If somebody had mentioned “cryptocurrency” to you a few years ago, you may well have pictured a shadowy and strange currency and a secret banking system, manned by mysterious operatives and used by a mixture of cyber-geeks, libertarians and perhaps more than a sprinkling of dubious characters. Certainly, in its early years, very few companies would have considered accepting it as payment, or as a vehicle for investment. However, crypto has grown enormously in both value and popularity, and continues to move into the mainstream at pace. With ever more people investing in various cryptocurrencies and wanting to use them to pay for services and products, the list of businesses accepting them is growing rapidly. As businesses themselves progress along the road of digitisation across the globe too, the question of adopting digital currency is becoming increasingly pressing. Does this mean that your business should start accepting crypto? Here we look at some pros and cons that may help you come to the right decision.
Lower Transaction Fees (or none at all…)
As you will know, businesses have to contend with all manner of transaction fees when calculating the price of their products or services. This means that you’ll either need to charge your customers extra, never attractive in a competitive world, or swallow the costs yourself. And they can mount up and become very costly to your business, regardless of who your provider is, as they all want their pound of flesh! With the blockchain-based technologies cryptocurrencies use, most wallets are either very low cost or completely free and you don’t need to pay any withdrawal fees. This means you’ll lower your overheads and improve your bottom line.
Easier and quicker transactions
All traditional financial organisations, no matter who they are, always take time to check, confirm and process any money transaction, so your funds are always tied up somewhere and delayed, with reams of paperwork often produced. The issue can be even more time-consuming if you sell goods or provide services across borders. When you receive a crypto payment, the financial middle-man is removed, and it is just you taking payment direct almost instantly from your customer. As the tech isn’t based in a single country you can make and receive payments across the world without having to worry about foreign exchange and transfer fees too.
Transactions using crypto have to be verified and confirmed by both sender and receiver and everything is time-stamped and cannot be retrospectively amended. So, any retrospective disputes with concern to the transaction are eliminated before they can start. With traditional website payments, a popular scam involves fraudsters paying via a credit card then use the chargeback function to avoid paying, meaning you’ve lost your money and often the goods have already been sent out too. This can’t happen with crypto as once a payment is in, it cannot be taken back. Personal data is also far more secure on the multi-layer blockchain tech cryptocurrencies use ensures the highest level of confidentiality – your customers can rest assured their details are safe.
Volatility of Cryptocurrency
The cryptocurrency market historically has been highly volatile and its value is very unpredictable compared with the world’s major currencies. Take the example of the no. 1 global digital currency, Bitcoin – it started off worth cents in 2008, grew to nearly $20,000 at the end of 2017 before losing 65% of its value in a month in early 2018. Yet it has boomed again in 2020 and at the end of November reached an all-time high and was poised to break the $20,000 barrier. In fairness, much of the volatility can be put down to the relative youth of the concept and thus being subject to market whims – perhaps things will settle as the currency is further adopted and people simply understand it better. For now, you should expect some fluctuations in value and you will need to ensure you fully understand and track the status of crypto on a daily basis to minimise risk and potential financial losses. It would be wise to start off by accepting small amounts until you get a grasp of the market. It’s also worth learning about bitcoin loophole app, which was developed to apply advanced technical and fundamental crypto strategies to generate profits and scans for high quality trading opportunities in over 100 crypto coins and tokens, trading the crypto market with an ascertained accuracy of 99.4%.
Lack of Legislation and Regulation
Unlike traditional fiat currencies, which are accepted and backed by the government concerned, crypto is currently more or less completely unregulated. The view of the concept also varies hugely from country to country – some nations are relatively comfortable with it while others ban its use altogether, and should you trade with the United States you will find that the approach taken at individual state level is far from consistent. Some nations have tried to use existing legislation or agencies to regulate it but they have struggled to do so as the laws were not designed to handle something as radically different as cryptocurrency. In practice this means it is yet to be decided how to regulate and control it, how to decide fees and what taxes should be implemented. Governments are now in the process of plugging the legislation gap, but it will probably require a long string of laws so it could be some time before everything is decided. So currently, there is an element of doubt attached to accepting crypto payments.
Lack of demand and understanding
Although there is no doubt that many companies are switching across to some degree, and public consciousness of cryptocurrency continues to grow, making it a more mainstream conversation, most people still don’t have any real understanding of how it works. They can also find the underlying blockchain technology baffling, all of which means that at the present time, the majority of people will continue to use the old tried and tested means of paying for goods and services. It also seems clear that many people who hold crypto coins are hanging on to them as an investment for the future rather than using them as a means to make purchases. So while it is becoming ever more part of conversations, demand has certainly not hit critical mass and it while it is always good for businesses to embrace change and be at the forefront of new developments it may not be right for you – at least yet!