Bure Valley Group is an investment introducer platform which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice.
Exploring a range of funding sources is always a good course of action when starting your own business. By doing this, you will develop a richer understanding of the opportunities available to you and, in turn, be able to determine the best course of action for your particular startup (in context with your aims and goals). One option you might consider is “blockchain”, but what is it, and what are the advantages of using it to assist in funding your new business venture?
In this article, our team at Bure Valley Group aims to answer the above questions. We hope you find this content useful. To find out more about our EIS and other investment opportunities, visit our portfolio page here. To enquire regarding our latest projects and funding (for investors and founders, respectively), you can reach us via:
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What is blockchain?
The best way to determine whether using blockchain to facilitate your startup’s funding is right for you is first to cover the basics – what is blockchain? In concise terms, “a blockchain” is a form of encrypted digital ledger. It is a peer-to-peer network that records transactions and is managed and shared over several platforms.
These transactions are often made in “bitcoin” or other forms of “cryptocurrency”, but one could use blockchain for any asset transfer, whether tangible or intangible. Find Stack reports that the use of blockchain in manufacturing, for example, is likely to grow 73% between 2022 and 2026.
More and more companies are actively turning to blockchain technology, as it is a great way to remove an intermediary (such as a bank or marketplace platform) from the equation, simplifying the purchase process.
What is cryptocurrency?
Briefly mentioned above, “cryptocurrencies” are digital currencies traded via blockchain and secured using “cryptography”. The literal meaning of the word “crypto” is secret or concealed. In this context, cryptography refers to details/messages which are hidden using a key and an algorithm, protecting them from prying eyes.
Cryptocurrency is not physical money, with payments existing solely as digital entries into the blockchain. Many cryptocurrencies are available to trade with in 2022, including Bitcoin, Ethereum, Litecoin and Ripple.
The advantages of blockchain
There are a few key benefits to your business implementing blockchain technology, some of which have been briefly detailed above. In terms of safety and security, blockchain provides greater transparency than its alternatives, detailing the entire history of a transaction and eliminating the opportunity for fraud. Plus, blockchain is encrypted end-to-end, and important information cannot be altered along the way.
In terms of the launch of your startup and the day-to-day running of your new business, many feel that blockchain is fast, efficient and automation-friendly, reducing associated costs and freeing up precious time.
In a broader societal sense, blockchain decentralises structure and reduces the need for a middleman. Information is no longer stored in one singular location (and thus is less likely to be lost), and transactions can occur between peers with a new level of ease.
The drawbacks of blockchain
As with anything, there are also downsides to the use of blockchain. Consider the flip side of easy peer-to-peer transactions – there is no regulatory institution to manage the situation or ensure that things are working as they should.
Plus, blockchain is primarily used for the transfer of cryptocurrency, and cryptocurrency mining has a considerable environmental toll. As of 2021, the Cambridge Bitcoin Electricity Consumption Index tells us that worldwide, bitcoin-mining operations use energy at a rate of close to 120 terawatt-hours per year (about the annual domestic electricity consumption of the entire country of Sweden).
Can blockchain help with startup funding?
Startups are not cheap to get off the ground, and many startup founders require additional capital to bring their business ideas to life. In this saturated world, with new ventures a dime a dozen, strong fundraising and investment strategies are a must. Can blockchain help fund your startup? Yes, potentially.
Using blockchain technology instead of more traditional methods will ensure the security, traceability, and transparency of your transactions while attracting new investors. More specifically, it will attract investors from the cryptocurrency and digital finance world looking for innovative new brands to put their weight behind.
But, as mentioned above, there are also drawbacks to entering the emerging blockchain and cryptocurrency industry, such as high energy consumption and a lack of regulation. It all depends on your vision for your business, the kind of investment you’d like to attract, and how you’d like to manage your finances going forward.
Interested in finding out more about the exciting startup projects we have on offer to investors here at Bure Valley Group? Get in touch today to start a conversation with our team and discuss some of the great investment memorandums we have available here:
+44 160 334 0827