There are 5,000+ cryptocurrencies across 20,000+ markets, with an aggregate market capitalization of $260 billion. While Bitcoin dominates the cryptocurrency market (65% market share), there are quite literally thousands of altcoin options available to everyday consumers, traders and investors. The rising prominence of cryptocurrency has facilitated greater adoption of this fiat alternative across the spectrum. Small, medium, and large enterprises are exploring their options vis-à-vis the variety of payment processing methods. The spike in cryptocurrency acceptance gained tremendous momentum in 2017 when the price of BTC went from under $1,000 per unit to over $20,000 per unit, before pulling back sharply in 2018.
Regardless, the trajectory remains bullish, with significant amounts of capital invested in this contrarian asset class. As new blockchain-based digital currencies are brought to market, so the public is introduced to specific social, environmental, and business initiatives. Businesses have been quick to respond to the crypto boom. Many online retailers, service providers, and government agencies are already ‘crypto equipped’. The complex minefield of digital currency regulation has not dampened interest in Bitcoin, Litecoin, Ethereum, Ripple, and others. On the contrary, many businesses and their customers are dabbling in this new-age options and enjoying all the benefits. These include cost savings, rapid transactions processing, relative anonymity, and the absence of established financial enterprise.
Lower Costs of Operations for Businesses and Consumers
The mainstream appeal of digital currency adoption is evident in the rising number of SMEs now accepting crypto as an equal payment option. Consider the instantly recognizable brands such as AT&T, Wikipedia, Expedia, Microsoft, Burger King (Venezuela), KFC (Canada), Miami Dolphins, Dallas Mavericks, Twitch, Subway, NewEgg, Gyft, ExpressVPN, and CheapAir. There are scores more businesses that are cashing in on the crypto craze, and with good reason. It’s not only customers who benefit from crypto; it’s businesses too. Since there are no direct processing fees associated with accepting crypto payments (credit cards are expensive), businesses get to keep more of the prices they charge and the revenues they generate. The absence of third-party involvement is a big boon to crypto adoptees.
Muted volatility Through Merchant Wallets
Detractors of crypto adoption routinely point to the volatility issue as the #1 reason why cryptocurrency cannot possibly be a viable payment processing option for businesses. In reality, the volatility aspect is muted by dint of the fact that merchants can immediately convert crypto payments into fiduciary currency, courtesy of merchant wallet accounts. This guards against whipsaw pricing with BTC/USD, BTC/GBP, or BTC/JPY, and other options. That crypto can fluctuate wildly around the mean, at any given point in time, is an important consideration for SMEs. Rather than holding deposits in crypto, businesses can immediately opt to have digital currencies converted into US dollars, British pounds, euros, or Japanese yen, et al. It is entirely possible however that a major price adjustment could take place while a transaction is being processed. Businesses assume this risk, however slight, for the greater good of expanding the tent to include more customers across the spectrum.
Casting a Wide Net for Customers Everywhere
Customers are inherently curious about the latest craze, particularly online shoppers. If crypto is everything it’s cracked up to be, there is no reason why folks won’t want to jump on the bandwagon with crypto. This digital currency option has global appeal, and that means businesses which accept BTC, LTC, ETH, BCH, and other popular crypto options will naturally attract many more customers in the process. By casting a wide net and accepting fiduciary currency payment options like credit cards, debit cards, bank transfers, e-Wallets, and the like in addition to non-fiat options like crypto, there’s lots more to be gained. Whether it’s B2B or B2C operations, there is greater potential to tap into new markets. What started as a sprint towards widespread adoption in 2017 slowed by 2019, but there is still plenty of forward momentum with crypto as the industry consolidates. Regulatory frameworks are being constructed, and this will ensure the survival and growth of crypto.
Tax-Related Compliance Issues
The mere fact that a business accepts crypto does not immunize it against tax compliance. Quite the contrary; the IRS and other government tax agencies around the world mandate that crypto payments and receipts are reported accurately for tax purposes. In the US, crypto is regarded as property and taxed accordingly. It is not deemed a currency. If a business decides to hold crypto as an investment, with the objective of appreciation in mind, nothing needs to be done with that. The reporting requirements and the responsibilities begin once the crypto is sold, transferred, or used. Then, the property a.k.a. the crypto, is subject to short-term/long-term capital gains. Meticulous records need to be kept by businesses when it comes to crypto currency, to ensure that the felonious charge of tax evasion is not brought to bear.
Businesses Can Benefit from Crypto Adoption
Businesses can certainly benefit from adopting crypto in many ways. We have already highlighted several leading enterprises that use crypto in their daily operations. Others include Tesla, Virgin Galactic, and Lionsgate Films. The passage of time will ensure that many more SMEs across the United States, Canada, Europe, Australasia and beyond will take to crypto like ducks to water. There are many peripheral benefits such as the decreased probability of fraudulent chargebacks, since crypto doesn’t permit as much, and reduced processing times in the marketplace.
The enhanced security measures in place with crypto are a natural incentive to customers to shop online. Statista (a leading statistics portal) has conducted multiple studies in this regard and found that 17% of customers opted against traditional online purchases for security-related concerns. Plus, 18% of customers are instantly turned off when e-commerce platforms request too much information from them during the checkout and verification process. This translates into plenty of lost sales – something modern-day businesses can ill afford. For these and many more reasons, cryptocurrency adoption makes sense.
Smith Willas is a freelance writer, blogger, and digital media journalist. He has a management degree in Supply Chain & Operations Management and Marketing and boasts a wide-ranging background in digital media.