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Many businesses accept payment in more than one currency and you may be one of them.
With cryptocurrency becoming more of a thing, this is a contributed post about the pro’s and con’s (mostly con’s let’s be honest) of accepting cryptocurrency like Bitcoin. Exchange rate anyone?
If you’re in tech or sell to tech folks as your niche, that’s a bit different to selling dance classes or a coach with clients internationally so you need to decide for yourself (like you would with any currency).
Why You Shouldn’t Accept Cryptocurrency as Payment
Digital payment systems have evolved in the past few years by allowing merchants to accept Bitcoins as payment. Microsoft and Virgin Airlines are among the top global brands that have shown their support for the cryptocurrency industry. Since some international companies have added Bitcoin to their accepted methods of payment, should small businesses follow suit?
While there are certainly perks in diversifying your store’s payment methods, small businesses will not benefit from accepting cryptocurrencies yet. Below are some of the biggest reasons why small businesses shouldn’t embrace cryptocurrencies.
Bitcoin and other alternatives aren’t universally recognised
Unlike regulated currencies that are recognised by banks anywhere in the world, cryptocurrencies’ transactional procedures are limited. You cannot grow your cryptocurrencies with interest in a bank, and you will have a hard time finding suppliers who accept them as payment.
While it’s true that companies like Microsoft are accepting Bitcoin, most merchants still do not accept digital funds. Why should you trouble yourself with accepting cryptocurrencies if you are going to struggle to use the funds? No matter how valuable cryptocurrencies become, it doesn’t make sense to accept them if not everyone recognises digital funds as a legitimate form of payment.
Cryptocurrencies are way more volatile that you can imagine
Investors used to say that gold is extremely volatile, with some of its sharpest drops ranging from £11 – £15. However, Bitcoin takes the term “volatility” to a whole new level.
Coinwire state that Bitcoin prices dipped from £7,139 to £7,022 in March. It was an 8% drop within a 24-hour period – something that commodities do not experience regularly within a trading day. In fact, this decline in value for Bitcoin was quite tame. Bitcoin prices slid from an all-time high of £14,490 in December to £7,244 in January. Accepting currencies like the British pound is still the better payment option because you can still adjust your strategies to pay your suppliers even when the currency’s exchange rate is low. With cryptocurrencies, it’s almost impossible to keep your assets’ stored value intact. A 50% decline in value is extremely detrimental for any small, or large, business owner.
While no currency can be safe from theft, cryptocurrencies offer very little in terms of security. Cash can be insured and recovered when lost, but Bitcoins are almost impossible to retrieve once they’re stolen or lost due to their unregulated nature.
There have been several stories of investors losing large amounts of money. A recent example was when a cryptocurrency investor suddenly lost £202 million worth of Etherum — the second most recognised cryptocurrency in the world. It was unintentional, as an Ethereum developer accidentally locked it due to a bug in the system. Most businesses cannot recover from such a loss, and many would close down or get buried in debt. The risk of such a loss is a big factor in why small businesses shouldn’t accept cryptocurrencies.
With the current setup of cryptocurrencies, it just doesn’t make sense for small businesses to take the risk of accepting digital funds. Traditional currencies are still the better option for accepting payment because they’re regulated by central banks, and can be backed by insurance.
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This is a contributed post with image provided by the contributor.