Should every business start accepting cryptocurrencies as payment? What are the advantages and disadvantages?
If you’ve followed cryptocurrency in the news or even heard someone mention Bitcoin in passing, this might seem like a subject for computer nerds only. While it is true that the technology behind cryptocurrencies plays an important role in the discussion, many of these coins are already taking steps to become more mainstream. Use cases for cryptocurrency are growing rapidly, and most of them involve replacing traditional currencies.
The price of cryptocurrency is still volatile
One of the reasons companies might be hesitant to embrace crypto is volatility. Cryptocurrencies are new currencies and their value is extremely volatile. This means that their value can increase or decrease by a large percentage over a short period of time. It is therefore risky for businesses to accept them as payment, as their value can change within hours. And since there is not enough liquidity to convert cryptocurrency (fiat).
In fact, due to this high volatility risk, some cryptocurrency exchanges don’t even allow users to transfer cryptocurrency to bank accounts. Or buy cryptos with a credit card, due to the price fluctuations they are known for.
There are cryptocurrencies for everyone
Besides the most well-known currencies, many other cryptocurrencies serve different purposes. For example, Litecoin is an alternative to Bitcoin, which has faster transaction times and is easier to mine. Another example is Monero, which manages privacy more robustly than Bitcoin by hiding the amount sent in each transaction and to whom it was sent. That’s why it was called “crypto for criminals”. There are even cryptocurrencies specially designed for the IoT (Internet of Things)like IOTA.
With all of these options, it’s clear that cryptocurrency isn’t just a fad or a bubble waiting to burst. It has the potential backing to become a mainstream payment method that will be around for years to come. When businesses start adopting cryptocurrency payment methods, they will experience many benefits. These would be increased financial security, reduced transaction costs and chargeback fraud. And finally, improving cross-border accessibility and improving the privacy and anonymity of their customers.
Cryptocurrencies can be hacked, but that doesn’t mean your money will be stolen
When you hear about hackers stealing cryptocurrencies, you might think your money might be stolen too. But when it comes to cryptocurrency, theft and hacking are not the same thing. Hacking happens when someone accesses an exchange. It is the service that allows users to exchange traditional currency for cryptocurrency tokens.
The thief flees with some of these tokens. Theft occurs when someone steals your cryptocurrency wallet or obtains your private key. Since hacking can happen on exchanges but not on wallets, the best way to avoid money theft is to use a wallet with good security features.
Some wallets have basic security systems like 2-factor authentication (2FA), where you enter a password, then confirm your identity with some other piece of information like a code sent to your phone or a fingerprint scan. Other wallets use more sophisticated systems like multi-signature wallets, which require multiple people to verify transactions before they go through biometric scanning. There, instead of entering a password, you provide biometric data such as fingerprints or retinal scans to identify yourself.
There are less transaction fees with cryptocurrency
Since cryptocurrency transactions are peer-to-peer, transaction fees are usually lower than those charged by third parties like banks and credit card companies. Typically, these fees range from 0-1%, as opposed to the 3%-5% cut that traditional payment processors take on credit card transactions. PayPal is another option for businesses that want to accept payments online without charging high processing fees. However, this service has a flat fee of 2.9% + $0.30 per transaction, which can quickly add up over time if your business has many small sales each day. The ability to avoid these processing fees can be a compelling reason for businesses to consider a system where they buy cryptocurrencies and use them for payments.
It’s easy to set up a crypto payment system
It is easy to set up a cryptocurrency payment system. Many companies, such as GoCoin and BitPay, have payment processors that support major cryptocurrencies. You can also use Bitcoin, Litecoin, and Ethereum APIs directly to help with your onboarding process.
You can also consider using an e-commerce plugin like WooCommerce or Magento, which already has built-in support for accepting cryptocurrency payments. Your customers will be able to purchase cryptocurrency and use it for in-store purchases on your site.
Starting to accept cryptocurrencies as payment is an easy decision to make when you look at all the benefits
Accepting cryptocurrencies is the right decision if you want to get ahead of your competitors and attract the attention of a large number of tech-savvy customers.
When it comes to accepting cryptocurrencies, there are several advantages that you cannot afford to ignore. First, when you accept cryptocurrency, you receive instant payment as soon as the transaction is confirmed on the Blockchain.
Second, accepting cryptocurrency does not involve any middlemen, so both parties receive their funds immediately after payment. Third, accepting cryptocurrency does not require any paperwork or approval from a third-party financial institution, as all transactions take place directly between two parties on the Blockchain.
Finally, accepting cryptocurrency will keep you competitive and up-to-date with the latest technology, which will help build trust with your customers who are looking for innovative ways to pay online. They want to do this without having to go through lengthy approval processes or wait times associated with traditional financial institutions like banks or credit card companies.