Long dismissed and despised by the financial world, digital assets have gone mainstream. After all, many crypto companies trade publicly on the Nasdaq exchange. Online payment platforms are working on plans to accept cryptocurrencies. Governments are exploring central bank digital currencies. And, notably, the ads that aired during Super Bowl 2022 included many crypto-focused companies.
The emergence of multiple blockchain platforms means increased speed, efficiency, and interoperability of digital assets amid falling transaction costs. Crypto and its many applications could soon penetrate all industries thanks to smart contract applications and use cases, from passport applications to vaccines to voting technology to chain management. supply.
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Why prioritize crypto right now?
Executives have more options than ever before to leverage digital assets, smart contracts and programmable money: Now is the time for businesses to envision a pool of contracts. their digital form. But what does this mean practically for your industry? why do you need care? And what should you do? What is the downside of waiting?
Innovative companies no longer theorize about a hypothetical world of cryptocurrencies and smart contracts. Corporate executives are building strategic roadmaps for crypto-based investment opportunities, operational improvements, and payment methods.
Three ways businesses should think about cryptocurrencies and smart contracts
Enterprise C-suite executives should look at crypto from all sides. Here are three starting points.
Diversify balance sheet.
Many companies are looking at digital assets and cryptocurrencies to diversify their balance sheets.
Case in point: In August 2020, MicroStrategy, a maker of publicly traded enterprise intelligence software, began converting cash to buy bitcoin in bulk. MicroStrategy President and CFO Phong Le explains the company’s decision.
“Global macroeconomics, currency and digital evolution have converged, requiring all forward-thinking corporations to consider alternative assets on their balance sheets,” Le said. their.”
There are both financial and strategic considerations for companies looking to add digital assets to their balance sheets, including the ability to:
- Capture asymmetric risk-reward
- Hedging against volatile fiat currencies
- Using modern, open technologies as part of the company’s overall strategy
- Enhance operational strategy to accept digital assets as payment
Our view on corporations investing in cryptocurrencies Discover more about adding digital assets to a company’s balance sheet.
Enable crypto payments
Today, the most common entry points adopted by corporations include the use of digital assets to enable payments in cryptocurrencies such as bitcoin. It requires some limited tweaking in corporate functions and can reach new customer groups and increase the volume of each sale. A method of communication that allows a business to transact between cryptocurrencies and fiat money to receive or make payments without touching it. Businesses that adopt this limited use of cryptocurrency often rely on third-party vendors and keep crypto off the books.
Another option is to go beyond allowing crypto payments and expand crypto adoption in treasury operations and functions with a hands-on approach. This route may bring companies more opportunities and benefits, but there will be more technical problems. Hands-on and hands-on approaches to using cryptocurrencies for payments are discussed further in the rise of the use of cryptocurrencies in business.
Redo with smart contracts
Smart contracts are the next step in the blockchain’s evolution from a financial transaction protocol into a multipurpose utility.
Smart contracts use consensus protocols to automatically execute the terms of a multi-party agreement, helping to automate or eliminate frequent, manual, or duplicate transactions between parties. Smart contracts can ease the process of auditing, mediation and legal review, as all parties agree to the code – representing rights and obligations – behind the digital transaction. The result is transparent, accurate and faster transactions. And smart contracts require fewer intermediaries, reducing execution risk and transaction costs.
Here are some examples of smart contracts by industry.
| Financial services | Life sciences and health care | Media and entertainment | Make | Interdisciplinary |
|---|---|---|---|---|
| Clearing transactions | Electronic medical records | Distribution of royalties | Supply chain resources and financial documentation | Execution of the transfer price agreement |
| Pay with coupons | Access to population health data | Product Administration and History | Peer-to-peer Transactions | |
| Processing insurance claims | Personal health tracking | Voting | ||
| Confirm loan eligibility |
Learn more about smart contract in Deloitte’s opinion.
What is at stake?
A tech company that hasn’t considered smart contracts could run the risk of falling behind. At a minimum, you should explore the possibilities of cryptocurrencies to see how they can benefit your business or industry. Interact with your organization’s leaders to identify opportunities to digitize or reimagine commercial operations using smart contracts. Cryptocurrency is more inclusive, moves at greater speed, and offers more transparency than ever before – all signs it is heading towards mainstream adoption. Are you on board?
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This post was written by Paul SilverglateUS vice president and technology leader, Deloitte & Touche LLP, and Rob Massey, global & US tax blockchain & digital asset leader, Deloitte Tax LLP. Please check ours Blockchain & Digital Asset Solutions for more information.
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