21 January 2022
Influence of Cryptocurrency on the Market
People's reactions to the entry of cryptocurrencies into the market have been divided. The majority of people regarded cryptocurrency as a massive con and a means for black-market criminal operations. Now, crypto acceptance has reached levels that no one could have predicted. People no longer consider cryptocurrencies to be a black-market transaction option, as they have realized the multiple benefits that come with their use.
Previously, businesses did not accept cryptocurrencies as a transactional mechanism when it first emerged since it was a new form of digital currency; however, now, most renowned corporate institutions such as Microsoft, Tesla, and roughly about 15,000 businesses worldwide accept bitcoin. So more and more companies have now embraced crypto and implemented it as a method of conducting business transactions.
Regardless of how many well-known businesses have started to use cryptocurrency in their daily operations, it is still a relatively new payment method that everyone is trying to understand better.
Here we break down the significant benefits and drawbacks of using cryptocurrencies in your business.
Pros of Cryptocurrency in Businesses
It is fast and secure.
The term “cryptocurrency” was born from the fact that encryption is used to verify transactions within cryptocurrency. The transmission of data and transaction procedures use advanced coding, and each coin and wallet is tracked on the blockchain. The ultimate goal is to improve security and safety. In addition, transactions using cryptocurrency are completed much faster than transactions involving fiat money. In the corporate world, speed is critical when it comes to collecting and processing payments.
It benefits businesses with international trade.
Because blockchain's architecture is designed to record a chain of transactions, it may be particularly well suited to tracking the movement of goods internationally and providing timely and accurate information on not only where products originated but also each stop they've made and where they are now.
That promptness, accuracy, and precision could benefit international buyers, sellers, and carriers, who frequently grapple with the same questions about shipments' origin and provenance, as well as how to handle the numerous transactions that must occur simultaneously at often widely dispersed ports of entry and helping products to clear customs quickly.
Furthermore, because the blockchain system automates many of the functions that currently require multiple middlemen to check and record movements, payments, and other data, it has the potential to significantly lower the costs of international trade for businesses with similar interests in mind.
It has low transaction fees.
Many payment services apply additional fees on transactions. PayPal, for example, can charge up to 4% of each transaction (or sometimes more). Meanwhile, bitcoin transaction fees are often small, if not non-existent. For example, Binance, one of the most well-known crypto-trading platforms in the world, charges 0.04–0.10% transaction fees, which are determined by trading volume.
It reduces chargeback fraud.
Friendly fraud, also known as chargeback fraud, occurs when a cardholder contacts the issuing bank to request a refund or reverse payment while still keeping the goods or services obtained from the transaction. Due to its strict tracking mechanism based on blockchain technology, cryptocurrency does not have this problem. In essence, committing a chargeback scam is virtually impossible.
Cons of Cryptocurrency in Businesses
It is More vulnerable to scams.
The foundation of cryptocurrency is based mostly on new and evolving technology areas such as Blockchain. Because of the newness of this technological feature, internet fraudsters and hackers can take advantage of this key factor to swindle cryptocurrency owners via social media platforms such as Facebook, Twitter, and Instagram. Fake bitcoin investment schemes have been utilized to defraud cryptocurrency consumers, resulting in financial loss.
The market is volatile.
Cryptocurrencies are extremely volatile, with their prices fluctuating dramatically. Security breaches, concern about its future value, and bad news, among other reasons, could all have an impact on its volatility.
In addition, aside from the most well-known cryptocurrencies such as Bitcoin and Ethereum, there are over 2,000 other types of cryptocurrencies. As a result, if other businesses, including your clients, switch from one digital currency to another, the value can plummet dramatically.
We hope you're able to decide or reach a conclusion that is useful to your business after considering the benefits and the less appealing aspects of implementing cryptocurrency as a form of payment in your business. Sometimes it's necessary to take a risk while weighing the benefits. Who knows, maybe you will be able to push the business that much further while the thought of cryptocurrencies is still new.