Quora Answer: Can Startups be Financed Only with Bitcoins?

The following is my answer to a Quora question: “Can startups be financed only with Bitcoins?”

I am not going to say it is possible, or impossible.  However, here are some considerations.  Firstly, start-ups require liquidity.  Bitcoins are not liquid, considering the limitations of a secondary market.  Bitcoins are not as easily exchangeable to cash, and other liquid financial instruments.

Secondly, Bitcoins are extremely volatile, even for cryptocurrency.  That means an amount pledged at the beginning of the financial year may be worth considerably less at the end.  With that sort of volatility, it puts unnecessary pressure on the balance sheet as capital injection.

It is conceivable that a start-up can be financed by Bitcoins.  But is it worth it?  It makes more sense to convert that Bitcoin into something more stable, and liquid first, and hold it in that instrument, before capital injection.