How cryptocurrency can help your business

Easy Crypto’s Janine Grainger outlines the business benefits of cryptocurrency for New Zealand SMB owners.

Cryptocurrency. It’s a big word, with big ramifications for all of us, including Kiwi SMBs.

But while most New Zealanders are aware of digital currencies, many businesses are still unfamiliar with what exactly it means for them – now, and in the future.

There is no doubt currency will go digital.

The Reserve Bank is currently consulting on a Central Bank Digital Currency (CBDC) – a virtual form of a country’s fiat currency[1], backed by a central bank. The Reserve Bank has signalled it is interested in launching a CBDC, noting the declining use, acceptance and availability of hard cash and the growth in offerings such as cryptocurrency, stablecoins and international CBDCs.

It’s just one sign of the growing acceptance of digital currencies, which has further accelerated thanks to the pandemic. From online shopping to digital meetings and the ubiquitous use of QR codes, digital has become less scary for all New Zealanders.

A report from the Financial Services Council of New Zealand found that as at April 2021, growth in the number of Kiwis who have invested or are investing in cryptocurrencies had jumped from just 3.1 percent to 9.5 percent in a year.

At the same time, crypto prices soared at the start of the pandemic and have continued to remain strong. For example, Bitcoin – the most popular cryptocurrency – has risen more than 500 percent since the start of the pandemic in early 2020.

And if you need more proof of how cryptocurrency is moving mainstream, several New Zealand charities, including Plunket, ChildFund and UNICEF, are now accepting digital currency donations.

Nevertheless for many, cryptocurrencies remain something of a mystery, often with a view that they’re for the tech savvy rather than mainstream business.

In reality, cryptocurrencies hold real benefits for New Zealand small businesses, from accepting crypto payments as a way of opening up to more diverse customer bases (and potentially saving money on the high merchant fees for debit and credit card services), to diversifying assets. There’s potential, too, for digital currencies to ease administration headaches for things like GST.

New payments, new customers

We’re seeing numerous moves to enable retail businesses to accept cryptocurrencies as payment – something that could potentially open them up to a more diverse customer base.

On the consumer side, there are now credit cards which enable you to spend cryptocurrencies at merchants, one of the bridges being built between cryptocurrencies and fiat currency. The cards allow users to convert their cryptocurrency holdings into fiat currency so you as a merchant won’t even know crypto is involved.

On the flip-side Mastercard is offering cryptocurrency payment services on its network. It’s only for the US at the moment, but when it rolls out more broadly New Zealand businesses will be able to accept payment in cryptocurrency.

Also, PayPal is enabling bitcoin payments at millions of merchants on its network to US users.

More locally, CBA, ASB’s parent, has announced it will offer cryptocurrency purchases for retail bank customers in its banking app in the first half of 2022.

Some US merchants, including restaurants and retailers, are also offering cryptocurrencies as an alternative to traditional loyalty points that credit cards offer users.

Four potential crypto benefits for businesses

1. Diversification

High inflation is driving investors to seek out alternative investments that can potentially hold up better than cash or bonds and crypto is often considered a form of ‘digital gold’ because of its potential to hedge against inflation.

But it’s not just a hedge option. Crypto is also a good diversification play. Business intelligence software company MicroStrategy is one of a number of big enterprises who have embraced bitcoin. They’ve made so much money from bitcoin they’re now more of a bitcoin company than a software company.

But it’s not just a tactic for enterprises. We’re seeing similar moves from our small business customers who are putting some of their business assets into cryptocurrencies rather than holding it in a bank, giving them a different asset class to draw on.

Cryptocurrencies can offer investment products where you get better returns than you can through bank interest, for example. Staking and lending in cryptocurrencies can have annual returns ranging from three to well over ten percent, so they provide a good way of diversifying and getting good returns to boot.

2. Programming away GST woes

Digital currencies are programmable which means they hold great potential for easing some of the headaches of day-to-day business administration for small businesses.

Consider if the Reserve Bank sets up a CBDC. It could be set so that when someone pays you for your services 15 cents of every dollar is automatically remitted to the IRD as a GST payment, removing the hassle of having to hold funds or worry about cashflow.

3. Cashing in on talent

In a tight talent market, cryptocurrency may ultimately become an opportunity to provide a point of difference when attracting staff. Increasing numbers of Kiwis are interested in being paid in cryptocurrency. Some might not take you up on the offer, of course, but it could be a way of showing you’re a truly forward-thinking company.

4. The NFT equation

Just as crypto is exploding onto the mainstage, so too NFTs (non-fungible tokens) are exploding onto the scene. Technically, NFTs are unique assets that can’t be replaced with anything else and are verified and stored using blockchain technology.

Much of the hype so far has been around digital artwork. Grimes sold US$6 million in digital artworks in early 2021. The Nyan flying space cat meme (yes, a meme) sold for US$590,000. Even Dan Carter has co-founded a company selling digital art as NFTs.

So what’s this got to do with business?

Well, leading brands are now starting to look to NFTs to create unique consumer experiences, enabling them to gather further insights from consumers and drive brand loyalty.

I recently heard someone say that in the future the question won’t be ‘what’s your marketing strategy?’ but ‘what’s your NFT strategy?’.

What many companies, including small businesses, don’t realise is that they’re sitting on a gold mine. Leveraging NFTs can create value for customers, and value for your business. Nike, for example, has introduced the ‘Cryptokick’, where customers are given a digital collectible of the physical shoe they buy. American Express has also dabbled in NFTs, releasing limited edition behind-the-scenes photos of singer-songwriter SZA as NFTs following a virtual concert they hosted.

Companies can use NFTs to create unique consumer experiences, drive brand loyalty with new benefits and generate new revenue streams.

We already have a number of customers who have made NFTs, and made a lot of money on them.

Digital currencies in all their forms, are here to stay. New Zealand SMBs are well placed to benefit from this new future. Now’s the time to start thinking about how you can do so.

Janine Grainger (pictured above) is co-founder and CEO of Easy Crypto. Visit https://easycrypto.com/nz