The success of Bitcoin and other cryptocurrencies in the last few years has solidified the place this technology has carved out in our world. The adoption of crypto among regular people has led governments to come around to the idea of making crypto payments as approachable and safe as possible.
In February 2021, Switzerland amended its laws to create a regulatory framework for crypto trading. The DLT (Distributed Ledger Technology) act allowed for the trading of rights through electronic ledgers (i.e., the blockchain), separated crypto assets from fiat ones in the event of bankruptcy and created a new license category for blockchain-based trading systems. Across the Atlantic, in September 2021, El Salvador became the first country that accepts Bitcoin as an official legal tender. To learn more, visit https://bitcoiniracompanies.com/
In the same vein, businesses have started embracing this alternative payment system, and yours might be the next one to join in. To ensure you make the right decision, we’ll let you in on all the benefits of using cryptocurrencies, as well as the detriments you need to be aware of.
Despite their leaps in popularity, cryptocurrencies have still not ditched their shady reputation. However, the technology behind them has gone from being misunderstood to being hailed as the cure-all for all our problems, to finally being accepted as a key piece of innovation, though not as potent as initially thought. Many industrial sectors have attempted to implement blockchain-based systems to improve their operations, be it in terms of regulations or payment. The oil, gas, and energy sectors have piloted projects to transition their records to the blockchain, with some promising results. The same is true of the auto industry and consumer goods production. PayPal now allows users to trade cryptocurrency using its platform, and use Bitcoin for payment with some vendors.
All in all, widespread crypto implementation is far from impossible. Here is what you stand to gain by embracing the trend:
Microsoft, Starbucks, Whole Foods, and Etsy are just some big-name businesses that have started accepting Bitcoin. Due to the technology’s unpredictable nature, each time a new company adopts it, every major sector takes notice, and word spreads quickly. As a result, accepting crypto payments has become both a potentially valuable integration, but also a kind of marketing tool.
For example, if you take this path, odds are good your company will be lauded as forward-thinking. Many IT professionals with experience in cryptocurrency and blockchain technology might flock to your side. This is important because you will need cutting-edge expertise to run this aspect of your business.
Customers also recognize when a business offers more payment options and better accessibility. As the number of people that work and pay with crypto coins grows, you will be in a unique position to captivate their attention.
When a crypto payment goes through, it registers in the blockchain and stays there forever. This eliminates wiggle room for customers asking for unjustified chargebacks, and also forces companies to keep spotless records, making “cooking the books” much, much harder.
On the other hand, businesses will have to invest in employees who can build this framework and operate it. For example, most refunds happen during the holiday season. Employees will have to devote a massive amount of time and effort to return payments individually. As a result, the cost of running your business will increase.
One of the main benefits of blockchain technology is its more robust security compared to standard payment methods. As mentioned, blockchain is essentially a digital ledger where every receipt is traceable. This is a massive boon to both customers and business owners, as faking and altering transactions is practically impossible due to the blockchain’s inherent accountability. On a smaller scale, this helps prevent chargebacks or paying for things without having the money for them, so bad actors won’t be able to game the system.
The blockchain is decentralized since all user computers – nodes – verify each transaction waiting to be logged. In other words, data is not held in one place but on a chain of devices, thus making it much more difficult to compromise.
Immediate Payment Processing
Crypto payments are processed very quickly: Thanks to that, waiting times are either minimal or non-existent. On the other side, traditional payments can take hours or days to be processed by bank institutions. Bitcoin, and cryptocurrencies in general, can go a long way toward speeding up your trading processes.
Lower Transaction Fees
Transaction fees and fees for payment processors are unavoidable realities of trading. In turn, one of the biggest advantages of crypto payment is that these currencies do not rely on banks, and therefore eliminate intermediary costs.
Payment processors such as PayPal charge up to 4% per every transaction, and in specific cases, much more than that. In comparison, crypto exchanges have fees lower than 1%. What’s more, these fees don’t change for foreign customers, while standard payment models have to include international fees.
As this young technology is still in development, there are structural and social detractors to it that you have to keep in mind.
The biggest worry for crypto users right now is the IRS exploration of taxing virtual currency as income or property, as the federal government could count on considerable funding from crypto taxes. On the other hand, crypto users are unsure how filing crypto income would work and the overall effect it might have on the crypto market.
If crypto taxes become a thing, crypto users will have to think about capital gains tax every time they buy, sell, or use crypto coins. They’ll have to keep a flawless record of each currency’s value when they receive and send it. This can be a source of frustration and headaches, especially if they make multiple daily transactions.
Lack of stability is the biggest nemesis for the wider adoption of this technology: There are just too many factors that affect the market. Most people still think that the associated risk is not worth investing in crypto, like Bitcoin – and all other cryptocurrencies not tied to other assets – could be worth tens of thousands of dollars one day, and then experience a massive drop in value the next.
While no one can manually change the value of crypto coins, individuals and governments can and will affect the crypto market indirectly. For example, in 2021, China announced that all cryptocurrency transactions are illegal. Soon after this announcement, the value of Bitcoin dropped by more than $2,000. Twitter statements from specific individuals with a large base of followers also affected specific crypto coins’ standing.
The Time is Now
Most experts expect the crypto market to evolve and grow despite its problems. The number of companies that adopt crypto payments will grow, and the competition will be more fierce. With that in mind, taking the plunge now might just be worth the risk. The only question is – will you?
Milica Kostic is a business enthusiast and content specialist who takes joy in writing about marketing, HR, cybersecurity, tech, finance, health. Her publications can be seen all over the web: Eventbrite, Gulf News, Host Review, CCM, to name a few. Her knowledge came from many years of B2B communication-based roles with 4 years of guiding world-known brands toward award-winning customer experience initiatives. She is also an advocate for vegetarianism, environmentalism, animal, and human rights with a degree in Sociology.