look into virtual currency and its impact on startups. And if you’re wondering if bitcoin is for the rich only visit this link for more information.

Speculators have been driving up prices and creating exuberance as they chase gains that some belief will continue to rise as the limit of 21 million bitcoins is reached.

4 Ways how bitcoin affects startups?

1. Bitcoin technology allows transferring money differently than traditional banks do.

This is very revolutionary for startups because they are usually short on cash but have many ideas to be brought into life. In addition, Bitcoin allows them much more efficient ways of fundraising. For example, Swarm’s reward-based crowdfunding platform has raised over 1 million USD worth of bitcoin within six weeks.

2. Startups can flourish in the bitcoin-community

Unlike traditional banks, bitcoin allows users to transfer money without waiting for three days and only paying a fee. This makes all sorts of new opportunities possible. For example, since the success of Fashion Week held at Digital Life this year, many stores and designers have increased exponentially.

Many of these small boutique shops do not have credit card machines, which is why bitcoin fits in perfectly for such a community, as it can be used to make transactions without fees.

3. Lower marketing costs

Bitcoin makes it possible to transfer money internationally at a meager cost, immediately opening up a vast market. Bitcoin makes it possible to transfer money internationally at a light cost, opening up a vast market for startups in developing countries.

For example, in Zimbabwe, where people are experiencing 700% inflation, bitcoin is being used as an alternative currency to hedge against hyperinflation. As a result, the entrepreneur Tawanda Kembo made his first sale within 6 hours of opening his shop.

4. Bitcoin’s presence in Kenya has allowed startups to flourish

The impact on business opportunities is similar for Kenya, where BitPesa has transferred money between companies within one day and at a meager fee. In addition, with one transaction carried out by BitPesa, Kenyan entrepreneurs could subcontract marketing and IT services from the Philippines, which is a very significant development for such a small-scale business.

7 Negative impact of bitcoin on startups

  1. Although bitcoin helps many people in countries such as Zimbabwe and Kenya, it is still far from stable, and there is no guarantee of it becoming more stable in the future. Therefore, it can not be said that this will help most startups because they often need to make reliable long-term plans for their business.
  2. Startups that only accept bitcoins might not access a large customer base. More and more people have started using bitcoin, but it is still an unstable currency, and it is difficult to predict the future of this currency.
  3. Bitcoin has a risk of causing the government to tighten its control over companies that transfer money across borders. Private companies in Kenya and Zimbabwe, for example, could be forced to halt the service because of the need to comply with KYC / AML regulations.
  4. Other startups use bitcoins as a buffer if traditional currencies break down, making it harder for them to predict their needed amount when making business plans.
  5. Startups are also at risk of being stolen by hackers, who have successfully hacked some bitcoin companies in the past.
  6. Bitcoin price fluctuations make it difficult for startups to plan for the future.
  7. Bitcoin has a limited number of transactions per second, which can significantly affect its scalability issues later on if bitcoin becomes more popular. Again, this is not an issue with online wallets, but companies using bitcoins are likely to be severely affected by this problem in the future.

Conclusion:

From the above, it can be seen that bitcoin has both positive and negative impacts on startups, but its pros are more pronounced. As long as companies understand this currency better, they can take advantage of Bitcoin offers. Although there are many risks for startups using bitcoins, taking steps to learn about bitcoin ensures that they are always one step ahead of the curve.