How Small Businesses Are Using Crypto to Build Financial Independence

In the last few years, Bitcoin and Ethereum have become highly popular. Crypto used to be a hidden asset, but now big names in business and government use it for transactions.

Small businesses have a chance to explore a new possibility with crypto. Small businesses have an exciting new opportunity with crypto, and a crypto payment widget helps make the move toward decentralized finance easier. Small companies can now handle finances differently because of the advantages crypto provides.

This article will explore the key ways small businesses are harnessing crypto’s potential. We’ll look at how small companies are using cryptocurrency to:

• Accept payments
• Raise funds
• Gain financial privacy
• Build decentralized finance apps
• Reward customers and build loyalty

Accepting Crypto Payments

One of the biggest crypto opportunities for small businesses is accepting cryptocurrency payments. Cryptocurrencies allow small businesses to accept payment from anyone globally without requiring a merchant account from a traditional bank.

According to Cointelegraph, as of 2024, approximately 15,000 businesses worldwide accept cryptocurrency payments, with around 2,300 located in the United States. While mainstream interest is growing for top cryptocurrencies such as Bitcoin and Ethereum, certain niche industries have more interest in privacy-focused coins such as Monero.

Here’s why more small businesses are accepting crypto payments:

• Lower Fees. Credit card payments can charge fees of around 3%. Crypto transaction fees are usually 1% or less.
• No Chargebacks. Cryptocurrency payments can’t be reversed or disputed after the transaction, eliminating costly chargeback fraud.
• Faster Settlement. Small businesses get access to crypto revenue faster, without waiting days for bank settlements.
• New Customers. Dealing with crypto can allow small businesses to access the rising community of crypto users.
• Tax Benefits. In a number of countries, crypto earnings from small businesses are taxed less than earnings from fiat currency.

To accept crypto payments, small businesses can leverage crypto payment gateways like BitPay and CoinPayments. These gateways, including platforms such as Inqud, allow businesses to accept major cryptocurrencies while receiving payouts in fiat currency like dollars.

Crypto-savvy small businesses can also accept coins directly into a private, secure digital wallet. Wallets like MetaMask allow small businesses to be self-custodial, truly owning the crypto they earn.

Raising Funds with Crypto

As well as making payments easier, cryptocurrency gives small businesses new resources for getting funds. Both crypto crowdfunding and DeFi lending are supporting the financial needs of small businesses.

Crypto Crowdfunding

Launching a new small business is a costly endeavor full of financial risk. To get started, entrepreneurs often turn to crowdfunding platforms like Kickstarter and Indiegogo for an early capital injection.

Now, new crypto-based crowdfunding platforms allow users to invest in and support small businesses using cryptocurrency:

• StartEngine – Cryptocurrency investing in startups and small businesses
• Republic – Crypto and equity crowdfunding on blockchain
• BitAngels – Angel investor network for crypto companies
• BnkToTheFuture – Crypto market for startup equity investments

These crypto crowdfunding sites give small businesses access to a dedicated cryptocurrency investor audience. And because they’re decentralized and global, crypto crowdfunding pools a much larger potential investor base compared to traditional crowdfunding.

Decentralized Finance Lending

Beyond crowdfunding, cryptocurrencies also enable decentralized finance (DeFi) apps. DeFi apps allow cryptocurrency holders to lend and earn interest on their coins to others seeking loans.

For small businesses, DeFi lending unlocks new potential sources of financing from a global liquidity pool:

• MakerDAO – Loans issued against Ethereum collateral
• Compound – Algorithmic money markets for supplying/borrowing assets
• Aave – Open-source liquidity protocol for earning interest

DeFi lending rates are set algorithmically based on supply and demand. By putting up cryptocurrency as collateral, small businesses can potentially source loans at rates as low as 2.9% APR.

And because DeFi lending doesn’t rely on traditional intermediaries like banks, small businesses can access loans faster and without credit checks. Crypto-based lending offers an entirely new paradigm for small business financing.

Gaining Financial Privacy

Regulatory burdens can make financial privacy a challenge for small merchants and service providers. However, cryptocurrencies now offer small businesses a way to gain more financial privacy.

Whether because of moral objections or compliance costs, small businesses can leverage privacy coins to reduce transparency:

• Monero – Top privacy coin for anonymous digital cash transactions
• Zcash – Encrypted crypto transactions reveal no wallet or payment info
• Dash – Hosts an anonymous, decentralized payments network

With privacy coins, small businesses can conceal revenues, transaction details, customer data, and merchant wallet balances. Privacy coin transactions are validated without having to show the key details because of features like ring signatures, stealth addresses, and zk-SNARKs.

Privacy coins are controversial, but they do have legitimate use cases for a small business to operate off the grid and out of reach of regulators and tax collectors.

Building Crypto Apps

Savvy technical small business owners are also now building their own cryptocurrency apps and platforms:

• Payment processing – Integrate crypto payments into custom online shops, apps, and SAAS products.
• Loyalty rewards – Create your own branded crypto tokens to reward customer loyalty.
• NFT marketplaces – Sell digital artwork, music, and more with an NFT sales platform.
• Tokenized funding – Launch a small business by selling equity or revenue share tokens.
• Blockchain data – Monetize data insights via oracles and data marketplaces.

As blockchain development platforms such as Ethereum and Cardano have come into full swing, building custom crypto apps is now easier than ever for small dev shops. Crypto can be used by small businesses to generate new digital assets, marketplaces, and revenue streams far beyond what a web app can deliver.

Rewarding Customers with Crypto

Cryptocurrencies also present innovative ways for small businesses to reward loyal customers. Legacy loyalty programs from large retailers offer pitiful rewards with little value.

Crypto enables small businesses to create branded tokens that provide real value back to their best community members:

• Pay loyalty rewards in a branded stablecoin token
• Give early access tokens to new products and services
• Reward top referrers with equity or profit share coins
• Enable token holders’ priority support, discounts, and perks
• Allow staking tokens for interest rate on purchases

By offering crypto assets via your own branded token, you can encourage customers to spread the word about your business and reward them for bringing you repeat business. Customers can use these loyalty rewards tokens to trade, stake, and grow the value over time.

Cryptocurrency tokens provide more exciting and engaging rewards for online and offline patrons of small businesses. Branded tokens build lasting community loyalty that goes far beyond traditional punch cards and coupons.

Conclusion

What was originally an academic curiosity, cryptocurrencies such as Bitcoin, have become a mainstream fad with actual use in the real world. Crypto opens up game-changing financial tools for small businesses to accept payments, finance operations, trade in privacy, build apps, and keep loyal customers.

Lower fees, global reach, faster settlement, new investors, and innovative architectures that crypto provides an unprecedented opportunity for small merchants. With the use of cryptocurrency, independent small businesses can bring to their disposal financial tools that were hitherto only available to large corporations.

While crypto does come with new technical and compliance considerations, the benefits outweigh the costs for most modern small firms. Now is the moment for small businesses to take advantage of cryptocurrency’s financial independence, as experts predict that its adoption will skyrocket over the next five years.

The above has explored the key ways small companies today can utilize Bitcoin, stablecoins, DeFi lending, privacy coins, smart contract platforms, and branded tokens to their advantage. Cryptocurrency empowers small businesses to control their financial destinies, gain privacy, and build the next generation of digital commerce applications.