In recent years, Bitcoin has become an important part of the investment strategy for many large businesses.

Indeed, it is regularly mentioned in financial news headlines and now prominently features in many balance-sheet discussions and long-term planning conversations across various industries in Australia. However, it is now gaining traction among small business owners.

Investing is a good strategy for any business, but especially a small one. That said, it should always be about protecting value, planning ahead, and making educated decisions that support a company’s long-term growth.

Bitcoin and other cryptos have introduced a new way to do this through digital assets, which provide extra diversification and financial resilience. Yet, to make the most of the opportunity it provides them with, all business owners should take the time to understand:

• How Bitcoin works
• How your business should approach it
• Where Bitcoin will sit alongside your other traditional investments

This guide is designed to help you do just that.

What is Bitcoin?

Bitcoin is a cryptocurrency, i.e., a digital form of money that operates online and is not controlled by a bank or government. It was conceived by the anonymous entity Satoshi Nakamoto, and introduced to the world in a white paper on October 31, 2008. The network officially launched when the first block (Genesis) was mined on January 3, 2009.

Essentially, Bitcoin allows people and businesses to send value directly to one another using secure technology called blockchain. Every Bitcoin transaction is recorded on this shared digital ledger. It is publicly visible, and all transactions are finite.

For businesses, Bitcoin is typically viewed as a digital asset, although it can be used as a currency to buy goods and services. There is a fixed supply of Bitcoin – there will only ever be 21 million – which means no new coins can be created beyond this set limit. This feature has led many business owners to see Bitcoin as a store of value that is just as attractive, if not more so, than cash, shares, or property.

Bitcoin can be bought and sold using regulated platforms such as Independent Reserve. It is also held in “wallets” which can be “hot” (attached to the internet) or “cold” (stored offline). Ownership is secured through cryptographic keys. This means businesses need clear processes for accessing and storing their investments.

What Business Owners Should Understand Before Investing in Bitcoin

The latest Bitcoin price surge has piqued the interest of many small businesses around the world. However, before allocating funds, owners should take the time to understand how this cryptocurrency behaves.

Bitcoin prices move in cycles, and these cycles influence short-term value changes. However, such volatility poses risks to any investment strategy, which is why carefully planning it is vitally important.

Something all small businesses should be aware of, if they want to invest in Bitcoin, is the regulatory implications of doing so. Australian businesses operate under clear tax and reporting frameworks, of which Bitcoin investments fall within. Therefore, there needs to be proper documentation to provide proof of transactions and income.

The security of your investment is also something you will need to get a handle on, because you will obviously want to keep your investment as safe as possible.

Long-Term Bitcoin Investment Strategies for Businesses

Many businesses approach cryptocurrency as a long-term Bitcoin investment strategy. Some treat it like a reserve asset, similar to holding cash or gold. By doing this, they focus predominantly on gradual exposure rather than rapid buying or selling. 

A Bitcoin treasury strategy may involve allocating a small percentage of surplus capital into Bitcoin over time. Alternatively, dollar-cost averaging allows businesses to invest consistently without focusing on daily price changes.

Viewing Bitcoin as a long-term balance-sheet asset encourages businesses to be patient. Indeed, those who follow this path often focus on years rather than months when it comes to realising a return on their investment.

Using Bitcoin for Portfolio Diversification

Introducing Bitcoin into their portfolio appeals to many business owners who already hold cash, property, or shares. Primarily, this is because this type of cryptocurrency offers exposure to a different asset class that behaves independently of many traditional investments.

For some businesses, diversification helps spread financial exposure across multiple areas. In this context, Bitcoin is often used for inflation hedging, especially during periods when purchasing power becomes harder to sustain.

You should be aware that diversification does not require large allocations. In fact, many business crypto investment strategies involve modest exposure that complements existing assets rather than replacing them.

How To Manage Risk For Your Business When Investing in Bitcoin

For many businesses, how they manage the risks involved with cryptocurrency should be an essential part of their Bitcoin investment strategy.

The first step is to decide how much exposure they are comfortable with, based on the company’s financial position. Many business owners decide to treat Bitcoin as a small portion of their overall investment mix rather than a core holding.

It is also important to have clear internal processes around their investment. In particular, with regard to who can authorise transactions and how Bitcoin holdings are monitored. At the same time, maintaining secure storage solutions reduces the chance of losing your digital assets.

Another great way to manage risk is to keep detailed records of all transactions. Tracking purchase dates, values, and storage methods helps to maintain accurate reports, which, in turn, keeps you compliant with government tax regulations.

Bitcoin vs Traditional Business Investments

Bitcoin is often compared with traditional business investments such as cash, shares, and property. But there is no reason at all why companies can’t include them as part of a diversified portfolio.

Cash offers stability and easy access. Shares provide growth potential. Property delivers long-term value through physical assets. But Bitcoin introduces a digital alternative that, unlike the aforementioned, operates independently of central banks and traditional financial systems.

The great thing about Bitcoin is that it can be accessed at any time and transferred quickly. Even though Bitcoin carries price movement risk, this is particularly appealing to businesses that value flexibility and liquidity,

Indeed, for many business owners, Bitcoin sits alongside traditional investments as a supplementary asset, rather than being a direct replacement.