Cryptocurrencies and business: pros and cons

Introduction

All spheres of public life are continuously evolving. The world economy does not stand aside either. It can generally be considered one of the engines of progress because the development of various technologies depends on the economy. This is how the cryptocurrency market, blockchain and other things, which now earn billions of dollars, appeared.

The growth of the crypto market in 2021 contributed to the growing interest in digital currency from various companies around the world. If earlier only those retailers that sincerely believed in the formation of the crypto industry invested in cryptocurrencies or introduced them into business processes, now it looks more like a trend.

The Influence of Cryptocurrencies in The US And Other Countries of The World

According to some surveys, in 2020, 2,300 American businesses accept bitcoin as a form of payment for transactions, excluding Bitcoin ATMs.

In 2021, the capitalization of the crypto market broke the $2.5 billion mark, although by the end of 2020 it did not reach $1 billion. In this regard, cryptocurrencies were talked about everywhere: in the media, social networks, thematic forums and other resources.

Cryptocurrency is a digital payment system that doesn’t involve banks or any other third parties to verify transactions, thereby making financial transfers easier and faster.

However, entrepreneurs are not in a hurry to start accepting payments in digital currency yet. Why is this happening and how do small and medium-sized businesses react to the advent of cryptocurrencies?

Like any other payment systems, cryptocurrency has good and bad sides. So, let’s see if the usage of crypto will do more harm than good or vice versa to your business.

Pros of Cryptocurrency Payments for Business

The usage of cryptocurrency is growing all over the globe, so the importance of digital money cannot be ignored anymore. More people want to invest in crypto than even few years ago. Everyone hopes that they’ll gain profit from their investments. Some of them use digital currencies as an alternative to fiat money. Some of the advantages of crypto money are

• * low fees;

• * irreversible transactions;

• * security;

• * speed.

Low Transaction Costs

Cryptocurrencies are more beneficial for small companies because they allow making money transactions for tiny fees. Thus, it will cost you around 3 – 5% of the transaction sum when you transfer money with a credit card or e-wallet. While you will pay less than $1 for your transfer regardless of the sum. The fees don’t depend on the distance, country and many other things.

Crypto Transactions are Irreversible

Once you have confirmed a currency transaction, it is impossible to cancel it. This allows retailers to be confident that they will get their money as soon as the transaction is completed. The retailer can be sure that there will not be chargebacks or fraudulent payment disputes.

The irreversibility of cryptocurrency allows companies to control their financial flows better.

Secure and Fast

When it comes to transferring money with credit cards or other payment methods, it can take some time. When you transfer cryptocurrency, it comes to your partner’s account immediately.

In many respects, cryptocurrency is more secure than many other payment solutions. Each transaction is recorded on the blockchain ledger, thereby increasing safety and security.

Cons of Cryptocurrencies for Business

Not only does digital money have pluses, but it also has some minuses. Naturally, they are common to all financial markets, but in the case of using cryptocurrencies, the risks are doubled due to their specific features. What threatens those who have chosen bitcoin or other cryptocurrencies as an investment tool? Some of them are

• * high volatility,

• * complicated set-up process,

• * lack of regulatory mechanisms.

Highly Volatile

According to some experts, high volatility is one of the cryptocurrency features that prevents their globalization. Currently, the cryptocurrency exchange rate is very volatile and can change in a wide range over short time intervals. For example, Bitcoin’s price was

In November, 2020	$19,850
8 January 2021	$41,973
Three days later	$33,400
In February	$50,000
In April	$64,800
In May	$30,000

Thereby, eCommerce retailers are at risk of losing money if they are not cautious.

The cryptocurrency market is unstable, as it is at the stage of formation. It requires special knowledge and skills that are often incomprehensible to beginners. And although high volatility may seem attractive for investment, there are numerous "gaps" in this completely new area.

Complicated Set-up Process

If you compare traditional money transactions, it will take more time and efforts to set up your bitcoin payment. You can also create a crypto wallet for your company and accept payments directly through it. Moreover, additional plugins may be required for secure bitcoin trading on e-commerce websites.

Another alternative is to use a third-party exchange service that will act as an intermediary between you and your consumers, but this will entail additional transaction costs from your wallet. Anyway, when you turn cryptocurrency into fiat money and vice versa you may lose more.

Cryptocurrency Versus Other Payment Methods

Is there any difference between cryptocurrency and traditional money? What are they? What advantages do different payment methods have? Let’s see in what ways cryptocurrency is better than other payment methods, and in what it is behind.

	Speed	accepted	fees	security
Bitcoin	Up to 10 minutes	Limited number, but is growing	Less than $1, don’t depend on the sum	high
Credit cards	instant	everywhere	0.5% - 5% of the sum transaction	can be stolen or lost
e-wallets	fast	Almost everywhere	Up to 10%	high
Bank transfers	Up to 5 days	everywhere	Up to 10%	can be hacked

In What Areas Of Business Is Cryptocurrency Used?

More and more companies start to use cryptocurrency. It is widely used by

• * online stores (not only small retailers, but also big ones),

• * payment services,

• * freelancers,

• * gambling venues.

Today, most Australian online casinos offer cryptocurrencies to load players’ gambling accounts. Crypto wallets allow players to make deposit and withdraw winnings without any fees. When it comes to other payment solutions such as credit/debit cards, bank transfers, e-wallets, prepaid cards, they always have deposit and withdraw limits, while deposits made with cryptocurrency can often be unlimited or offer better limits. Casinos also offers different bonuses for those who replenish their account with crypto. There are even special cryptocurrency games that allow you to play at minimum stakes and get a chance to win a large cryptocurrency jackpot. You can enjoy games at a bitcoin casino, eth casino, Litecoin casino, etc.

Recap

Overall, the fact should you accept cryptocurrencies on your site or not is determined by one factor: your consumers.

Cryptocurrency is unstable, not regulated by anyone, does not guarantee investor protection, is subject to extreme volatility and is attractive to scammers. The prospects for virtual earnings can be as airy as the currency itself. Therefore, everyone who invests in bitcoin or carries out transactions with cryptocurrencies must first take into account the risks in order to take the necessary measures. Only an integrated approach will help you to run your business effectively.

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