There is no question that 2018 is the year cryptocurrencies are becoming mainstream. With an influx of talk around and adoption of Bitcoin, Litecoin, and other cryptocurrencies, smart small business owners are beginning to wonder if they should be accepting this new form of payment. However, there are several pragmatic and technical elements small businesses in particular should consider before diving into the world of crypto.
By George Levy
To help you determine if cryptocurrency is right for your business, consider this:
1. Bitcoin is only one type of cryptocurrency… but it’s the most popular
There are over 1,600 different cryptocurrencies available at the time of writing this article. This is an overwhelming number and it would be practically impossible for the average small business to accept such a wide range of payment options.
For small business owners, Bitcoin is by far the most popular choice and the most widely accepted option. There are other alternatives which have been gaining popularity, such as Bitcoin Cash and Litecoin, but for the largest “bang for your buck” on where to start, Bitcoin is the obvious first choice.
2. Cryptocurrencies are highly volatile
Unlike receiving payment in U.S. dollars, in which case 1 dollar is always worth 1 dollar. Cryptocurrencies have varying prices that fluctuate with the market, and change prices regularly against the dollar. These price fluctuations can work for or against your business, and it’s a matter of personal choice how you handle it.
This means, for example, that if you accept payment for a product in Bitcoin, and the price of Bitcoin goes up, you could benefit from the rise in the price when you convert those bitcoins to US Dollars.
Unfortunately, the inverse is also true.
If the price of Bitcoin were to drop, the payment you received would also be less valuable. As a result, when you try to convert the Bitcoins into U.S .Dollars, you would receive a smaller amount of U.S. dollars than what the original payment was supposed to have been worth. This price volatility can have a major impact on a small business which needs the steady cash flow, and often can’t afford to “sit and wait” until the price of Bitcoin rises. However…
3. You don’t have to keep the payments received in cryptocurrency
Small businesses that count on daily sales made and are not willing to speculate with the money made from those sales, can work with third party providers such as Coinbase and Bitpay. These platforms makes it possible for them to accept the payments from the customers in cryptocurrency, but to receive the actual deposits in U.S. dollars.
This enables the merchant to avoid dealing with the price volatility issue or converting as they receive the actual payments in U.S. dollars.
4. There are no chargebacks in cryptocurrency
Transactions made in cryptocurrency are final and non-reversible. This means that there is no such thing as a credit card company or bank that can issue a reversal or place a stop payment on a check. Once a person pays in cryptocurrency, and you receive confirmation for the payment, you will have received the actual funds. With payments in cryptocurrency, you do not have to deal with checks having insufficient funds, or chargebacks for fraudulent credit card purchases.
5. Accepting Bitcoin and cryptocurrencies can make your business more appealing to customers
Accepting payments in cryptocurrency also offers SMBs the advantage of giving customers an additional way to pay, while providing an extra layer of protection for their information. When someone pays you in Bitcoin, they do not have to give you their credit card number or any other sensitive information, which makes paying in crypto very attractive to privacy conscious customers.
Additionally, many cryptocurrency users are passionate about the crypto industry itself, and actively seek to support businesses that accept payments in cryptocurrency. This can not only help drive word-of-mouth promotion, but also translate into PR opportunities for your business, while positioning your small business as forward thinking.
Introducing new technologies to your small business can be daunting, especially when that technology has anything to do with how you get paid, but any good business owner knows that with risk comes reward. Remaining cognizant of the risk involved and working toward an increased understanding of the crypto world is the best way to determine if this budding technology is right for your customers and most importantly, the health of your business.
George Levy is an instructor on Udemy, Chief Learning Officer and a certified Instructor on blockchain, Bitcoin and cryptocurrency at Blockchain Institute of Technology (BIT), a leading professional training and certification organization specialized on blockchain technology. He is also a co-founder of Bitsonline, a media portal for all things Bitcoin, Cryptocurrency, FinTech and the technology that frames it all. Follow him on Twitter @georgelevy.