Crypto payment: What Small Business Owners Should Know
Table Of Contents
What is cryptocurrency?
Cryptocurrency is a digital exchange currency that uses cryptography to transfer cash. It fully depends on peer-to-peer technology, and is, in effect, decentralized in nature. This means no central bank or government can back or regulate it. Buyers transfer funds straight to sellers, without a 3rd party to process payments.
Cryptocurrency relies on blockchain technology, which is a digital ledger that saves all transactions in public and chronological order, anonymously. Any person can include transactions to the blockchain using a personalized digital key. Blockchain technology secures the exchanges of cryptocurrency.
Types of cryptocurrency
Unlike most currencies, cryptocurrencies are not created by administrations. They can be created by pretty much anyone, and there are also thousands of cryptocurrencies. Ethereum and Bitcoin are the best known, but there are many others, including Monero, Litecoin, Ripple, Bitcoin cash, Dash, and more.
Cryptocurrencies change greatly. While some are gaining widespread acceptance, others are facing blachlash. French regulators recently put fifteen cryptocurrency and crypto-asset investment sites on a blacklist.
Meanwhile, more cryptocurrencies are coming to the business market, thanks to a boom in ICOs, or initial coin offerings. An ICO is a way for firms to raise money for products via the unregulated sale of crypto tokens. After some pushback from administration authorities, the number of ICOs has dropped off. Facebook banned crpytocurrency ads starting in 2018 January, while Google recently announced it would begin banning ICO and cryptocurrency.
So, is accepting cryptocurrency right for your small business? Before you can evaluate whether or not performing transactions with cryptocurrency makes sense, it is vital to be sure know the basics – and not just get caught up in the hype.
How cryptocurrencies work
There are many different kinds of digital currencies traded every day. Bitcoin is one of many currencies that are based on blockchain – it is the most famous. Litecoin, Ethereum, Zcash, Stellar Lumens and XRP are some other examples.
If you run a restaurant, café, or brick-and-mortar retail shop, you most likely already have a point of sale system at the checkout register. You can upgrade the most recent PoS machines with a Bitcoin wallet program. To accept money in Bitcoin, just type in the price and the data, this produces a QR code that the customer can scan to complete the transaction. Most online wallets charge a percentage per transactions, and some wallet applications will even permit you to print a receipt if needed.
For e-commerce transactions, you don’t even need a PoS machine. All you need to do is download a cryptocurrency application to a smartphone or tablet. Generally, transfer need scanning a QR code, inputting a code string or just bumping 2 devices together.
Things you should know About Cryptocurrency payment
Crypto is a relatively new phenomenon, it can be hard for small business owners to wrap their heads around it. To help you out, here are some things you should know about cryptocurrency payment:
⭐ Cryptocurrency is digital money
It is not physical like coins or cash. It uses cryptographic techniques to safe transactions and controls the creation of new currency units. Crypto is best news for little businesses, as it decreases the danger of fraud. Also, you can fast transfer and “store” it because it is digital. It also gets rid of the need for third party, such as bank.
⭐ Cryptocurrency is volatile
Bitcoin value, for example, has change significantly in recent years. If you accept cryptocurrency as payment, your value could replace dramatically overnight. It also means that a certain amount of danger is involved in accepting cryptocurrency as payment. That said, the volatile nature of cryptocurrency can also job in your favor. If you hold onto cryptocurrency and the value goes up, you could view an important return on your investment.
⭐ Cryptocurrency is still largely untested
While there are many famous cryptocurrencies, such as Ehtereum and Bitcoin, there are also new unproven and new ones. Before investing in any cryptocurrency, it is important to perform full research. Ensure to read up on the team behind the project, the technology, they are using, and the roadmap they are have laid out. Also, accesses the danger involved in investing in untested and new cryptocurrency.
⭐ Cryptocurrency is decentralized
Crypto is not subject to the control of any one entity, which has lots of implications. First, no central authority can shut down digital currency or interfere with its operation. Second, it also means that cryptocurrency is not subject to the same regulation as traditional fiat currencies. This lack of regulation can be beneficial and detrimental. On the other hand, cryptocurrency can run in free market without interference. It also implies that no oversees cryptocurrency and make sure people use it responsibly.
Advantages of accepting cryptocurrency for your business
Let’s begin with the advantages:
⭐ Lower transaction fees
Little businesses are generally charged between 25 and 30 cents plus 2% to 4% of the full transaction for every credit card swipe. Anyway, transactions fees for cryptocurrency payments depends on whether you pick to get digital coins in your personal wallet or via 3rd party wallets such as AurPay. The lacks of middleman collecting fees to facilitate the exchange decrease the expense greatly.
⭐ Increased sales
Cryptocurrency can open the doors to new markets across the planet.
⭐ Catering to consumer demands
A rising number of people are now investing in and accepting cryptocurrency as a legitimate way of transactions. This provides an extra way to pay while providing an included layer of security and protection for their information.
⭐ Merchant protection
Since cryptocurrency is decentralized in nature, it also saves merchants from scam chargebacks. Just like cash, cryptocurrency transactions are final, because no 3rd party is capable to reserve the charges. Since, blockchain technology works on peer-to-peer system, chargebacks cannot happen. If a customer demands a refund, only the merchant have the right to cancel the transaction.
There is some hesitation in the crypto community about possible regulations. Some countries have already banned the use of cryptocurrencies: Iraq, Egypt, Oman, Qatar, Algeria, Morocco, China, and Tunisia.
But, for the little business owner, it seems like a best time to look into accepting cryptocurrency. The field is ripe, and many are taking advantage of the crpytocurrency offers.