Why should oil companies consider paying with bitcoin?
Only some companies can afford to be shortsighted in their approach, from exploring oil to extracting it to refining it.
The website Oil Profit will assist traders in their bitcoin journey with the best trading tools, fast payouts, and phenomenal customer support. But what about the risk of a lack of trust? People should recognize that oil companies are now at a point where they have an opportunity to reduce the financial risk of using new technologies. One such technology that is gaining importance is Bitcoin.
Digital currency has been on an aggressive push in recent years and is slowly but surely catching on with consumers and some big businesses, including Amazon and Microsoft. The bottom line is that by using bitcoin instead of fiat, oil companies can significantly decrease their risk while simultaneously reducing costs by as much as 40%.
First, one must understand how oil companies make money to explore this idea. About 80% of their revenue comes from the product's sale, as oil is typically refined and sold for a profit. However, it is possible through independent business and a global partnership with another company specializing in this area. The fact is that between independents, there are about 2800 different refineries in the world.
From there, what should be considered are the risks involved in each refinery and how much liquidity is required to cover any potential losses. By treating the oil industry as an independent business, it should be recognized that there are complications that may arise from a lack of liquidity. The immediate impact would be an inability to meet commitments or pay suppliers promptly. Let's explore some prominent reasons oil companies should start paying with bitcoin.
Oil companies pay massive transaction fees:
Value exchange between parties will always be a consideration when making transactions. Unfortunately, oil companies must pay some of these costs by dealing with the banks. These costs average about 1.2% for most transactions and can increase to 3% for those less than $1,000. As a result, oils a result, oil companies are looking at other alternatives to get around the price associated with banks, including Bitcoin.
Instead of paying these transaction fees for value exchange, oil companies can directly transfer money from one party to another without any intermediary or mediator. It would also potentially lower the risk of fraud and reduce the potential for human error. Oil companies can also easily exchange funds, increasing the speed at which they react and respond to their business partners.
Oil companies have to focus on KYC:
Know Your Customer is necessary for many businesses, including oil companies. It is essential when processing international transactions due to different laws and regulations regarding money transfers.
To comply with these laws, oil companies must be able to identify who is transacting and what parts of their business need to be regulated to accomplish this idea. However, Bitcoin allows flexibility and freedom to transfer funds without the KYC process, allowing their business to operate in countries where competitors are not so lucky.
Cross borders transaction:
The reputation of oil companies is not something they will be happy talking about, but it must be at least acknowledged. Sending money from one country to another can be complicated, and there are many ways governments can interfere with this process and complicate something that should be simple. Using bitcoin would allow these companies to avoid fraudulent transactions and reduce the risk of foreign exchange costs. Oil companies must take a more global approach to reduce fraud by treating every person or company they do business with as a potential customer and supplier. Bitcoin allows companies to use a global payment system without borders or restrictions due to different regulations.
Oil companies need to pay bills:
As previously mentioned, the most significant cost involved with running an oil company is the interest paid on the borrowed money. Oil companies must pay some of this cost through banks and other outlets, but when using bitcoin, this cost can be reduced by 40%. By using bitcoin instead of fiat, oil companies can improve their liquidity and reduce the risk of being unable to pay their bills on time.
Insurance:
It would help if you always had insurance to protect your business from something that might happen. It is vital to any business and is no different for oil companies. However, when it comes to this type of insurance, being able to pay for it in one lump sum can be challenging, as you may have to pay monthly or quarterly.
Oil companies need to deal with high political risk:
For an oil company to be profitable, many things must happen for that company to sell its product, including domestic and international agreements and government subsidization. As a result, it can make doing business in some countries quite tricky and sometimes only allows these companies to function as they would like. Bitcoin can reduce the risk of these political moves and allow the government to issue a transparent and accountable currency for oil companies.
In conclusion, bitcoin has many benefits that oil companies can benefit from using digital currency. The cost associated with Bitcoin is much lower than when using fiat and can help reduce risk in several ways. More importantly, bitcoin allows businesses to avoid processing fees which could be better spent on development or operation costs. By paying their bills promptly, oil companies can also improve their liquidity, allowing them to react quickly to any potential risks.