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Although widely unregulated, more and more businesses are using cryptocurrencies and other forms of digital currency when it comes to payments and transactions.
As with any new venture, there are some risks involved, but there are also some benefits to accepting cryptocurrency.
In the US alone, over 2,000 businesses are accepting bitcoin as a payment method and an increasing number of businesses across the globe are looking to do the same, as so many people now invest in crypto as the main way to make money online.
But should your business be accepting cryptocurrency and, if so, what are the risks involved?
Why Should My Business Consider Accepting Crypto?
The use of cryptocurrency has both advantages and disadvantages. As with anything in business, it’s important to weigh up the potential risks involved and there are both risks and incentives to gain when it comes to accepting cryptocurrency. It’s important that, if you are considering using crypto in your business, you have a clear understanding of why you want to undertake this approach and put together a list of questions you may have before agreeing to any terms.
Whilst many investors choose to buy bitcoin as a long-term investment, businesses can actually utilise the currency in more ways, but there are some considerations to bear in mind.
Let’s look at some of the best ways in which your business can use cryptocurrency.
1. Paying For Goods and Services
If you have an international business or eCommerce store, then you’re likely all too aware of the complications that come with international currencies. Whether you have suppliers from other countries that need paying or offer services to international clients, then you’ll be familiar with the complexities of making international payments.
Bank transfers often require manual authorisation and take several days to process, not to mention the fees that are often involved. For eCommerce stores, implementing an international currency converter to your website can be costly and require the use of website developers.
By offering cryptocurrency as a form of payment, you can make instant transactions, no matter where in the world you are looking to send it or what time of day it is. Any fees that are involved are quite low and transactions are transparent, as they are displayed on the blockchain for merchants and businesses to see and confirm the transaction.
2. Use As Part Of Your Cash Reserves
The world is currently in a state of economic uncertainty following the pandemic and conflict in Ukraine. As a result, more people and businesses are looking to invest part of their wealth into bitcoin and other cryptocurrencies as a means of boosting their funds. The European Central Bank has said that bitcoin acts as an exit valve from the system and that it helps users to protect the value of their investments over time.
Many other large companies, such as PayPal and Tesla, are beginning to realise the advantage of using cryptocurrency. Before 2021, Tesla allowed you to buy a vehicle outright with bitcoin, but with the mining rate decreasing, they paused crypto payments. Elon Musk has said that should the rate reach around 50%, they will start to accept bitcoin as a currency again.
Over time, the supply of exchange will decrease whilst in comparison, bitcoin and other cryptocurrencies will continue to grow. Although not required to disclose holdings, many businesses are said to be currently stocking up on bitcoin and cryptocurrency investments as a way of cash reserve protection, and your business can do the same. Currently, it is fairly easy to exchange and purchase bitcoin and it is predicted that in the future there will be an inevitable supply shortage, making bitcoin widely unavailable.
3. Protection From Inflation
Other than the obvious benefits of cryptocurrency increasing in value, using it in your business means that you also have an extra layer of protection against instability in the economy. With inflation having rapidly increased over the past few years, many businesses are now seeing bitcoin as a reliable option when it comes to maintaining the value of their money.
It’s important for businesses to note that using bitcoin in business is not just limited to transactional benefits, but also offers plenty of additional opportunities. However, there are also some disadvantages to using cryptocurrency in your business.
4. Widely Unregulated Market
Bitcoin and cryptocurrency are widely unregulated markets and guidelines and rules differ from country to country. In some countries, the use of cryptocurrency is outright banned, such as in China, and whilst in most countries, it is legal, it isn’t recognised as a currency. This means that the market can be a volatile place and it is wildly unpredictable. If you do decide to use cryptocurrency within your business, always be sure to check the rules of the country to which you are sending or receiving funds and have a secure wallet for your investments.
5. Risk Of Scams and Security
As the cryptocurrency market is so unregulated, this, unfortunately, means that scams and fraudulent activity is common. There is currently no way to completely protect investors and their funds from cybercriminals and scams, which means that you need to be aware at all times. If you’re dealing with a regulated broker who handles your trades on your behalf, ensure that they are who they say they are. A growing number of personal and business trades are being affected by regulated brokers who use funds from their clients as a way to make their own investments, often losing both their money and the investor’s funds.
A lot of people fall victim to crypto scams or lose money through regulated brokers making bad decisions, so be sure to do plenty of research before making any trades. If you do believe that you have been the victim of a crypto trading scam, then consider enlisting the services of an investment fraud lawyer, who may be able to help retrieve lost funds.
Cryptocurrency is seen by some as a pivotal evolution of finance and currency and believes that, in the future, we will be using cryptocurrency as easily as any other world currency. If your business does choose to use cryptocurrencies, then be sure to do plenty of research into the area as a means of protecting your business finances. Some questions to ask yourself include:
- What is the overall, long-term strategy?
- Will this decision affect your business in the long run?
- How can you ensure that your funds are secure?
- What will the implementation roadmap look like?