At the outset of 2021, it’s fair to say that Bitcoin is inarguably its strongest position ever to start a new year. The cryptocurrency saw a very strong run throughout the second half of 2020, making some faithful investors a lot of money, and putting some skeptics at ease. Now, there is still some debate about where it will go from here. Some analysts believe Bitcoin’s bull run is likely near its end for the time being. On the other hand, a particularly enthusiastic analysis at Business Insider suggests that the currency’s value could quadruple over the course of the year to come.
If one thing will never change about Bitcoin it may be that it will always polarize prognosticators. But in this post, we’re not assessing Bitcoin in terms of investment potential or 2021 predictions. Rather, we’re making a note of its strong position with regard to its potential effect on Bitcoin-related startups. The cryptocurrency’s performance in 2020 brought about a new level of legitimacy, which is likely to make the notion of starting a Bitcoin business all the more appealing for countless prospective startup founders.
Already, recent years have brought about a spike in these types of businesses. People are starting Bitcoin lending companies, organizing their own new crypto wallet programs, setting up Bitcoin guidance sites and services, and so on. And with the cryptocurrency now appearing more “legitimate” than ever, there will be more perceived value in launching these types of businesses.
For those considering a move like this though, there are some important factors to consider.
Teaching the basics
If you’re going to start a Bitcoin business, one of the most important things to keep in mind is that many consumers still have a limited understanding of cryptocurrency fundamentals. For this reason, it is in any related business’s best interest to be able to educate potential partners and clients on those fundamentals. To give an example of what this might look like, ZDNet does a nice job of going over some of the basics that individuals and businesses alike need to be familiar with when dealing with Bitcoin. These include the core definition and basic benefits, the various available alternatives, how to get started with storage options and exchanges, and how to deal safely with cryptos.
If you’re at the point of launching a Bitcoin business, most of this is likely familiar to you. But it can be helpful to go back to the basics to understand some of the areas in which you will likely need to be able to offer clear, concise education to potential partners and clients.
We just made a note that knowledge of the available Bitcoin alternatives can be helpful in teaching the basics to potential clients. But it’s also important to consider some of these alternatives internally. Is your Bitcoin-related business set up to deal solely in Bitcoin, or can you support other cryptocurrencies as well? If you do intend to support other cryptos, do you know which ones you’re going to focus on, and why? These are fundamentally simple questions, but they demand real care and consideration before you get your business off the ground.
Any new business owner should give some thought to liability protection. But particularly if you’re starting a Bitcoin-related company that may see you handling clients’ finances, or advising them on financial transfers, personal protection is vital. Proper liability protection essentially makes it such that your personal assets as an individual are not tied up in any debts your business might accrue, or any legal action that may for whatever reason be brought against your business.
There are multiple ways of setting up this sort of protection, though the most fundamental has to do with the core structure of your business. On this subject, ZenBusiness explains that there are multiple structures that help to formally separate personal assets from business liability. An LLC (limited liability company) structure is designed for this very purpose, though corporations and LLPs also provide some degree of personal protection. All are worth looking into before launching a Bitcoin business so that you can make the best decision in protecting your own assets.
When starting any Bitcoin-related business, it’s also important to stay on top of the news regarding regulation. Case in point, our recent post ‘US Bank Regulator ‘Worried’ with Biden Crypto Regulations’ spoke to the fact that a shifting political landscape has the potential to disrupt the regulatory status quo regarding cryptocurrency. This is something that can’t always be planned or in precise terms, but it’s a reason to be vigilant regarding any and all news relating to cryptocurrency policy discussion. It’s one thing to watch the crypto charts and analyze Bitcoin from a financial perspective. But regulatory practices are still in flux to some degree also, and these can have a tremendous effect on currency value, consumer trust, Bitcoin utility, and more. Staying on top of them is essential if you’re to keep your business in good shape.
There will be plenty more to consider with regard to your specific Bitcoin business. But these are some overarching concerns to keep in mind for anyone working on this unique sort of startup venture.