Dealing with cryptocurrencies isn’t always a straightforward process. Companies in this space face all sorts of challenges from governments, consumers, and even the technology itself. Frankly, it is hard to get ahead when you work in this industry.
However, winning in crypto doesn’t have to be as difficult as many make it out to be. While it isn’t a walk in the park, it’s not impossible, either.
We’re going to split this post into two parts. The first section deals with the problems and challenges crypto companies face while the second focuses on what can be done about these issues, including how to approach the regulatory environment.
The Challenges Facing The Crypto Industry
This section introduces the challenges facing the crypto industry. You’ll learn why it is so hard to get ahead in the sector from numerous angles, some of which isn’t often talked about.
Negative Perceptions
One significant problem the crypto industry has is negative perceptions. Consumers associate it with illegal activity and scams, which isn’t ideal for anyone’s playbook.
For example, we are still living through an era where people view the use of crypto as something that criminals do. Many members of the public believe that traffickers use it on the black market and so on.
Many may also share the perception that crypto isn’t real money or that it doesn’t have any value of its own. Many investors view it as a speculative asset and something to avoid at all costs. These people say that it is in a bubble and that it will come crashing back down to Earth before the general population realizes it.
Scalability Issues
Next to that are the scalability issues. The blockchain network can only grow at a fixed rate allowed by the system, limiting the number of coins that can come into existence.
This problem is particularly acute for Bitcoin. While the size of the market is small relative to the economy, the ability of the system to mint new coins is limited. This has profound implications for credit markets in the future. If you can’t issue new credit, the net flows into the system will not be sufficient to maintain the asset’s value.
On the micro-scale, there are also a limited number of transactions networks can carry out per second. It’s not like the conventional banking system where clearinghouses have almost unlimited upside. There are computation constraints on the system related to blockchain.
Security Risks
Security risks are another potential problem with crypto technology and why companies sometimes struggle. Keeping people’s assets safe isn’t as straightforward as many punters originally thought.
Multiple factors drive these security risks. The main one is the access to the underlying networks. Companies like Binance have had all sorts of problems trying to keep wallets safe and managed through their “hot” servers.
You also have the susceptibility to all the usual phishing and password hacking scams you get for regular banking. Many crypto companies simply don’t have the infrastructure required to protect against this sort of thing.
Volatility
The real value of cryptocurrencies, assets, and companies can also vary wildly from one week to the next. As with any new asset class, it takes a while for it to settle down and enter a sensible price range.
Historically, this was a tremendous problem. You could have orders of magnitude changes in the perceived market value of the underlying digital assets or equities, even if the fair value remained constant or rose steadily.
This volatility is what shakes many investors out of the market. Companies can find it hard to attract capital because the people giving them the money don’t know if they are going to make a return.
Regulatory Uncertainty
You also have significant regulatory issues in the crypto space. Companies don’t know when governments are going to crack down on them and prevent them from growing.
This problem is particularly acute in the currency space. Companies have no idea whether government departments will suddenly decide to outlaw their operations and prevent them from administering or distributing tokens to customers.
Governments still don’t know how to classify cryptocurrencies. The U.S. believes they are a type of commodity, but other players in the market believe they are a currency alternative.
The blockchain is also simply a technology that facilitates economic operations, similar to the cloud. The market and the government are still trying to figure out what to do with the technology and how it could change the game in the future.
How Companies Can Address These Challenges
While these challenges might seem significant, there are numerous tactics companies can use to address them. Despite all the nay-saying and volatility, the underlying technology and concepts are valuable and will undoubtedly have a profound impact on the real world in the future.
But what can companies do in the meantime to win in this space?
Collaborate With Regulators
The first piece of advice is simply to collaborate with regulators. Working with the people making the rules can help you thrash something out that goes in your favor and makes sense for society at large.
Regulators usually don’t understand the industry as well as you do, so talking to them about how everything works can help. As long as the frameworks you suggest are equitable, all the parties involved could find common ground.
You can also point out unfair regulations and how they are hindering the development of the industry and damaging social welfare at large. Getting decision-makers to change their minds could help them foster innovation and get the crypto economy off the ground.
Yes, it’s going to be a long and uneasy road. But you have to start somewhere. Conducting awareness seminars aimed at educating interested parties is one of many ways to go about it.
Build Transparency
If you’re struggling with crypto PR, you might also want to start building transparency. Showing customers and the public what you do can help dispel myths and normalize the crypto economy.
One approach is to simply use a PR agency that specializes in this area. Professionals can chart a course forward and show you what you need to do next if you are having issues getting the right message across to your audience.
Remember – it is not about what you decide to tell the audience, it is about what they understand from your message.
If you can find a way to show people you are behaving equitably, you will draw a following naturally.
Building transparency could also include something as simple as hosting a weekly webinar on social media. Chatting through what you are doing and how you think it might help people is an excellent way to eliminate fear, uncertainty and doubt.
Invest In Security Measures
You also want to invest in security measures at your crypto firm, regardless of your operations. The more you can convince people that you are taking care of their money or providing a safe service, the more likely they are to turn towards you.
How you do this will depend on your IT requirements. There are numerous services out there that can provide specific security services for crypto companies. It’s just a matter of finding them.
Generally, you want to spend around 5% to 10% of revenue on security operations. If you can raise expenditures to the same as marketing, you can put in place procedures that will make catastrophic breaches less likely.
Develop Scalable Solutions
Depending on your segment in crypto marketing, you may also be able to develop scalable solutions. These mean you can continue adding users without any breakdown in the quality of service.
While some markets face real algorithmic constraints, companies are getting better at finding ways around these. For instance, layered systems are improving the speed of Bitcoin transactions, boosting the network and helping it function better for everyday usage.
You also have companies tinkering with the type of “proof” the underlying blockchain technology requires. Proof of stake may become more scalable than proof of work going into the future, providing more options for companies that need to grow fast.
Educate Your Audience
The final piece of advice to help get out of a rut as a crypto firm is to educate your audience. If people understand what you do and how it works, they are less likely to be critical, cynical, or skeptical.
Oh wait, we’re talking about human beings here. People are going to be critical, cynical, or skeptical no matter what you do. You just have to ensure that you’re getting the right message across to your intended audience.
The main task should be to debunk the common myths in the crypto space that the fear-mongering media loves to focus on. For instance, it’s not true that the majority of crypto payments are to criminals. It’s also false that crypto has no intrinsic value, unlike gold.
You’ll want to provide educational services that detail the nuts and bolts of what you are doing. If customers have a picture of how your firm operates, they are less likely to regard it with suspicion going forward.
In summary, crypto companies face some challenges in today’s market. That might be why they haven’t become a bigger force yet. However, at the same time, these issues can be overcome with the proper management and approach.
