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Factors Affecting Institutional Adoption Of Cryptocurrency in Commercial Funding

by | Nov 2, 2019 | Blog

Financial institutions have historically been slow to adopt or integrate cryptocurrencies into their overall investment options. There are a number of reasons for this unwillingness to explore the opportunities in the cryptocurrency field. Here are some of the basics of cryptocurrency and a brief explanation of the opportunities and drawbacks of these investments in the financial marketplace.

What Is Cryptocurrency?

Cryptocurrency is a medium of exchange that is based on internet transactions and that is not under the control of any government entity or centralized financial authority. In theory, this prevents interference in the established value of cryptocurrencies. The best-known cryptocurrency is Bitcoin. Many other types of cryptocurrency are available including Zcash, Ethereum, Monero, Dash, Ripple, and Cardano. Each of these cryptocurrencies is designed to serve as a medium of exchange for transactions and offer a superior degree of privacy for these financial activities.

Barriers to Institutional Adoption

Apart from the obvious questions about the stability and the lack of regulation present in the cryptocurrency marketplace, other barriers have prevented widespread adoption of these cryptocurrencies by financial institutions. Some of the most common issues with using cryptocurrency in the commercial funding marketplace include the lack of advanced application programming interfaces in the exchange marketplace and the fact that cryptocurrencies have not yet established a centralized trading system for all transactions. This forces commercial funding companies and other financial institutions to work with a wide range of different systems and trading exchanges.

Why Cryptocurrency Matters to Your Business

Cryptocurrency offers a number of important advantages in the commercial financial marketplace:

  • Because cryptocurrency transactions are typically performed on a peer-to-peer network, they eliminate most of the uncertainty and added expenses involved in the financial process.
  • Cryptocurrency transactions are designed to provide optimal privacy for all parties. This is especially important in funding arrangements designed to finance cannabis-related business activities in the states that have legalized these businesses.
  • Because cryptocurrency is available to all investors regardless of their geographical location or their ability to access traditional forms of credit, these digital currencies can allow for truly international funding for many commercial enterprises.
Although cryptocurrency is not quite ready for prime time in the commercial real estate and investment funding marketplace, it is likely to have a significant impact on the availability and disbursement of funds in the near future.

The Value of Alternative Lending

When cryptocurrency does hit the commercial lending and funding marketplace, alternative lenders will likely lead the charge in making these arrangements available to their borrowers and investors. Alternative lending companies who offer commercial funding arrangements can provide you with the most practical options for fast approval and disbursement of your funding in the commercial real estate and business lending industry.
At ReProp Financial, we offer direct loans for businesses in the state of California and across the western part of the United States. Whether you need direct funding for real estate acquisitions, construction or upgrades to your business operations, ReProp Financial offers the right solutions for you. Call us today at 1-800-444-2948 to submit a loan or to request more information. We look forward to the opportunity to serve you.
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