Cryptocurrencies such as Bitcoin and Ethereum have become very popular over the last decade. These digital currencies were initially invented as a way of helping people trade internationally without having to pay transfer fees by offering a decentralized currency not controlled by banks.
Over time, cryptocurrencies have become more of an investment asset than a form of currency. That said, you can still buy things online using cryptocurrencies. In fact, many online businesses have started to accept cryptocurrencies like Bitcoin as a payment option. Some companies such as Whole Foods and Starbucks have even begun accepting cryptocurrencies via mobile payment in their physical stores.
As more people invest in cryptocurrency, it’s likely to become a more widely used payment method. But should your company accept this payment method? This guide explains some of the things to consider.
Gain an understanding of how crypto works
Before accepting cryptocurrency as a payment method, it’s important to get an understanding of how it works. Below are just a few basic things you’ll need to understand:
- Cryptocurrency cannot be stored in a bank with the rest of your company’s funds. You can sell it and convert it into cash, which can then be deposited in your bank. Alternatively, you can store it in a digital wallet.
- Cryptocurrency is bought and traded via cryptocurrency exchanges. There are fees involved when using these platforms.
- There are many different types of cryptocurrencies, however not all are commonly used. The most popular cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Ripple XRP (XRP). You may only want to accept these options.
It could be worth buying some ETH cryptocurrency or some BTC cryptocurrency to better understand how it works. You may decide that it’s too complex and costly to get involved with or you may find that you’re able to easily get to grips with it.
Consider who your customers are
You should consider whether your customers are likely to own cryptocurrency and whether they are likely to benefit from paying via crypto. If you have an international customer base and sell products online, you could find that a lot of customers want to pay using crypto - and as such it could be a selling point that helps you attract more business.
If you run a local business and sell most of your products face-to-face then you may not see much benefit from accepting cryptocurrency. It’s unlikely that many customers are going to go into a local store and ask if they can pay using crypto.
Decide if you’re willing to take the risk
Accepting cryptocurrency as a form of payment comes with its risks.
Because cryptocurrencies cannot be stored in a bank, you need to keep them secure yourself. Fail to do this and there’s a risk you could get them hacked.
Cryptocurrency values are also very volatile. The likes of Bitcoin have experienced huge rises and falls in value. If you accept a large payment in cryptocurrency and the value of that cryptocurrency drops, you could make a big loss.
That said, cryptocurrencies can also rise dramatically in value. Many of the earliest businesses to accept Bitcoin found themselves getting rich due to the huge rise in Bitcoin’s value. In other words, it could be an extra way of making a profit. It’s up to you as to whether you want to take the risk.
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