How To Start a Crypto Business in 2023?
The cryptocurrency market is relatively young and very specific in its structure and organization. Still, we can already trace some stages of its evolution, including those related to the development of its institutions. Obviously, these processes were accompanied by the transformation of behavior patterns of cryptocurrency market players. The study of these models makes it possible to test a number of behavioral finance theories and determine the common and specific features in the functioning of the cryptocurrency market compared with other financial markets.
The term “cryptocurrency” is now firmly rooted in both the everyday lexicon and specialized literature. The word essentially hides a set of accounting, issuance, and exchange mechanisms. Unlike electronic money, cryptocurrency is not controlled by the state or an organization and is not tied to real money. Because such systems are decentralized, correctness is ensured through a blockchain of transaction blocks based on cryptographic algorithms. All this led to the idea that the development of blockchain technology can fundamentally change human life and the financial system as a whole, which contributed to the creation and development of countless different business projects related to the crypto niche.
This article will tell you what a crypto business is, what makes it profitable, and the benefits of creating one today. In addition, you will learn the main types of businesses in the crypto industry, and at the end, you will find a step-by-step guide on how to create your own crypto business and take your place under the sun in the crypto world.
What is a Crypto Business and How is It Profitable?
As the global crypto adoption index shows, most of the countries in the world have already adopted cryptocurrencies and are actively using them in different areas of human life. A global digitalization of society is taking place and cryptocurrencies are driving progress toward a complete transition from traditional money to digital money. Various crypto projects related to cryptoprocessing, virtual reality, cryptoassets trading, and many other areas where cryptocurrency is able to unlock its potential are being created.
Cryptocurrency business today represents a wide range of promising areas of crypto market development. The creation and development of crypto projects that each day cover more and more spheres of human life has already made it clear that the new blockchain technology is becoming a revolution that fundamentally changes the way money works in the modern financial system. More and more companies are trying to keep up with the progress by implementing solutions based on distributed ledger technology and thus making a step towards enhancing business processes that allow for improving customer experience accordingly.
Both companies with many years of experience and newly founded companies are finding that important customers and suppliers are choosing to do business using cryptocurrency. Using cryptocurrency for business presents many opportunities today. Introducing cryptocurrency now can help raise awareness of this new technology in every organization. It can also help companies position themselves in this important emerging space for the future, which may include central bank digital currencies and traditional investments that have been tokenized and new asset classes may provide access to new pools of capital and liquidity through cryptocurrency.
For example, cryptocurrency business accounts can be an effective alternative to cash or a countervailing asset whose value may depreciate over time due to inflation. Cryptocurrency is an investment asset, and some, such as Bitcoin, have performed exceptionally well over the past five years. Moreover, one of the important aspects of the crypto business as part of the creation of a blockchain-based solution is the fact that people are working hard to remain anonymous, which is certainly an important component when creating any kind of crypto projects. Another example is that by creating a payment system in cryptocurrency, you can connect with these people and interact with them on a deeper level, allowing them to shop at some online store and do as they please.
Benefits of Running a Crypto Business Today
The growth of the crypto market in 2021 has contributed to the interest in digital assets from various companies around the world. While previously only those companies who sincerely believed in the crypto industry were investing in cryptocurrencies or implementing them in their business processes, now it is more like a trend. Cryptocurrency technologies, being an integral part of the financial system today, have become the foundation on which a large number of different projects are built, and which are designed to make life easier not only for ordinary consumers, but also for the business sector.
Businesses use cryptocurrency because it helps optimize business processes. It’s not just about digital assets; it’s also about blockchain technology. As we know, it is impossible to change or delete information from the blockchain once it has already been entered there. In addition to the fact that it eliminates the abuse of power by individuals of any company, it is even cheaper and more convenient.
Let’s take the banking sector as an example. In banking, there is a process called reconsolidation. According to studies, if blockchain technology is integrated into this process, the speed of data reconciliation will increase dozens of times, the human factor will be eliminated, and annual operating costs can be reduced by $4 billion, with a total figure of $30 billion for American banks.
Businesses can also use cryptocurrencies to conduct cross-border transactions. This method differs from banking services in terms of speed, minimal commissions, and the ability to perform a transaction at any moment. Many companies worldwide accept cryptocurrencies as payment for their goods or services. The reason for this is that it is a good investment tool, which does not have a clear legal background, so accepting payments, for example, in Bitcoin, will be much more profitable for the company than in fiat currency.
The total number of users in the crypto market on December 29th, 2021 is approximately 295 million. Today that number has more than doubled to nearly 1 billion. The number, as well as interest in cryptocurrencies, continues to grow. What is the reason for such interest? For example, protection from inflation: Bitcoin is limited to 21 million coins, while the issue of fiat currencies is unlimited. Also, some people don’t trust traditional financial systems, so they support the idea of digital money, stablecoins independent from volatility, confidential transactions, and many other things.
Every business requires development. And the crypto industry is lending a helping hand in this endeavor, providing better tools for online business. One of them is crypto processing or a method that allows you to pay for goods and services with cryptocurrency. Cryptoprocessing also allows receiving payments from users from all over the world, even where there is no access to banking services. Thus, the geography of sales expands, which leads to an increase in revenue. It secures funds through strong encryption and increases business competitiveness, profits, customer service, and customer loyalty. That’s why crypto-processing can bring tremendous business benefits.
Options for Starting a Crypto Business
Cryptocurrencies have become the technology of the future and now offer new development opportunities for businesses around the world. There are a number of business ideas in the crypto industry that use blockchain technology in one way or another to create interesting and useful solutions within payments, analytics, and other areas. Here are a number of business ideas that are actively developing in the crypto world.
1. Crypto Exchange
A good crypto exchange can bring millions and even billions of dollars to its owners. It can be developed either from scratch or by purchasing a ready-made solution.
The first option is quite time-consuming but entirely feasible. It is essential when creating any platform/site to pay attention to its functionality and security because breaking the platform where the assets of its users are stored will be literally the point of no return – the users will lose money and will stop trusting you. That’s why you need to take care of data protection in the first place. Also, remember user-friendliness – the platform will benefit if the services can be used effortlessly and the interface is friendly. All this can be done with the help of a powerful team of developers, analysts, marketers, and executives with extensive experience in the niche.
A white label, or turnkey solution, is a cheaper and easier way to start making money. Essentially, you are buying a ready-made product that only needs to be launched. In addition, the working crypto exchange can be given for improvement – to add some functions of your own, for example. This approach will be cheaper than creating a platform from scratch and will be ideal for those who value every second of their time.
2. Crypto Processing Service
Crypto processing is a modern payment tool, thanks to which customers pay for goods or services online, not with ordinary money via bank data or payment systems, but with cryptocurrency. Today’s crypto industry development, in one way or another, requires merchants to integrate new payment solutions for doing business online. Consequently, this urgent problem can be solved by creating crypto payment gateways.
This possibility of using crypto processing is convenient for buyers and beneficial for merchants integrating this payment method into their sites. By accepting customers’ money transfers in cryptocurrency, merchants save on commissions, which are significantly higher for ordinary bank transfers, and also increase the number of buyers, many of whom are eager to pay with cryptocurrency. Thanks to the new payment approaches, the customer base and, consequently, the company’s profits are growing.
3. Crypto Asset Management Solution
Many crypto traders and investors purchase a wide range of different currencies to maintain a diverse portfolio. If they use different wallets and multiple exchanges, it can be difficult for them to keep track of their crypto assets, which can create problems with their portfolio analytics. For such cases, developing a special service or app that will keep track of an investor’s portfolio and provide detailed analytics can be a crypto business idea. Such solutions are called crypto trackers.
Crypto portfolio trackers are third-party tools that link to your crypto wallets and provide an overview of your crypto assets. Instead of having to track each transaction manually, users can sync their crypto portfolio with their portfolio tracker and get the entire data as a whole, including total gains and/or losses for the relevant tax year.
4. Crypto Analytical Platform
Crypto analytics platform is a multifunctional ecosystem with a large set of tools for technical and fundamental analysis of the cryptocurrency market in order to identify potentially profitable projects for investing money. This type of crypto business is a very profitable option because the need to have a platform for in-depth crypto market analytics is one of the integral things in the process of trading crypto assets.
Such services give access to numerous trading tools, including charts to plot the price movement of an asset, calculate its trading volume, various indicators, oscillators to determine the strength of the trend, etc. In addition, one can find news feeds displaying information about the status of a particular crypto asset, detailed statistics of the crypto portfolio and the dynamics of its value on such platforms. All this and more make this type of crypto business one of the most profitable and useful in the crypto industry.
5. Crypto Mining Platform
Today, there are many services that make it possible to mine not only Bitcoin but also other cryptocurrencies, which is very popular among participants in the crypto market. Since mining cryptocurrencies using professional equipment such as powerful video cards for creating farms is not cheap, many who want to mine crypto use special platforms with similar functionality and algorithms and are often cheaper to use.
Such platforms offer a choice of several mining modes for most cryptocurrencies that exist on the crypto market today, depending on the power of the equipment used on the computer. They also provide access to a large arsenal of analytical tools to monitor the mining process in real time, which, combined with a relatively low maintenance cost, is a great tool for mining crypto.
6. NFT Marketplace
According to OpenSea – the leading NFT marketplace which facilitated nearly 88% of the total trading volumes for 2021, or over $12.5 billion – the summer of 2021 was the peak of saturation, followed by a decline in activity. Today, industry activity is becoming cyclical with its downs and dips. The rise in activity is associated with triggers, which are most often attention-grabbing events.
An NFT marketplace is a platform that sells non-interchangeable tokens from different owners and creators. For example, OpenSea offers a choice of individual images as well as collections. Here users can create and run their own digital art. It is also possible to buy NFTs for collection or resale. The owner of the marketplace receives a commission from the launch of the collection and its sales.
7. Proprietary Blockchain and Cryptocurrency
Blockchain is a book of decentralized data exchanged through secure channels. Blockchain technology allows a group of selected participants to exchange data. Cloud-based blockchain services make it possible to easily collect, integrate and exchange transaction data from multiple sources. The data is broken down into common blocks that are interconnected through unique identifiers that take the form of cryptographic hash functions.
Creating your own blockchain can dilute competition in the market and the implementation of your own cryptocurrency can contribute to the development of new projects where your cryptocurrency can be used as payment, etc. On the other hand, once the blockchain is created, other companies will also be able to create their own solutions based on it, which will certainly add to your reputation points in the crypto industry.
8. Crypto Exchanges Software
The software for companies working in the crypto sphere includes a very wide range of different programs that somehow maintain smooth operation of the entire system, such as a cryptocurrency exchange. However, the most important component of any crypto exchange is a matching engine. This mechanism provides an ultra-fast convergence of incoming buy and sell orders, thereby satisfying their execution. The development of such systems is not an easy but incredibly profitable business because no exchange can do without the process of order matching.
Key Steps of Starting a Crypto Business
Now that you know what a crypto business is and why it is profitable, as well as familiarized with the main areas of crypto business today, it’s time to consider in detail the sequence of necessary steps to create your own crypto business. Regardless of the direction of the crypto business that you choose, the sequence of actions is presented in general terms.
1. Choose a Crypto Business Direction
Choosing the direction of crypto business is the first and most important step in creating a product that will be useful to all users. Before you do that, you need to understand what you are most interested in. Today there are a lot of directions in which you can try your forces, starting from cryptocurrency wallets and finishing with creation of cryptocurrency exchange. It is necessary to approach this question with special attention, because your decision will determine the vector of company development and, accordingly, will require certain knowledge and skills in a certain field.
2. Identification of the Target Audience and Market Research
Market research is an integral part of the launch of any business and therefore this stage requires a particularly careful approach. You will need a thorough analysis of the market conditions in order to understand which company offers what services, what customer base it has, and in general how it positions itself. You must also take care to find out who will be the target audience for the solution you offer. This can be investors and traders, corporate clients or ordinary users when it comes to using a crypto wallet. This step will allow you to start developing a business plan.
3. Choose the Legal Structure
The right legal form of enterprise can give founders additional tools to implement their business development and protection plans. The most common forms are Limited Liability Companies (LLC), Limited Partnerships (LP), and Individual Entrepreneurs without a Legal Entity (IE). Each of these forms has its advantages and disadvantages and is used depending on the tasks to be performed by entrepreneurs.
The most popular form of a commercial legal entity among representatives of medium and small businesses is a limited liability company, which has many advantages compared to other organizational-legal forms of commercial organizations. For example, unlike other legal entities, a limited liability company may have one founder – an individual. By becoming the founder of such an LLC and the general director, the entrepreneur will be able to fully control his business.
But representatives of small businesses most often choose the status of the individual entrepreneur. Usually, these are activities in retail trade, catering, and other services provided to the population. Individual entrepreneurs have more freedom in handling cash. Accounting for the individual entrepreneur is simpler and does not require deep accounting knowledge. But in case of bankruptcy, the individual entrepreneur is responsible for all his personal property.
4. Secure Initial Funding
The launch of any business involves the presence of impressive capital and the purchase of the necessary software and servers, hiring specialists who will work on the project, renting office space (in case your business needs it), as well as many other expenses related to both administrative and with the legal aspects of running a crypto business. In this case, you initially have a large amount of funds, or you can contact the bank and get a loan to start it. Also, one of the most popular options at this stage is to attract investors to finance your product. In any case, it is worthwhile to carefully analyze your capabilities and approach the matter wisely.
5. Open a Business Bank Account
Once you’ve decided on the direction of your business and calculated your budget, it’s time to think about opening business bank accounts to ensure cash flow. In this case, you should pay special attention to the terms and conditions of accounts at each particular bank through a comparative analysis. Some banks offer more favorable terms, while in other banks you can find interesting business offers. In any case you should carefully study the offers existing in the market in order to benefit as much as possible from cooperation with the bank.
6. Get the Required Business Licenses and Permits
The topic related to legal formalities is one of the most important when it comes to launching a crypto business. Each state obliges crypto projects to have corresponding permits and licenses for their activities. This is not only due to the fact that the crypto market is a young direction in the financial system, which is strongly exposed to various kinds of hacker attacks and fraud, but also due to the fact that regulation of any activity gives an opportunity to confirm honesty and transparency of business. In this regard, you need to take care beforehand to get all necessary licenses and permissions to start your crypto business.
7. Purchase and Setup the Software Needed to Run Crypto Business
At this stage, you should think about what software you may need to keep your crypto business running smoothly. Depending on the direction you choose, you may need a trading platform, payment gateway, third-party servers to run various API elements, institutional liquidity, matchmaking engine, and more. It is also worth paying special attention to White Label solutions, because they allow you to launch a business much faster using the support of another company.
8. Take Care of Advertising and Promotion
Marketing and advertising is the cornerstone of success in the business environment. The more people learn about your business, the more your income will be, and, accordingly, fame. At this stage, you need to competently approach the planning of an advertising campaign for your crypto business. In the 21st century, the possibilities of advertising have become simply limitless, which plays into the hands of any business that knows how to approach this business in the right way. Explore all possible promotion methods including social media, radio, and TV advertising, as well as the use of affiliate programs and collaborations with different publications to increase customer conversions.
Creating and maintaining a crypto business is a challenging task that requires legal knowledge, a lot of capital, and some experience in the field in which your product will belong. It is essential to develop a clear business plan and consistently put it into practice. Also, remember that you need to always be aware of the news background in the crypto industry to understand the structure of competition in the market and follow the latest trends, which to some extent, can help you expand your line of products and solutions for the crypto world. One way or another, today’s crypto market provides great opportunities not only to create a high-quality and useful crypto product but also to change the direction of development of the entire financial system.