The popularity of crypto has exploded in recent years, and the pandemic craze and retail investment has fueled the fire a lot. Bitcoin was the pioneer of blockchain technology, and they are the original cryptocurrency and have continued to raise the bar for crypto standards. Not only is it a useful investment tool, but it can also be used to make daily transactions large and small.
But many companies have started to determine whether accepting crypto payments is worth the initial investment as well as the short- and long-term risks. Of course, there are risks, as with any business activity, but crypto can magnify those risks in some cases. So let’s take a look at what accepting crypto payments can do for your business.
What is cryptography
The big question: what is cryptocurrency? Cryptocurrency is a decentralized peer-to-peer network that facilitates both the production or “mining” of new crypto, but also transaction functions, by maintaining an open source ledger that can be independently verified.
It sounds complicated, but it means that neither party controls the currency. As a result, it can be verified publicly and anonymously without the need for a central processor or board. Instead, the production of a given crypto is usually a function of the mathematical equations hard-coded into the currency.
What are the advantages of cryptography?
There are many benefits to accepting crypto payments for your business, here are a few.
The security of the wallet is impossible to overcome with the technology currently available. This makes crypto one of the most difficult currencies to steal, and documented opportunities for theft are usually attributed to poor security or the habits of the coin holder.
When properly implemented, cryptocurrency wallet encryption cannot be broken outside of quantum computing. But it also makes wallet recovery incredibly easy when the seed phrase is kept safe. Often, the seed phrases are engraved on corrosion resistant metal and stored in a hidden location. Even if a wallet file is stolen, it cannot be recovered by any normal means without the proper owner.
Blockchain technology is incredibly fast. Blockchain technology can handle hundreds of transactions per second. This high transaction speed can benefit those who process small payments as well as those who process larger transactions.
One of the downsides of the modern banking system is the lack of immediacy, which is a travesty with our current technology. Blockchain technology allows crypto transactions to enter the system and be verified and confirmed within moments.
Use crypto to pay for lunch faster than the cashier can physically give change for a cash purchase and send the funds for a down payment home in less than a second, eliminating ACH or wire transfers that can take hours at best, days at worst.
Having a payment method that more people want to use means more people will spend on your site while using that payment method. If you have customers who tell you they want to buy your products using Bitcoin or Ethereum, not being able to accept those currencies means you could miss those sales.
Low transaction fees
One of the best things about decentralizing crypto means that you don’t have to pay exorbitant fees to payment processors. The costs are built into the network and are often fractions of a penny for small transactions and pennies even for some of the larger ones. So, accepting crypto can help your business reduce the money spent on payment processing.
Are there any risks associated with accepting crypto payments?
There are some risks, and they are not insignificant. Looked.
This is the big one. While Bitcoin is the standard for crypto, even it sometimes suffers from intense volatility. For example, in the last 18 months, at the time of writing this article, BTC has gone from $ 9,000 to $ 20,000, then to $ 30,000, to $ 60,000, back to almost $ 47,000. . For small businesses, losing that percentage of an asset’s equity can be devastating.
There are recurring concerns about the regulatory industry and how it may or may not be willing or able to restrict or regulate crypto. At the moment, they treat crypto the same as other capital gains, where they are heavily taxed if held for less than a year. Some companies couldn’t afford to start accepting crypto payments, only to have to sit on the assets for a year.