If you're like many, you've probably heard a lot about cryptocurrency in the past few years. It grows in popularity every day, and for businesses, it could save them money. When deciding if cryptocurrency will work for your business, you should also consider the pros and cons. For some companies, the integration will work well. For others, though, it may not yet be a wise investment.
What is Cryptocurrency?
Cryptocurrency is an internet-based form of money that uses blockchain technology and cryptographic properties to facilitate a transaction. It is a decentralized platform, meaning it has no authoritative figures, banks, or institutions that control the information and money transfers. You're essentially in charge of your own funds.
The two most common types of cryptocurrency are Bitcoin and Ethereum, though there are many more lesser-known ones out there. Each uses blockchain technology for conducting transactions and maintaining security. Each block represents a transaction that cryptography connects in the digital realm. The blocks hold information like timestamps and authentication processes.
The transaction process is important because the blockchain ensures a certain amount of security. Though this technology makes it difficult for cybercriminals to steal or harm your funds, these incidents can still occur. If you're considering cryptocurrency for your business, you'll want to consider how much money you can make, retain, and use for purchases through crypto funds. You'll also want to research the security level of your chosen platform.
Benefits of Accepting Cryptocurrency
A business will see many benefits when accepting cryptocurrency. It's a newer form of payment that can add dimension to the services and products a seller provides.
Cryptocurrency's decentralized platform appeals to many. Banks and institutions can often be difficult to work with. If you'd like to transfer your money or start an investment account, sometimes a bank will advise against it or encourage loans. With crypto funds, you can control everything yourself. This dynamic gives you more agency to invest and sell the way you want to.
Cryptocurrency also makes it easier for groups of people to pay together in one payment. Crowd-sourced payments are necessary at times, especially for joint business deals. At some other times, customers will simply want to split purchases. Cryptocurrency makes that easy through its various platforms. Plus, you'll see all this activity in a public ledger, which ensures more security.
While these benefits can be financially helpful, several other advantages can directly save money for businesses.
How It Can Save Money
For starters, transferring money with cryptocurrency is cheaper. Many payment services or banks may have fees that come with moving around your funds. Often, the more money you want to move, the higher the fee. When using cryptocurrency platforms, though, these fees are minuscule, which ultimately adds up so you can save.
Similarly, banks allow for chargebacks after business transactions occur. A chargeback lets a bank reverse a transaction, taking the money from a business and giving it back to the consumer. While these actions are sometimes necessary, it can be a significant loss of revenue for certain companies. Cryptocurrency doesn't have chargebacks—all transactions are final. This dynamic lets the money stay with the business.
If you do choose to work with cryptocurrency, you can then expand your customer base. Among the demographics, millennials invest in cryptocurrency more than any other generation. As a business incorporates crypto payments, it will draw in more of this demographic. You can expect to see tech-savvy individuals supporting the company, too.
Cryptocurrency also makes international sales easier. There's no intermediary, and you don't need to adhere to conversions. Cryptocurrency is universal and can facilitate investments across borders.
Due to these money-saving benefits, the businesses that stand to gain the most from integrating cryptocurrency are bigger companies. Any business in the tech industry should start thinking about incorporating cryptocurrency, too, if they haven't already. Progress remains frequent and fast in both of these areas—using cryptocurrency makes for a wise investment.
Cons of Accepting Cryptocurrency
Though there are many helpful ways to save money and grow business with cryptocurrency, there are some cons, too.
The most common drawback that people point to is the crypto market's volatility. Cryptocurrency values can skyrocket in one instant but drop in the next. For example, Bitcoin was worth over $15,000 at the end of 2017 but decreased by over half about a month later. This kind of fluctuation can hurt businesses and the value of their products and services.
Regarding transactions, cryptocurrency doesn't have the range that regular money does. It can't collect interest, and only select locations will accept it. With fewer transaction options, businesses might not see growth when investing.
Security is also a touchy subject. You may occasionally hear about security issues within the crypto world, which can deter many people. Though the lack of centralization can be a plus, here it's a drawback. If you lose your funds or a cybercriminal steals them, you likely won't get that money back. If you lose a lot of money, this loss can devastate your business.
The businesses that should not accept cryptocurrency are newer, smaller enterprises. Any company that can't afford to lose any funds should wait until it has developed enough to have a strong foundation. Business owners can also wait until cryptocurrencies become less volatile, but that could be a while.
Should You Invest?
Ultimately, investing will be up to the business owner. If the risks outweigh the benefits, then it might not be the time to invest. However, if the pros are greater than the cons, it could be a money-saving option that will grow your enterprise.
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