The movement to adopt digital currencies has become increasingly popular among individuals since the launch of Bitcoin a decade ago. Now, more businesses are also beginning to create bitcoin franchises (businesses that integrate crypto in one or more ways). Here are some of the most popular bitcoin franchise categories and a few real-world examples of businesses in this space.
Accepting Crypto Payments
One of the easiest ways that any business can become a bitcoin franchise is to begin to adopt cryptocurrency as a form of payment. In 2019, this is far from just an idea. Many of the world’s top enterprises (and many small businesses) already accept crypto. This movement spans across various industries, from brick-and-mortar shops to e-commerce stores.
For instance, Shopify gives store owners the option to accept Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and 300+ other cryptocurrencies. Microsoft, CheapAir, and several other well-known companies all accept crypto. Despite this success, we have also seen some cases where businesses have stopped accepting crypto. The main causes for this include things like bear markets and high transaction fees during peak blockchain usage times. However, with continuous technical improvements, the overall trend is clear: more businesses are looking towards accepting crypto payments.
Mining cryptocurrency also presents another route for entrepreneurs. While it’s possible to begin mining from one’s own home as a hobbyist, some people have created massive enterprises out of bitcoin mining. Bitmain, the world’s leading producer of bitcoin mining rigs, is one such example. In the first nine months of 2018, this company made $500 million on a little more than $3 billion of revenues.
Mining rig manufacturing isn’t the only bitcoin franchise opportunity within the mining category. Large companies have invested in infrastructure (i.e. warehouses) to run large-scale mining operations. TMGcore is one example. Traditionally, mining rigs are most likely to be profitable in very specific locations. Mostly, this includes locations with cooler climates and access to cheap electricity.
TMGcore is changing this through an innovative new mining facility, though. In East Texas, the company is reportedly utilizing Two Phase Liquid Cooling Immersion technology. This reduces cooling costs by up to 90 percent. Supposedly, the company will start a mining pool dubbed LEGACYII at some point in 2019. The mining pool will run on renewable energy. Yes, the exact size of this initial capital investments is unknown. However, it’s normal for projects of this magnitude to cost millions to get started. Even with high initial costs, similar crypto mining facilities are popping up around the globe.
In January 2018, Russian businessman Aleksey Kolesnik bought two power stations in Perm, Russia for an estimated $3 million. The acquisition of these facilities is thought to be for the purposes of setting up a crypto mining and data center. There are even more relevant examples similar to this. For instance, in April 2018, two companies in Australia (Hunter Energy and IOT Group) began working on a plan to convert a decommissioned coal power plant into a crypto mining facility.
Purchasing cryptocurrency and HODLing led to the creation of several bitcoin millionaires and bitcoin billionaires in the past few years. For the most part, investing has been traditionally done at the individual level. Nonetheless, this is beginning to change with the emergence of bitcoin franchises like digital asset management firms.
More specifically, many concepts from traditional finance are now being applied in crypto. As outlined previously, Grayscale Investments has established a number of crypto investment trusts. These financial products are all classified as grantor trusts. Some notable offerings include single-asset products (i.e. ETC, XRP, ZEC) and diversified products (a collection of various investment trusts).
In the US, the status of Bitcoin ETFs is undetermined (as of February 2019). However, this concept is gaining traction. Future regulatory approvals could mean more businesses in asset management and more institutional investment options.
As an alternative to the above choices, some businesses might even decide to just convert a portion of fiat profits to crypto and use this as a way to store capital reserves.
Crypto Exchanges and Bitcoin ATMs
There are a number of cryptocurrency exchanges that have made a major impact on the crypto industry. These businesses give much-needed liquidity to the market and simplify the process of acquiring and using cryptos for P2P payments. Centralized exchanges, decentralized exchanges, futures trading platforms, and even Bitcoin ATMs are a few examples of this type of bitcoin franchise.
Some exchanges provide the option to convert fiat-to-crypto, serving as an important connection that opens up new possibilities of crypto adoption. Others provide services or protocols for exchanging crypto-to-crypto, filling a vital need for accessibility to various cryptos.
Typically, most exchanges charge standard fees for trades and/or fund withdrawals. Coinbase, the world’s most popular fiat-to-crypto exchange, reached an estimated $1.3 billion in revenue in 2018 and $1 billion in 2017. Binance, the world’s most popular crypt-to-crypto exchange, made $446 million in profits in 2018.
Develop Technical Solutions that Integrate Blockchain and Crypto
Another vital part of the ecosystem of bitcoin franchises is the array of technologies that utilize blockchain and crypto payments. Decentralized applications (dapps), blockchain as a service (BaaS) platforms, and a variety of other solutions are becoming increasingly popular.
Moreover, these technologies are aiming to provide more efficiency than traditional solutions. In the payroll/HR realm, Bitwage is providing a blockchain-based, payroll and invoicing service for both individuals and companies. Funding options for payments include cryptos (BTC and ETH) as well as numerous fiat currencies that can be processed via credit card, wire, and ACH.
Besides B2B services such as Bitwage, decentralized applications (dapps) like CryptoKitties are a popular option for developers looking to create consumer-focused businesses around crypto. With the launch of gaming dapps such as CryptoKitties, companies have the ability to collect fees from users directly in crypto. For users, the quality of these games is steadily improving. Ultimately, they are creating new experiences that weren’t possible before with traditional web or mobile applications.
As these technologies improve over time, related BaaS solutions and dapps have the ability to gain more users and have greater influence in their market niches.