The cryptocurrency market has evolved substantially in the past years because digital coins offer much more benefits than fiat money. As users are increasing by the day, businesses have adopted cryptocurrencies for alternative payments, which has set the competition to up their game and add more than Bitcoin to their transactional options.
Since Ethereum is the second most-used cryptocurrency and is constantly developing, companies like Shopify, Overstock and Home Depot accept Ether as a form of payment, and more businesses are planning to merge into this change. Let’s find out what are the benefits of this innovative system and why you should adopt this change in your company too.
Security
The way Ethereum is built provides much more security than any financial institution out there because it’s a decentralized blockchain platform that uses smart contracts to allow users to make transactions without a central authority. The main features which make Ethereum secure are:
- Immutability: once mined, data cannot be changed, altered or deleted.
- Consensus: updates are made in accordance with the blockchain protocol, so only nodes or peers on the network are able to validate improvements.
- Increasing capacity: as many computers work together to maintain the blockchain, the system can’t be shut down.
Security is one of the main weaknesses of businesses, given that over 75% of targeted cyberattacks start only with an email. Even if bigger companies also experience data breaches, small businesses are the most vulnerable, as they don’t invest as much in security.
But with the Ethereum blockchain, these security problems are less likely to happen, and businesses can ensure clients that their data and money are safe.
Globalization
Globalization has already helped businesses expand their area and be accessible to people worldwide. Still, since the economy is sometimes unstable, it becomes difficult for them to adapt and sustain their work.
But the blockchain technology offers the chance for enterprises to procure goods from other countries or allow customers to pay through its programmed system with independent security models.
Anyone with a digital wallet can make transactions on the blockchain without having to enter
personal information, making it more encouraging for investors to purchase and sell goods on the Ethereum market.
No currency exchange rates can affect the transactions, although the levels of volatility may be an issue for beginners.
If you want to know how to buy eth, there are many ways to do it, from purchasing through your credit/debit card, a bank deposit, P2P trading or third-party payment.
This feature will help you choose the right option for your business, but if you’re new to this, it would be best to use your bank deposit or credit/debit card.
Performance
The Ethereum blockchain offers scalability and performance through its Proof of Authority system (PoA), where nodes can help outperform the public mainnet and scale up to hundreds of transactions per second. PoA has the following benefits:
- It reduces the time between blocks, which increases the throughput of the chain;
- It removes forking, along with the risk that a transaction may be “undone”;
- It helps with high data integrity and fault tolerance;
- It is operationally flexible, meaning that the group of validators can be modified in time to ensure the trustworthiness of nodes;
On the other hand, the blockchain has other solutions for scalability and performance, including:
- Sharding: the main blockchain is separated into segments that nodes can verify;
- Layer two scaling: the network can operate on top of an underlying blockchain protocol to improve its efficiency;
- State channels: transactions can be made off-chain so that users can interact with the Ethereum mainnet at a minimum;
Privatization
The benefit of having a business is that you can create a private group with private transaction layers so that information isn’t visible to network participants. This makes the data encrypted and shared only with relevant parties.
These private groups are called decentralized autonomous organizations (DAOs) and are a safer way for organizations to collaborate and commit funds.
These can be used for:
- Charities that accept memberships and donations from users worldwide;
- Freelancers who pool their funds for software subscriptions and other transactions;
- Ventures and grants to pool investment capital;
DAOs have a fully democratized system which allows members to vote on any changes in their group, and all activity is transparent to them. There are a few options for memberships as they determine how voting works:
- Token-based membership allows you to vote if you own tokens;
- Share-based membership lets you contribute to the group if you offer some value in the form of tokens;
- Reputation-based memberships grant voting power through proof of participation;
Tokenization
Any asset on the Ethereum blockchain registered in a digital format can be tokenized, meaning that businesses can expand their line of products, fractionalize monolithic assets (real estate) and unlock new incentive models.
This process allows companies to go fully digital, even if their work involves fiat money or physical assets. Tokenization brings a range of benefits to market participants:
- There’s a broader investor base because it becomes possible to buy or sell tokens that represent fractions of ownership;
- There’s a more extensive geographic reach for customers and investors;
- There’s a reduced transactional time;
- The infrastructure upgrades frequently, making markets more efficient;
- There’s a decreased cost for reconciliation insecurity trading which improves administrative processes;
Performing asset tokenization is not complicated, but you need to research creating a tokenomics model for the assert to outline the token’s value and program the tokenized asset to adhere to legal regulations.
The complexity and investment requirements for such a process may vary depending on the type of asset and the chosen blockchain platform, but it’s worth it if your assets bring much value to the blockchain.
Final thoughts
Blockchain technology has allowed us to benefit from a more secure and fast way to make transactions. Now businesses are adopting these practices because more clients demand this payment solution. If you plan to bring your business into the blockchain, Ethereum is one of the best places for any products and services you want to offer.
