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Should Your Company Accept Crypto Payments?

In recent years, cryptocurrencies and blockchain technology have increased in popularity and use. For instance, a decade ago, very few people worldwide knew about their existence. Today, they provide secure, reliable, and convenient payment solutions. Furthermore, businesses everywhere are ready to crypto payments as staple financial tools.

Furthermore, more payment processors allow companies to automatically convert crypto into local currencies. In turn, accepting crypto payments comes with numerous benefits to retailers. In this article, we discuss the advantages of accepting payments in cryptocurrencies. Also, we discover if this modern practice poses any risks for your business.

What Is Cryptocurrency?

Let’s start with the basic definition of cryptocurrency. What is crypto, and why do businesses rush to incorporate it in their payment options?

A cryptocurrency is a virtual asset operating on peer-to-peer technology. Also, it opposes the concept of fiat currencies, such as USD, EUR, and YEN. The latter is under complete control of centralized authorities, including banks and governments. On the other hand, cryptocurrencies function on decentralization and rely on countless users (peers). Lastly, many of them work thanks to unique encryption techniques that mine and manage their release and use.

Crypto transactions cut out the middleman by transferring funds directly to sellers. All these transactions occur on a verified network. Also, they become public records to prevent users from double-spending the coins. Each cryptocurrency is unique, but some coins provide more privacy and protection more than others.

Nowadays, these virtual currencies are never far from making sensational headlines. For instance, Tesla’s founder, Elon Musk, invested billions in crypto to make Bitcoin’s value skyrocket. Conversely, news about hackers running with millions of dollars in stolen crypto causes its value to drop. Together with other industry events, this news causes intense volatility in the market.

Nevertheless, despite its volatile nature, cryptocurrency is becoming a viable payment alternative for businesses everywhere. So, are crypto payments right for your business?

Benefits of Crypto Payments

Below are some benefits of accepting crypto payments worth considering for small and medium business owners.

Broad Consumer Market

Accepting crypto payments allows companies to access new demographic groups who have created a community within the crypto space. Also, giving your customers the option to pay for goods and services with cryptocurrencies may earn you long-term loyal clients.

recent report shows that at least 40% of clients who pay with crypto are new business consumers. Also, their purchases are twice as much as that of credit card users. Lastly, crypto payments enable you to access broader markets and appeal to consumers from all over the world.

Real-Time and Secure Transactions

Crypto’s decentralized nature offers merchants and customers a secure means of performing transactions. Fiat currency is still the most popular payment means. However, it features a considerable risk of exposure since robbers can quickly access cash registers and steal money.

Break-in robberies are a significant cause of losses in business closure that account for about 6% of crimes in the US. By accepting crypto payments, companies benefit from minimal risk of robbery. That’s because cryptocurrencies do not have a physical representation. Therefore, you don’t need a cash register to store them.

Additionally, while credit card systems take several days to process, cryptocurrency transactions take place instantly. In turn, they will aid in streamlining your company’s cash flow and offer quick access to funds.

Low Transaction Costs

Another benefit of crypto payments is that it features low transaction costs. This counts whether you accept crypto through a third-party provider like Coinbase or directly to your personal wallet. Also, the transaction prices are much lower than other payment methods, like credit cards and PayPal.

For instance, many Bitcoin exchange platforms charge a transaction fee of less than 1%. Furthermore, if you regularly have international customers, crypto payments come in handy when avoiding international currency transfer fees. This is primarily because of cryptocurrency’s decentralized nature, and banks or governments can require you to pay extra costs.

What Are the Risks of Accepting Crypto Payments?

Accepting crypto payments is not all milk and honey. This practice comes with a few risks, such as the ones below.

The Volatile Nature of Cryptocurrencies

The most significant risk of accepting virtual currencies is their price volatility, contributing to their highly unpredictable price value. For instance, when Bitcoin made its debut, it was worth pennies. But by December 2017, its price rose to $19,172 per coin. Currently, the value of one Bitcoin is approximately $60,000.

To counteract the volatility of these virtual currencies, companies need some form of transferring cryptos into fiat currency regularly. Platforms like Coinbase or BitPay facilitate such immediate transactions. Therefore, they aim to protect small businesses against crypto’s volatile nature.

Technical Barriers

Accepting cryptocurrency payments requires companies to establish a digital wallet and a cryptocurrency exchange account. However, most business owners are not familiar with this technology. So, they may face a technical barrier, which may prohibit them from accepting such payments.

Uncertain Regulations

At the moment, the crypto space is still facing regulatory uncertainty worldwide. While some governments are looking for ways to legalize it, others seek to ban its use. Therefore, businesses cannot rely on a smooth-working legal framework to accept crypto payments safely.

Conclusion – Crypto Payments

If you want to upgrade your company to modern standards, then crypto payments should do the trick. Nowadays, many services specialize in streamlining this updating process. So, you can count on expert advice when enabling customers to pay with crypto for your products and services.

Crypto payments come with numerous benefits. They are faster, safer, and incur lower transaction costs. Furthermore, they can open your business to new customer demographics.

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Nevertheless, paying with crypto is still in its early days. Many companies are still waiting for local authorities to regulate digital assets and enable crypto payments legally. Also, crypto volatility is still a cause of concern for many. Therefore, you may have to wait a bit before you can adopt this form of payment safely.

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