Cryptocurrency is simply digital currency, an online medium of exchange via blockchain technology. It’s encrypted , immutable, and decentralized. According to Statista, the global cryptocurrency market could grow from $51.5 billion in 2024 to $71.7 billion by 2028 at a compound annual growth rate of 8.62%. In recent years, we’ve witnessed the growing adoption of cryptocurrency among companies across different industries, but is it right for your small business?
The Potential Benefits of Leveraging Cryptocurrency
Cryptocurrency now leads the financial technology, paving the way for digital transactions in business worldwide. Small businesses can attract international consumers using crypto and offer local customers new payment methods. Let’s take the use of Bitcoin as a perfect example. It was introduced back in 2009 and turned into the most popular crypto globally.
Blockchain helps build new payment rails for businesses. Small companies can capitalize on this technology for more efficient and seamless transactions. Meanwhile, they can benefit from the lower transaction fees and no chargebacks or disputes of cryptocurrencies. Yet, they can boost sales by serving new and international consumers using crypto.
Blockchain is notable for its encryption and decentralization, fostering platform security and data privacy. Small businesses can utilize the technology with a smart contract audit process for hired contractors. Likewise, SMEs accepting cryptocurrencies from customers can guarantee irreversible, transparent, and secured transactions.
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The Possible Risks of Using Cryptocurrency
The cryptocurrency industry is known for its volatile market. Crypto values fluctuate frequently, making them highly unpredictable for small businesses looking to earn and grow. Take Bitcoin as an example: Its value rapidly increased to more than $64,000 per coin in February 2021 and quickly decreased to less than $28,500 per coin in May 2023.
While notable for its decentralized nature, cryptocurrency might eventually be subject to laws and regulations. The industry is facing uncertainties as governments seek to regulate the crypto market. Some countries have begun considering the creation of the Central Bank Digital Currencies, which might impact the crypto market in the near future.
Cryptocurrency is known for its secured, decentralized, and immutable transactions. However, small businesses cannot ignore fraudulent activities consumers and other vendors commit. Quite recently, a scam company is again impersonating Coinbase in the UK. So, startups and SMEs must be wary of people acting as platform representatives.
How Small Businesses Can Leverage Cryptocurrency
Startups and SMEs should start exploring the use of cryptocurrency for their business. However, they must do so with extra caution and calculated risk.
Anthony Martin, the Founder and CEO of Choice Mutual, recommends using crypto for small businesses. Martin explained: “Cryptocurrency removes the middleman in each and every transaction. It is decentralized, meaning no central authorities like banks or the government regulate it. As an online seller, you can allow buyers to directly transfer the money to you for payment without a third-party involvement.”
As an entrepreneur, here’s how you can leverage crypto for your small business:
- Setting up crypto payments for your e-commerce website is as simple as downloading a plug-in or app on your e-commerce platform. But, if this isn’t available, you can register with third-party service providers, such as BitPay, Coinbase, or PayPal, to start accepting payments.
- Accepting cryptocurrency requires establishing digital wallets on an online currency exchange. These wallets keep your money as crypto, while payment gateways let you seamlessly exchange them for regular currencies. As we’re heading towards a digital, cashless society, offering digital wallets is best.
- You can also manually accept cryptocurrency payments for your small business. That is if you haven’t started setting up digital wallets. All it takes is to create an account on a crypto exchange, such as BitPay and Coinbase. This way, customers have somewhere to send their payments through cryptocurrencies.
You can integrate crypto payments with accounting software. Automation features help in recording, analyzing, and forecasting your finances.
Best Practices for Using Cryptocurrency for Small Businesses
Implementing cryptocurrency in your small business involves several key practices. Firstly, integrate blockchain into your online store by establishing digital wallets or creating accounts on online currency exchanges. Additionally, consider leveraging smart contracts to streamline processes and enhance security measures.
Secondly, provide comprehensive training for employees on blockchain technology, ensuring they understand its functionalities and implications, particularly in processing crypto payments. Focus on familiarizing them with associated procedures to facilitate seamless transactions.
To ensure the security and efficiency of cryptocurrency usage, prioritize secure logins and access regulation. Implement robust security measures such as multi-factor authentication for both employees and customers involved in payment transactions. Additionally, explore the benefits of digital identity to combat fraudulent activities, whether initiated by AI or humans.
Lastly, conduct regular audits to optimize your e-commerce platform and its integration with blockchain technology. These audits help identify and address potential security vulnerabilities, ensuring smooth and secure processing of crypto transactions. Stay proactive in updating your systems to mitigate emerging threats and maintain operational integrity.
Final Words
As a small business, it’s best to start exploring cryptocurrency. It allows global transactions, offers cost efficiency, and enhances privacy and security. However, prepare for its volatile market, combat fraud, and keep up with laws and regulations. Prepare for the bright and promising future of cryptocurrency. Embrace calculated risks to maximize its potential for your small business starting today!
This article was written by Anthony Martin at www.financemagnates.com.
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