Should Your Small Business Accept Cryptocurrency?

In the decade since, accepting cryptocurrency at a business has become easier and more common. But it’s still more complicated than simply acquiring it as an individual. The checklist to get started includes getting to know the pros and cons of cryptocurrency, being informed with essentials and making incremental progress towards accepting cryptocurrency.

Advantages of cryptocurrency

There are 4 crucial advantages that cryptocurrency offers for your business.

First of all, cryptocurrency is a virtual asset, which means there is no need to set foot in a bank or ATM. When buying and storing crypto, you are not required to set up any sort of account that contains personal identifiable information like a social security number or address.

Secondly, another biggest advantage of cryptocurrency is security. Being built on blockchain technology, every cryptocurrency transaction is incredibly safeguarded. It is nearly impossible to brute-force attacks a user’s wallet because a unique private key is assigned to each of them in a distributed ledger, which is required to generate any and all transactions.

Moreover, small businesses can save a great deal of time when applying cryptocurrency payments. In comparison with traditional financial agencies, cryptocurrency transactions of all kinds are substantially faster. Crypto transfers can take as little as a few minutes as they are processed in real time.

Last but not least, the cost of using crypto is lower than using a traditional banking institution or credit card issuer. There is no monthly or yearly fee integrated with storing cryptocurrency and when it comes to trading money, both domestically and internationally, the costs that businesses have to pay are significantly lower.

Cryptocurrency opens doors to a worldwide marketplace. As a digital currency, crypto affords users from across the world the opportunity to pay for goods and services without the need to convert currencies. Once a business owner has received crypto as a payment, they will have a better possibility of making money.

Disadvantages of cryptocurrency

While we looked at the benefits of cryptocurrencies, there are also some of the drawbacks.

First and foremost, if your customers are prone to forgetting or losing your password, using crypto is not a good idea as a one-of-a-kind passkey is required for all blockchain recordings. There is no password reset button or help desk to get back the passwords, so businesses can struggle with payment problems.

Another disadvantage to cryptocurrency is the lack of typical financial protections that we have to anticipate. There is no overseeing agent that protects your money or insurance of cryptocurrency. Businesses may take all the risk with cryptocurrency as here’s no option for disputing or reversing incorrect transitions.

Furthermore, entrepreneurs accepting and applying crypto in their business is that if the value of the cryptocurrency rises before the conversion to cash is made, the business owner is responsible for taxes associated with capital gains due to its price volatility.

Things business should know before accepting cryptocurrency

Know your audience

According to the Skynova survey, 37% of business owners said desire from consumers influenced their decision to start accepting cryptocurrencies. Moreover, 44% said they’ve started to accept cryptocurrencies to reach younger generations and acquire new customers.

However, businesses should target the right audiences to get the full potential of them. To the young generation who is a tech-savvy audience, the ability to accept cryptocurrency payments could be an essential requirement for your business. And the older generations are catching up and you will still need to find a way to adapt if you choose to serve that segment.

Not all cryptocurrencies are created equal

There are more than 5,000 different kinds of cryptocurrencies on the market right now, which can be broken down into three main categories including coins, utility tokens and tokenized securities. It is suggested that businesses need to truly understand the status of cryptos, what they do, and what their long-term value will bring before putting your money into any of them.

Cryptocurrencies fluctuate more in price than traditional currencies

The traditional currencies are backed by the central governments to state their values, while cryptocurrencies were created to not let the financial agencies have the autonomy to regulate the funds of an individual. Cryptocurrencies have a fixed supply and are still at a nascent stage so that the result of this newness is the high volatility in the industry.

Cryptocurrencies are becoming safer and more secure

Thanks to cryptocurrency’s decentralized nature, transactions on most cryptocurrency networks are incredibly secure. The underlying blockchain technology inherently protects your digital assets and saves the recordings.

The regulatory environment around cryptocurrency is still uncertain

As cryptocurrency has grown in importance in the global investing scene, countries have tried a variety of ways to regulate it. The regulatory uncertainty is the barriers for cryptocurrency as there is no regulatory framework in place to ensure protection of assets.

Go it alone or with a payment tool

Businesses do not need a third-party processor since cryptocurrencies are free to receive and can be free to send. However, building a payment workflow is time-consuming that demands technological expertise. Third-party payment tools are able to address businesses a way to quickly start accepting crypto payments.

What are the tax and accounting issues?

The Internal Revenue Service (IRS) treats cryptocurrencies as property for tax purposes. Because of that, businesses are required to track their values from the time when they are received until the time they are sold. Small businesses should be aware of the tax implications if you plan on holding on to any crypto you receive. And think through how information from your point-of-sale system gets to your accountant and make sure that your crypto payments tool integrates with internal accounting.

How to start accepting cryptocurrency and crypto payments?

Step 1: Set up your cryptocurrency wallet

Setting up a crypto wallet is the first step businesses need to take action. The way a wallet works is the same as a bank account that users send and receive digital currency. Remember to go for a multi-cryptocurrency wallet that provides several types of cryptocurrencies to widen the range of crypto from various customers.

Other factors to look for when choosing a multi-cryptocurrency wallet are safety, popular crypto it holds, purchase/transaction fees and the ability to link with other software wallets or applications.

Step 2: Integrate crypto payments on your website

Once your crypto wallet is ready, it is time to incorporate crypto payments into your website or your e-commerce site. There are various plugins that you can install to set up crypto payment processing or organize direct payments with your customers via wallet address or QR code.

If you can not find the right plugin, you can sign up to get support from crypto payment gateways. Crypto processors provide several ways in which you can accept payment on your website. Some of these methods include payment buttons and invoices. Cryptocurrency payment gateways can be considered based on types of crypto, transaction fees, platform connections, good reputation, etc.

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Spirit Labs

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We are a full-stack software development company with extensive experiences in delivering cutting edge solutions for SMEs, Startups and Entrepreneurs.