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Is using cryptocurrency in business a good idea?

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There have been many speculations about the utility of cryptocurrency since the inception of Bitcoin. Although there are many benefits of using crypto, it has been adopted by the common man and celebrities alike. The popularity of cryptocurrencies is based on what problems they resolve. Despite an increase in the trading volumes of crypto, there are very few people who use it for day-to-day tasks. As the infrastructure for accepting and making payments in crypto gets better, more people are expected to use it instead of FIAT currencies for purchasing a product or availing of a service.

The use of cryptocurrency in business has been debated by experts for a long time now. Look at these points below and decide for yourself!

The plus points of using cryptocurrency in business

  1. Redirect your investment – If you are just starting your business and you are looking for investment opportunities that will give you a profit and help you build your business then cryptocurrency is a good option. While the most popular crypto used in businesses is Bitcoin, you can decide for yourself. You can consider accepting payments in Ripple, Dogecoin, or any of the altcoins that have proved reliable. Instead of accepting payments and then investing in crypto, you can directly decide how much of your payments can remain invested and how much you need for the operational cost. If you are paid in crypto which is good for short-term gains, then you can immediately convert it to FIAT and use it for the operational costs. For example, XRP to INR value is expected to go up so that it can remain as a long-term investment.
  2. Elimination of third parties – If you are running a business online, you need to create a trustworthy way for your customers to make payments. When you use cryptocurrency, you do not have to worry about any third-party involvements and mishandling of customer data. There is no need for banks to be involved at all as cryptocurrency is a peer-to-peer network.
  3. Make your business global – The benefit of accepting payments in cryptocurrency is that you can accept payments from all over the world. The transaction fees are negligible and you can redirect your funds for the development of your business. The speed of the transaction is another bonus that ensures you can start disbursing the product or service immediately.
  4. Irreversible transactions – There are many scamsters who make the payment, receive the product, and then cancel the charge on their card saying it was not them who did it or that they did not receive the product. Such frauds are very common and are rarely brought to light as the customer is given the benefit of doubt. If you use cryptocurrency, the transaction becomes irreversible and even if the customer does not receive the product, then a refund is possible only by initiating a new transaction.

Disadvantages of using cryptocurrency in a business

While we have seen the advantages, let us take a quick look at the disadvantages as well.

  1. Identity of the buyer – Although anonymity can be a boon, if you are running a business, there is a moral responsibility of not doing business with people who do not abide by the law. Even though the transactions can be traced, it is not necessary that the identity of the person making the transactions will be found. There can be nothing tying the identity of the person to the online username chosen by them. This remains a risk you might have to take.
  2. Improper regulations – There are still no written rules for the use and trading of cryptocurrency. This means volatility and fraud are much higher than in a traditional economy. This also means that overnight the government can decide to ban the cryptocurrency you are accepting as payment and it will require time and effort to change a major part of your business.
  3. Preferential currency – Even today, a lot of people are skeptical about using crypto to pay. Imagine if you invest heavily in creating a robust infrastructure that allows you to accept cryptocurrency as payment and customers end up paying in FIAT currencies only. You cannot keep crypto payments as the only option as you might end up losing revenue due to a lack of payment options. Apart from this, there is a constant fear of overpaying or underpaying as the price keeps fluctuating. For example, the DOGE to INR value might change after you have paid for a certain product. If the value goes up, you have been overpaid, whereas if the price reduces overnight, you will end up losing money.
  4. Sustainability – Looking at the points above it is clear that you cannot have only cryptocurrency as the payment option. You need to cater to the majority of customers who prefer to pay via traditional means. This means you need to curate a business model that accepts all kinds of modes of payment. For a company that is in its nascent stage, this can mean tying up funds that can be used for other purposes.

The use of crypto in business is a choice you will have to make and live with. Use the pointers above to decide!

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