Why your Business Should Accept Cryptocurrency?

04 Aug. 21

In the past year, cryptocurrency has exploded into mainstream culture, which Wall Street dipping their hands into the industry and Bitcoin rising in value to over $20,000 CAD per coin. While values have fluctuated since then due to the volatility of the market itself, its clear that crypto is here to stay; which is leading many entrepreneurs and businesses to accept cryptocurrencies as part of their payment infrastructure.

What is a Cryptocurrency?

A cryptocurrency is essentially a virtual form of money. It is designed to act as a way for people online to pay for goods and services, as well as product. The creator of Bitcoin, Satoshi Nakamoto; described Bitcoin in its white paper as a ‘peer-to-peer electronic cash system which is decentralized.’ This means that cryptocurrencies are not regulated by things like banks or central controlling authorities. In a way, cryptocurrency functions similarly to torrent networks used for file sharing. The Blockchain, which is build into every crypto is a public ledger which features all transactions which occur on the network, making it available and transparent to anyone who needs to see it.

Should Your Business Accept Crypto for Payment?

Small businesses owners may experience a multitude of benefits by accepting cryptocurrency for payments. We’ve outlined below a number of reasons why your business would prosper if you add crypto payments to your business operation.

  1. Lower Transaction Fees: For Canadian and United States business owners, you face fees for accepting payments via credit cards. One Canadian Federation of Independent Business lists the minimum fee for a credit card transaction at  1.65%. In Cryptocurrencies, fees can be much lower and help with cutting out the banking middle-man from getting their cut. For example, most transaction fees on the Binance Smart Contract network fall within the range of 8 to 20 cents maximum, and Ethereum transactions are currently being worked on to allow zero fees per transaction.
  1. It protects the Merchant: Fraudulent charge backs on credit card transactions aren’t common, but they do happen. This can be a headache for any small business to deal with and take time to deal with. Similar to cash transactions, cryptocurrency transactions are final; as there is no third party to reverse existing purchases or charges. If there is an issue with a payment, it can also be dealt with much faster than a credit card by allowing the merchant to access the blockchain and quickly identify the fraudulent transaction.
  1. Increases the reach of your Customer Base: Accepting cryptocurrency as payment opens you up to more customers around the world. Crypto can help to avoid currency exchanges and the fees associated with the process. Customers will instead only need to pay in a universal currency, which simplifies their decision to make a purchase. This is similar to the wide adaption of the Euro across the EU; which caused product prices to equalize which made purchasing decisions much easier for consumers.
  1. It offers flexibility to your Customers: Giving more ways to pay offers more flexibility to your customers, which makes them more likely to do business with you. Crypto has seen adoption in everyday stores and businesses, with things such as Bitcoin ATMs becoming popular in places like the U.S and Canada; meaning there’s more customer potentials to get used to dealing in cryptocurrencies.

Risks to Keep in Mind

While there’s plenty of clear benefits to your business or brand accepting crypto for payments, there are some risks to keep in mind. We’ve outlined a few of them below:

  1. A Steep Learning Curve: While your business may be interested in adopting crypto for payment methods, it’s still a relatively new technology with a steep learning curve, information-dense and not all of the technologies problems have been fully ironed out. With most small businesses pressed for both time and resources, it may take you a while for your business to become ‘crypto-ready.’
  1. High Market Volatility: While cryptocurrency is a growing industry, its still a slave to its own high volatility. There is an old story of a Florida programmer, Laszlo Hanyecz who purchased two pizzas in 2010 with 10,000 Bitcoins. If he had held those same coins, he would’ve been worth roughly $100 million by December of 2017. Cryptocurrency is still in its infancy and prone to mass market fluctuations, thus its recommended to make crypto one of your payment options; but not the sole option for your business.
  1. Security Concerns and Immaturity: Much like all other types of currency, crypto still isn’t 100 percent safe yet. There’s no way to prevent criminals from hacking wallets and stealing your funds. Additionally, cryptocurrency cannot be backed or insured. There is very little chance that if your crypto is stolen, you won’t be getting it back. However, this is changing rapidly as crypto becomes more sophisticated in its security, and many cryptocurrency exchanges such as Coinbase and Binance do in fact insure all losses on their platform in the case of hacking. It’s recommended for any business that accepts crypto for payments to use multi-factor security.

While cryptocurrency is still growing everyday, its clear the industry has room to grow. Your company can benefit from this new technology, as long as you’re smart and your research first!

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