Needless to say, the cryptocurrencies are ridiculously popular at the moment – people are investing into them far and wide and some businesses are even considering coming up with their own coins. The big idea behind the cryptos is offering a decentralized method of monetary trade – not governed by any bank or any government. With the aim of becoming viable for actual everyday transactions at some point, many entrepreneurs and business owners are wondering if the time is right to start accepting the cryptocurrencies in their business. The answer, as it would appear, is far from simple.
How it Works, in Short
Explaining all the semantics behind the cryptocurrencies can fit an entire book, and there is a whole lot of information to be found on Google on the subject, so let’s just brush up on the basics here. Digital currencies are in part currencies, and in part commodities; although they very much hold a particular value (that is currently somewhat volatile), they have a fixed supply, similar to that of precious metals. This is what makes the crypto market stand out from Forex and the precious metal market – cryptocurrencies are hybrid currencies.
The entire science behind virtual currencies is based on the blockchain technology, a decentralized network that works something akin to the way torrents work – every node is an administrator of the blockchain and every node joins the network voluntarily.
If you are serious about starting to accept cryptocurrency at your small business, you should thoroughly introduce yourself to it.
The Positive Side of Cryptocurrency
To be quite blunt, cryptocurrency presents a cheaper and quicker way to accept customer payments, in comparison with typical payment methods such as credit cards. Additionally, every crypto transaction is final, meaning that the balance of power is tipped towards the merchant, rather than the consumer.
Given the fact that there is usually an intermediary to help facilitate the payments and take their cut, most digital transactions have processing fees: credit cards and PayPal transactions alike. Given that there is no intermediary in the case of digital currencies, there are no processing fees included, and this adds up to a whole lot when it comes to a small business.
There’s also the factor of high transaction speeds; in fact, they happen in near real-time; we’re talking 10 minutes or less! Compare this to the 2-3 days’ time that’s the case with credit card transactions, and you’ll quickly see the benefits – time, after all, is money.
Crypto transactions are final – there is no way of negating a sale. In other words, the merchants are given more control over their return policies, without the risk of chargebacks and other cumbersome revenue killers.
Cryptocurrencies add up to the payment options for the customer – and we all know how beneficial a variety of payment options is to an average consumer. There are so many coins available out there now, some even having surpassed Bitcoin itself, in terms of features that they offer. This means that you could, for instance, sell Bitcoin to buy Dash if one of its features that the BTC doesn’t have in offer suits your needs.
The Downsides of Accepting Cryptocurrency in Your Business
Well, suffice to say, there’s still high price volatility to take into account when it comes to digital currencies – a risk that could affect your business. However, there is a way around this, as many merchant wallets automatically convert coin to cash, just to steer clear of potential crashes.
One of the strong points of crypto is simultaneously its downside – being decentralized as they are, cryptos do offer the benefit of avoiding fees, but given the unregulated currency environment, many governments and central banks are still very skeptical when it comes to this method of making transactions – they are unsure what type of legislation they should pass regarding taxation. This means that cryptocurrency is, as of yet, being treated as either cash or property.
Although the digital currencies are legal in the majority of countries around the globe, the tax environment is still very much prone to change – domestic and international and import/export taxes alike. This all adds up to crypto instability.
Well, the answer is still far from simple; in fact, there is no right or wrong one to the question at hand. In truth, it all depends on whether you’re a B2C or a B2B business. As a B2C, it will be easy for you to implement the cryptocurrencies, given the fact that the number of consumers who engage in digital currencies is on the rise, plus there is an amount of free advertising included that may pay off. As a B2B, paying your partners in cryptocurrency might not be a viable option, as not many businesses are willing to use them.
Whatever your final verdict might be, one thing is certain: if you choose to accept cryptocurrency as a valid payment method in your small business, there is no reason for not accepting all cryptos – most merchant wallets automatically convert all transactions to your business’s main currency. In any case, getting informed past this entry definitely won’t hurt you or your company.