Besides transferring funds across borders without middle-mans, using cryptocurrencies open business to an entirely new customer base around the world. There are many reasons why companies should adopt cryptocurrencies, however many just do not know how to do so.
As a business owner, you may have been thinking about implementing cryptocurrencies as a method payment and a way to accept payment in your company. You are not alone in this, as accepting cryptocurrencies as a payment method is becoming more and more common. Despite this, there are still a number of inherent risks involved in adopting cryptocurrencies and it would be prudent to make yourself aware of these risks and how to put the best control measures in place to ensure that you are protecting your own interests and the interests of your clients.
The opinion on cryptocurrencies and their viability as an option in business have slowly been trending in a better direction since their initial explosion in popularity in 2017. The severe crackdown imposed by numerous world governments has slowly begun to soften and as a consequence, there are more businesses than ever that are accepting cryptocurrency in their business, especially Bitcoin.
Despite the warmer approach to digital currencies, many business owners are still wary about the volatility and risks that cryptocurrencies can pose to their business and their clients. They want their customers paying in cryptos and to buy with cryptos in a safe manner. Yet, many business owners do not know how to do so.
The Rise Of Businesses Wanting To Accept Cryptos
More businesses than ever before are accepting payment in cryptocurrencies and some of the businesses doing so are names that you will likely be familiar with. For example, the German division of Burger King, Starbucks, UK-based food delivery service OrderTakeaway and Richard Branson’s Virgin Galactic among the many beginning to adopt virtual currencies. In fact, there are hundreds of retailers that are following the trend.
There are a number of reasons why companies are starting to adopt cryptocurrencies. Firstly, for businesses that are involved in foreign trade, they are able to transfer currency across borders without a middle-man, this means that they are able to avoid expensive transfer fees, which leads to more retained profits for each sale. Furthermore, money can be transferred across a blockchain close to instantly, whereas with the traditional banking model it can take days for funds to clear.
Being open to using cryptocurrencies also allows businesses to open themselves up to an entirely new customer base. By advertising the acceptance of cryptocurrencies, businesses can make themselves available to customers in different countries by diminishing the cost associated with serving cross-border customers.
Finally, sensitive data that is transmitted over a blockchain, such as payment information is stored under lock and key and is protected from nefarious agents, meaning that the potential for customers to be defrauded is incredibly minuscule. This can also be a big selling point for customers that do not like the idea of banks keeping tabs on their every move and every transaction that they make.
The Risks Involved In Adopting Cryptos
One of the first risks associated with a business accepting the use of cryptocurrencies is the price volatility that comes from cryptocurrencies. Whilst investors can benefit from cryptocurrency price volatility, a business may accept payment in cryptocurrency and by the time they convert the payment into fiat currency, the cryptocurrency may devalue significantly, leading to an unprofitable transaction for the business. Businesses can take some precautions against cryptocurrency volatility, although because no transaction is actually instantaneous, completely eliminating the risks is essentially impossible.
One of the second risks involved in adopting cryptocurrencies comes from the way in which they need to be stored. Your cryptocurrency holdings are only as safe as the crypto wallet that you use to store them and cyberattacks can leave your holdings totally drained.
Limited regulation and the freedom afforded by cryptocurrencies is one of the major selling points, however, the limited regulation poses a question of reliability. If you are not comfortable with the potential for loss, even if it is a small chance, you may be better off waiting until you feel that your business could viably withstand such an event.
How To Mitigate The Risks of Accepting Cryptocurrencies?
One of the first ways to mitigate the risks involved in accepting and paying in cryptocurrencies would be to arm yourself with a cryptocurrency wallet that has high levels of security. There are a number of wallets on the marketplace that have high-quality security and this will go a long way towards preventing you from falling afoul of criminal actors stealing your cryptocurrency holdings.
One of the ways in which businesses can mitigate the risk of price volatility with cryptocurrencies would be to store your cryptocurrencies and make payments by utilizing stablecoins, which have been specifically created to ensure price stability. This will prevent the aforementioned issue of a price drop turning a profitable transaction into a transaction that operates at a loss. Another solution to this problem would be to convert any cryptocurrency received into fiat currency as soon as it is received, to minimize the possibility of a price drop before the conversion is made.
Finally, to combat the issues of reliability and limited regulation, you will need to do a lot of research into how cryptocurrencies are viewed in your locality. From this information, you will be able to ascertain whether or not it is practicable to accept cryptocurrencies in your company. Furthermore, from your research, you will be able to identify the cryptocurrency that is best suited to your needs, there are thousands of cryptocurrencies in circulation at this point and only a number of them will be perfectly suited to your company.