Discarded for a long time and ignored by the financial world, digital assets have reached the mainstream. After all, many cryptocurrency companies trade publicly on the Nasdaq Stock Exchange. Online payment platforms are working on plans to accept cryptocurrencies. Governments are exploring the digital currencies of central banks. And, most importantly, the announcements issued during the 2022 Super Bowl included numerous cryptocurrency-focused companies.
The emergence of multiple blockchain platforms means increasing the speed, efficiency and interoperability of digital assets in the face of falling transaction costs. Crypto and its many applications can soon infiltrate all industries thanks to smart contract applications and use cases ranging from vaccine passport applications to voting technology to supply chain management.
SEE: Metaverse Cheat Sheet: Everything You Need to Know (Free PDF) (Technological Republic)
Why prioritize cryptography now?
Executives have more options than ever to take advantage of digital assets, smart contracts, and programmable money: now is the time for companies to imagine reforming their contracts in digital format. But what does this mean in practical terms for your industry? Why should you care? And what should you do? What is the disadvantage of waiting?
Innovative companies no longer theorize about a hypothetical world of crypto and smart contracts. Business executives are developing strategic roadmaps for cryptocurrency-based investment opportunities, operational improvements, and payment methods.
Three Ways Businesses Should Think About Cryptographic and Smart Contracts
Business suite C executives should consider cryptography on all sides. Here are three starting points.
Diversify the balance sheet.
More companies are looking for digital assets and cryptocurrencies to diversify their corporate balance sheets.
Case in point: In August 2020, MicroStrategy, the publicly traded business intelligence software maker, began converting cash to buy large amounts of bitcoins. MicroStrategy President and CFO Phong Lee explained the company’s decision.
“Global macroeconomic, monetary, and digital developments have converged, requiring all forward-looking corporations to consider alternative assets on their balance sheet,” Lee said.
There are financial and strategic considerations for companies looking to add digital assets to their balance sheet, including the ability to:
- It captures the asymmetric risk return
- Hedging against fluctuating fiat currencies
- Adopt open and modern technologies as part of the global corporate strategy
- Improves an operational strategy for accepting digital assets as payments
Our perspective on corporations investing in cryptography further explores the possibility of adding digital assets to a corporate balance sheet.
Enable cryptocurrency payments
Today, the most popular entry points adopted by corporations include the use of digital assets to allow payments in cryptocurrency such as bitcoin. It requires a limited number of adjustments in corporate functions and can reach a new clientele and increase the volume of each sales transaction. A hands-off approach allows the company to make transactions between crypto and fiat currency to receive or make payments without touching. Companies that adopt this limited use of cryptography typically rely on third-party vendors and keep cryptography off the books.
Another option is to go beyond allowing cryptocurrency payments and expanding the adoption of cryptocurrencies within operations and the treasury function through a practical approach. This route can give companies more opportunities and benefits, but they will probably have more technical issues. Practical and practical approaches to using cryptocurrencies for payments are discussed below in increasing the use of cryptocurrency in business.
Platform with smart contracts
Smart contracts are the next step in the progression of the blockchain from a financial transaction protocol to a multi-purpose utility.
Smart contracts use consensus protocols to automatically implement the terms of multi-party agreements, helping to automate or eliminate frequent, manual, or duplicate transactions between the parties. Smart contracts can reduce audit, conciliation, and legal reviews, as all parties agree on the code, which represents the rights and obligations, behind the digital transaction. The resulting transaction is more transparent, accurate, and faster. And smart contracts require fewer intermediaries, which reduces the risk of execution and the cost of the transaction.
Here are some examples of smart contracts by industry.
|Financial services||Life sciences and health care||Media and entertainment||Manufacturing||Intersectoral|
|Liquidation and commercial compensation||Electronic medical record||Distribution of rights||Source of supply chain and financial documentation||Execution of the transfer price agreement|
|Coupon payments||Access to population health data||Product governance and history||Peer transactions|
|Processing of insurance claims||Personal health monitoring||Voting|
|Validation of loan eligibility|
Learn more about smart contracts in Deloitte’s outlook.
What is at stake
A technology company that is not yet considering smart contracts may be at risk of falling behind. At the very least, you should explore cryptographic capabilities to see how they can benefit your business or industry. Contact your organization’s leaders to identify opportunities to digitize or reimagine business activities through smart contracts. Crypto is more inclusive, moves faster and offers more transparency than ever, all indications are that it is geared towards general adoption. Are you on board?
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This post was written by Paul Silverglate, vice president and leader of the US technology industry. U. See our Blockchain and Digital Assets solutions for more information.
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