Bitcoin And The External Environment

The market environment is the environment in which the business sells good and services and customers buy them from businesses. To analyze which forces impact the market environment an

• Environmental scan
• SWOT analysis and,
• The Porter’s 6 forces model can be performed within the business.

Porter’s 6 Forces is composed of 6 forces, namely:

• Current competitors
• The threat of new entrants
• The threat of substitute products
• Power of the buyer
• Power of the supplier
• Power of complementary products.

In this case Bitcoin can be seen as a threat of new entrant and giving consumers their power of being a buyer. Bitcoin can be seen as a threat to government’s traditional way of dispersing, controlling and using money because now it gives the people the power to control their own monies. People can invest and grow money without any interest, which is what government and banks use to run themselves in terms of investing, and borrowing money between themselves and consumers. Bitcoin can be bought in fractions making it easier to attain then fiscal money and although this may sound like a little the value of Bitcoin will and can generate great returns. Power of the Buyer is the power, which customers have to decide where and from which business they will put their loyalty and invest his/her money. Seeing that Bitcoin has recently been gaining popularity and people are realizing its worth, security through transparency and technological advances. It may appeal to buyers as it presents itself as a new way of transacting in this ever-changing world we live in and may hold a bit of snob value making it enticing to buyers. In terms of businesses, they might have to join onto the Bitcoin bandwagon as it is where the customers may be and the aim of a business is mainly to satisfy your consumer. And thus with Bitcoin it will add to easy transaction between customers and businesses.

The Macro Environment

The macro environment is the most external environment of the three business environments. With the Macro environment, businesses have no control over it but can and should use its events to develop strategies to counter events that may threaten the business and optimize on opportunities that may avail themselves. The PESTLE Analysis represents the factors that may be a may be a threat or opportunity to businesses. The acronym stands for:

• Political
• Economic and ethical
• Social
• Technological
• Legislative
• Environmental.

A factor that businesses may have to encounter because of Bitcoin is the Technological factor. This refers to the equipment and technology business uses to advertise and transact with customers. Bitcoin would fall under this factor, as it is software that businesses can use to perform transactions between customers or suppliers. With the PESTLE factors being interrelated, this technological factor may impact the Economic factors as well. For instance, as previously mentioned that with the introduction of Bitcoin businesses like banks may become obsolete. Thus it could cause the interest rate to increase, as they will no longer be reliant on a variety of income channels. People will be investing, growing and keeping their money in Bitcoin making banks valuable for financial assistance only.

Possible competitive advantages

Bitcoin does possess possible competitive advantage for businesses as it provides a place for businesses and entrepreneurs to keep their money while simultaneously growing it. It is like an investment invested into to grow it but is accessible at any time without the tedious waiting periods and documents required from banks. When purchasing Bitcoin, it is solely yours and is without the interference of transaction costs and eliminates the double-spend problem. Double-spending is a risk where digital money can be copied. Similar to the connotation Vinny Lingham made with the CD’s of how one is made but millions of copies of it can be made, bought and sold. So with Bitcoin that is eliminated. It also eliminates paper trail because as Mr. Lingham mentioned, that every transaction made on Bitcoin is recorded onto the blockchain.

Bitcoin and entrepreneurship

Satoshi Nakamoto, developer of Bitcoin, made an entrepreneurial move in developing Bitcoin. His/her identification of the Double-Spending problem was an opportunity with potential to instill changes not only with how people transact with money but on certain practices in the economy. In terms of the economy Bitcoin in coherence with the Blockchain, could eliminate corruption. The Blockchain is transparent and tamper-free and could help entrepreneurs in business well implement the King II report of Transparency. Thus with this medium every transaction made is recorded, indicating entrepreneurs discipline and responsibility to make decisions and leadership that is fair.

Bitcoin to new and emerging entrepreneurs can also be used as means of creating capital to grow money and invest into other ventures. The use of Bitcoin rather than the traditional money we use right now may pose as a differentiation strategy for entrepreneurs. As an entrepreneur you want to find your competitive advantage and the use of Bitcoin may be it as it is growing more as a trusted means of investing money and may be of high value in the near future. Bitcoin also helps cut process costs in terms of money transfers between two parties in a transaction. It eliminates banking fees and cross-banking transaction costs.In places like Africa, cryptocurrencies have become a very popular means of generating an income due to the high unemployment rates in some countries. Although, the introduction of cryptocurrencies does not necessarily require one to be directly involved in it for income or creating a job opportunity. For instance, 16-year-old technology fanatic, Elisha Owusu Akwya is a young entrepreneur and CEO of cryptocurrency marketing company Token Media. His company according to BitcoinAfrica has contributed to $40 million sales of Bitcoin.

Bitcoin as an investment instrument

When investing in any venture, each one has its own level of risk and level of return. High risk investment will bring about high returns and low risk investment will bring low returns on investments. According to the information I have read on Bitcoin and its investment viability, at the current moment it is viable but could in future potentially be in what is called a “financial bubble”. Which is a term used to describe the fast fluctuation of a something and once under too much pressure burst or lost as it not able to handle it any longer. I would describe Bitcoin as a strategy for growth investment as one can invest their money into buying a Bitcoin an watch it grow over a long period to enable getting maximum returns on the Investment.

Elements of risk

As with any investment there is a risk of losing your investment, thus as mentioned before that with Bitcoin potentially being in a financial bubble it has its risks. And thus for businesses that wish to invest in buying a bitcoin I would rather suggest diversifying their investments and not solely into Bitcoin. They can invest in other cryptocurrencies such as Etherium or the JSE.

Investment in Bitcoin could potentially hold great rewards, remember the higher the risk the greater the return on the investment. Bitcoin can be bought in either fraction of a bitcoin making it cost less and take an even longer time to grow thus returns will be very minimal. While if investing in buying one whole bitcoin, your investment will grow bigger at a much faster rate as your businesses input will have been great. Once again the survival of your investment is dependent on the market’s price.

Conclusion

Volatile, Uncertain, Complex and Ambiguous world, VUCA. A business acronym that indicates that we live in a world where change is the only constant. The VUCA world needs business leaders and entrepreneurs that are VUCA Prime. Which entail being a Visionary, Understanding, Clear and Agile. These upcoming business leaders and entrepreneurs should be visionary to see the potential in technologies such as Bitcoin in solving business related problems such as trust. They should take the understanding that technologies such as Bitcoin take time to mature but an eye must be kept on them in case the impact a business negatively when least expected. They should be clear about their business decisions and the implications the may have when utilizing Bitcoin because of its volatility as well as to avoid any loss of money that may occur. They should be agile by responding quickly to opportunities that Bitcoin can offer to businesses due to the security it presents to businesses when making transactions.

All in all, Bitcoin presents both opportunities and threats to a business, and more so entrepreneurial opportunities as an investment asset, which can be bought to store value and grow over time and generate a return on the investment.