Fortunately, there is a consensus about how to start a cryptocurrency business. If you’ve never heard of the blockchain, it’s the technology behind Bitcoin and other cryptocurrencies. And the software that runs on the blockchain is called a “wallet.” You can think of a wallet like a bank account, but instead of keeping money for yourself, it stores money for other people. As in bank accounts, you can use a digital wallet to send and receive money just as easily as you can use physical cash.
So if you have an idea for an app that lets people pay each other with Bitcoin or another cryptocurrency, there are only three things you need to figure out:
A legal name for your company. Some kind of legal entity (like a limited liability corporation or an LLC) that will own your company’s assets. A way to receive payments from customers, like a bank account or credit card number.
You will need to be able to answer the following questions:
What is a cryptocurrency?
What is a blockchain?
What is a cryptocurrency business?
Which legal issues are involved in running a cryptocurrency business?
How can I start a cryptocurrency business?
What type of cryptocurrency business am I allowed to run in my jurisdiction?
The cryptocurrency business is a relatively new one, and there is not yet a lot of clarity on what it means. The government has been trying to regulate it. Some people think it is already illegal. The reality is that there are no clear answers.
It’s easy to see how something could be both legal and illegal at the same time: for example, selling marijuana without a license may be both illegal and legal. If you want to start a cryptocurrency business, you need to make some hard choices about which side of the legal line you want to be on.
If you want to run a business in cryptocurrency, you should start by reading the public records of the few businesses that have actually managed to get off the ground.
For example, if you want to sell a physical item for bitcoin, consider buying it from someone who has already done that. Then make your own record of it and send it off to a third party with instructions for how to release your bitcoins.
If the item is totally fungible, like a t-shirt, you might ask the seller to ship you some sample t-shirts of other colors and sizes, and then once they arrive you can wash and wear them and pay the seller with your bitcoins.
If the item isn’t totally fungible, like an antique book or a collection of stamps or coins, then each piece must be different enough that your bitcoins are not being used on an existing stock. There are a lot of ways to do this: visible revisions on each page, blacking out certain sections on the cover, making sure each coin is unique by adding unique serial numbers inside.
This may all seem like overkill, but God knows someone has tried to sue over something as mundane as a musical album cover
It’s important to understand that in the world of cryptocurrencies, there are no governments or formal legal systems. The IRS doesn’t care if you buy and sell Bitcoin. Banks don’t care. The SEC doesn’t care. It doesn’t matter if you have a few million dollars or a couple of hundred thousand. If you’re not running your business honestly, they will come after you and put you in jail, even if it’s your third time around the block.
Cryptocurrencies are currently unregulated, so it’s possible that anyone can start a cryptocurrency business. It’s also possible that only a rich white guy with a lot of friends can do so. In fact, there is more than one kind of cryptocurrency business. I’m going to talk about one kind because I know about it, but it may not be the kind you want to start:
Cryptocurrency is a new kind of money. If you want to make money with cryptocurrency, you have to understand what it is and what it is not.
Cryptocurrency isn’t real money. It doesn’t have value in itself; it has value only because we say it does. “Bitcoin” is just a string of letters and numbers, much like the ones that make up the dollar bill or the euro coin. If people started using “bitcoin” instead of dollars or euros, then the value of “bitcoin” would fall because there would be fewer dollars or euros. But that’s all it would mean: there would be fewer dollars or euros, not less value.
Cryptocurrency doesn’t have any direct connection to physical things either; it doesn’t have anything to do with bridges, buildings, computer hardware or software, or any other tangible stuff that actually exists in the real world. Cryptocurrency is purely virtual; its value is based on belief that others will think it has value.
So why do we call this virtual money “cryptocurrency”? It’s because we are trying to communicate something abstract and theoretical to people who are used to thinking about dollars and euros – people who are used to thinking about things with a real existence in the world
The Internet is weirdly democratic. Anyone with a web browser and a computer can start a business. I got started in 2014 when the first Bitcoin ATM had just opened in Vancouver, Canada. I thought it would be fun to start an ATM business—it was a good choice for me because I knew nothing about computers but I was very interested in Bitcoins, and I didn’t mind getting my hands dirty.
When you’re starting a new business, you are always facing uncertainty. You don’t know how many customers you’re going to have, what your costs will be, or where your product or service will fit into the market. What if no one wants to buy from you? It’s not like there’s a big business school in the world that teaches entrepreneurship: it’s mostly people who have been doing the same thing their whole lives figuring out ways to make money.
An entrepreneur doesn’t necessarily have to be crazy. He just has to be willing to take risks and make bets on things he doesn’t understand in order to build something he thinks is worth building.