The Growth of Cryptocurrency-Based Businesses: Benefits and Risks

If at first people perceived cryptocurrencies as something strange and incomprehensible, now we can observe how an increasing number of people are showing interest in studying and using them. Everyone understands that it is not practical to put all the eggs in one basket and is looking for different ways to save their savings. In addition, they are trying to find ways to protect themselves from inflation and reduce commission costs for various transactions.

Numerous businesses also understand that this is a great solution to many problems. Among those companies that already accept such payments, some are on everyone’s lips. For instance, Etsy, PayPal, Home Depot, Microsoft, and others. About 15,200 companies around the world already accept payments in digital currencies.

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Increasing demand

As we have already noted, it is not only people who are interested in using digital currencies to save or protect their savings. The most important thing about them is that they are based on a special distributed ledger technology called the blockchain. The most important advantage of this technology is that it offers increased security for crypto wallet holders. All data is stored on them, that is, decentralized. Unlike traditional centralized storage, using them, owners are protected from data loss and leakage.

Every transaction is verified and recorded. In addition, transactions are completed quickly as there is no need for a third party to be involved. Thus, companies that receive such payments make life easier for themselves and consumers.

For many businesses, and especially for small and medium-sized businesses, expensive transaction fees are the biggest problem. This is another big plus for businesses of all sizes, as you can pay low fees using cryptocurrencies. If customers pay for their purchases with digital currencies, then there is no need for their conversion by any intermediary.

Risks

The benefits of accepting such payments are obvious. However, it cannot be said that this is a completely winning idea since every business must understand that in addition to the benefits, there are also some risks.

Poor understanding of technology

You can’t just introduce such payments and continue to work as before. This requires well-savvy professionals who have a clear understanding of the technology and how to use it. There is a huge amount of information to study and it cannot be said that this technology can be understood easily and quickly because the learning process is long. That is why before the implementation, you need to become a good expert in this area.

Price instability

The spikes in the price of digital currencies are discouraging. You can never predict what will happen to them. Prices can either rise sharply or fall. For example, if the most famous cryptocurrency, bitcoin, at the time of its appearance 13 years ago, was worth less than a dollar, then a year ago it reached the mark of 65 thousand dollars. This year, the cost has dropped to 19 thousand dollars.

Such instability does not allow businesses to boldly use digital currencies. You always need to monitor the rise and fall of prices and convert them back to fiat currency in time so as not to lose your profits. This must be done quickly and regularly. That is why for small businesses this can be a serious problem.

However, this problem has a solution. For these purposes, many companies use the services of other companies that help monitor prices and, in case of fluctuations, regularly make a currency exchange.

Safety

Although the technology offers an increased level of security, no one can guarantee one hundred percent security. Fraudsters and cybercriminals are nimble and therefore look for different ways to still get into the wallets of people. Users are poorly protected from theft because they do not have any insurance.

Nevertheless, today various companies offer loss insurance. One such company is Coinbase. It offers its customers to hold less than two percent of digital currency online, so that if something happens, then customers can at least somehow be insured against losses.

Companies using Coinbase services can feel safe. However, if you have an e-wallet that can be hacked at any time, then everything related to the security of your account is your responsibility.

Now many are working to solve the problem of fraud. Companies are developing technologies that will significantly increase the security of such wallets. For this, technologies are being developed that will allow access to wallets based on facial identification. This will greatly reduce the number of thefts and also help users access their wallets in case of password loss, which is a massive problem.

Final Thoughts

The benefits of accepting cryptocurrency payments are overwhelming. For the vast majority of companies, this is the best solution to most of their problems. In addition, there are benefits for both companies and their customers. However, there are still many risks of such technology. Various companies are doing their best by developing new technologies to reduce their number.

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