If you’re thinking about incorporating crypto into your business or looking to better understand how digital currencies are infiltrating the business world, you’ll find everything you need to know on the topic below. Looking at the benefits these digital currencies can provide, as well as the downsides, we are effectively dissecting the concept of cryptocurrency in a traditional business model.
Each day we move into a more digital space, be it from the way we communicate to the way we pay for goods, there is no denying that the direction we’re headed in is digitally dominated. The evolution of money is taking a similar stride, from gold coins to banknotes to electronic transfers, and now, digital currencies.
Since the advent of Bitcoin, the world’s first cryptocurrency, over a decade ago, the world has embraced the new age payment system (even if it was one sector at a time). From early investors and developers to huge corporations, crypto has and continues to, infiltrate the financial sector. The recent Bitcoin futures ETF approval provides a classic example.
Crypto In Business
Since the global pandemic, Bitcoin (and the cryptocurrency industry) has edged itself into both the mainstream media as well as the corporate world. Following global market crashes, Bitcoin rose from the ashes and soared to reach unprecedented highs months later.
Many corporations looked to shift their company reserves from the devaluing US dollar to Bitcoin, instigating a massive wave of institutional involvement. Many big companies, everyone from PayPal to Wholefoods, started accepting (or facilitating the trade of) Bitcoin, and gradually crypto became less of a taboo in the Financial sector.
By the end of 2020, it is estimated that around 2,300 businesses in the United States had started accepting cryptocurrencies, alongside the 17,000 Bitcoin ATMs available across the country. As more businesses create teams to focus on the benefits of implementing cryptocurrency in their business, we’ve outlined the pros and cons of adopting the revolutionary technology.
The Pros Of Crypto In Business
For those not yet familiar with the benefits of crypto, or perhaps what it could do for companies (especially virtual and e-commerce ones), find the advantages that cryptocurrency can bring below:
• Removes The Middleman
The intent behind cryptocurrency creation was to establish a peer-to-peer payment system that circumvents the need for intermediary banks and financial establishments. This direct transactional approach results in diminished fees, quicker processing times, and a reduction in the often protracted paperwork and administrative formalities. Instead of relying on centralized entities, this payment system relies on a distributed network and a transparent, unchangeable ledger for its operational functionality.
• Fast, Secure Settlements
The network can facilitate international transactions in under an hour, for a fraction of the cost that fiat transactions cost. Using encrypted means of facilitating transactions, cryptocurrency networks are much more secure than any traditional bank.
• Increased User Engagement And Conversion Rates
The more payment options a company offers, the bigger the net of potential customers and conversion rates. The same is true for a wider range of currencies. By providing more options for customers to choose from, the wider the net of potential profit grows.
• Growth Potential
Change often leads to growth, particularly in saturated, highly competitive markets. Adopting and supporting crypto in business practices puts the company at the forefront of emerging technology, a space many will want to be as the world gets more digital.
• Lower Transaction Fees
Payment networks are notorious for charging high fees when receiving transactions, however, Bitcoin and other cryptocurrencies typically charge a much lower percentage.
The Cons Of Crypto In Business
Of course, there is always a downside to everything. Below we look at some of the risks associated with incorporating cryptocurrencies in business.
• Volatility
Cryptocurrencies have become synonymous with volatility, as the markets move to match supply and demand. Each market has been known to go through stages of increased price movement, however, analysts remain certain that while short term volatility is imminent, long term growth is on the cards.
• Consider Your Target Market
Not everyone has jumped on the crypto bandwagon so it is best to assess whether your clientele would be interested in such an option. If your business is catered to a predominantly older demographic then perhaps incorporating crypto as a payment option is not the best move.
• Security Is Your Responsibility
In the past, many people have lost their crypto portfolios due to lost private keys or hacks. With cryptocurrency, the onus lies on the holder to maintain adequate security measures in order to ensure the safety of the funds.
Conclusion
After evaluating the advantages and disadvantages of incorporating cryptocurrency into your business, you can determine if this decision aligns with your company's strategic direction.