Small Businesses And Cryptocurrency: Should Know Trade with Cryptocurrency?
Cryptocurrency has remained an intricate part of business transactions in recent times. With the rise in Bitcoin, many people have come to invest in cryptocurrency. Many coins have been developed and many will be developed soon. The argument is on small business and cryptocurrency and how they converge.
There are several advantages and disadvantages of cryptocurrency to businesses. In the running of affairs of small businesses, it has remained very controversial.
It cannot be said directly that small and cryptocurrency has become a perfect match and neither can it be opined that they are now beyond match. The fact is that the interest in the technology has remained strong despite issues affecting it now.
The many coins available at coinsmarketcap.com gives credence to this very fact. Even Nigeria has joined in the development of Cryptocurrency. There is the ABJcoin that has grown in popularity both within and outside the country.
This article will look at small businesses and cryptocurrency by eliciting the advantages and disadvantages of the technology.
It will be your choice to decide whether it is good for small businesses. As I earlier stated, there is no wrong or right way here. But we shall see.
Small Businesses And Cryptocurrency: Benefits/Advantages of accepting cryptocurrency
Below are some of the benefits we can derive from cryptocurrency and why small businesses should embrace it.
Cryptocurrencies offer several primary benefits that small businesses may want to consider:
There are lower transaction fees
With cryptocurrency, there is no intermediary. This reduces, to a very great extent, the cost or fees incurred from transactions. This is indeed a plus. Remember, small businesses in the process of accepting credit card payments normally face fees for each card swipe. This will reduce if they start transacting in cryptocurrency.
It offers merchant protection
Another plus for cryptocurrency in small businesses is the protection it offers merchant from fraudulent chargebacks. Remember, the technology has a decentralized setup which makes the transactions final and there is no third party that can reverse charges.
The decentralized nature of the technology enables businesses to open doors to international buyers. These buyers were once unable to access the products and services of these small businesses. The cryptocurrency helped in linking the world closer and opening opportunities for small businesses.
Catering to consumer preferences
This currency gives added protection to buyers. There is no check, no third party, and no much stress. It is a way to pay and be sure of protecting your information. Customers will surely want that.
Small Businesses And Cryptocurrency: Risks/Disadvantages Of Accepting Cryptocurrency
There are technical barriers
It is true that technology is great but it is also true that technology has its limitations. When you accept cryptocurrency, the implication is that you will set up digital wallets on a digital currency exchange. Doing this could turn out to be technically problematic for small businesses not attuned to technology yet.
Remember, the currency is an information-dense field that has a relatively high learning curve. This presents a significant problem for small businesses trying to run on cryptocurrency.
According to Serge Beck of Optherium, “As it stands now, small businesses, in particular, would find it difficult to accept cryptocurrency. And even without the technical obstacles, the volatility of crypto values still creates a disincentive for entrepreneurs to hold digital currencies.”
The above will take us to the next issue; volatility.
Cryptocurrency is very volatile
Cryptocurrency is not steady. There is a high rate of volatility here. This has made the value very unpredictable. Look at what happened to Bitcoin and you will understand. It rose from less than a dollar to almost $20,000 and now it fell to about $7,000.
The analysis by Ariel Wolanov of Finserv Experts will explain the issue of volatility to you. He said that “You will have to make some form of arrangement for translating your cryptocurrency back into your currency of record,” Cryptocurrencies are volatile, [so] you will want to do this quickly and regularly. The only reason for a business to hold on to cryptocurrency would be as a speculative investment but doing so essentially amounts to gambling with your revenue stream.”
Cryptocurrency is insecure
Of a truth, transacting in cryptocurrency eliminates cyber threats. Chief amongst them is the stolen credit card numbers. However, it is still not 100 percent safe. Users use wallets and there is no way to completely eliminate the possibility of hackers and cybercriminals getting their hands on users wallets. Remember, they are not backed and they are not insured.
It is possible that these security issues can be ameliorated but they remain challenges to the use of cryptocurrency.
Lack of regulation
I’m very sure that nobody wants to invest in a place that has the capacity to become anarchic. Cryptocurrency at this level has the capacity to become that because there is no regulation. It should be a source of worry for users. Of course, regulations will come up eventually but until then, you just have to be wary of the whole situation.
According to Polema, “Because cryptocurrencies are relatively new, there’s much uncertainty around how the government will work out kinks in its regulation. Indeed, new regulations could be passed by the time you read this. [Cryptocurrency] won’t be universally accepted until businesses are certain they know how to report gains and pay proper taxes on cryptocurrency transactions.”
Until we see the new regulations, small businesses and cryptocurrency may not be a perfect marriage.