When digital currencies like Bitcoin first became financial players, they gained a sinister reputation. As the preferred financial medium for ransomware creators and terrorists, cryptocurrencies came to the attention of markets and governments in a very negative light.
Since then, however, the currency has gained more legitimacy. Businesses are beginning to accept Bitcoin and other altcoins, and more small businesses are looking at cryptocurrency as currency, not just an investment or commodity. There are definite benefits to choose to accept altcoins at your small business.
Entirely Owned By Account Holder
It only takes one instance of your Paypal account being shut down or put on hold to realize that you are not the one who “owns” your digital currency when it is in their hands. Similarly, banks can freeze your assets at certain times. In either situation, until you complete whatever these companies determine is appropriate, you will be unable to access your funds. This can be even more disastrous for businesses than it is for individuals.
With Bitcoins, account holders own all the coins that they have purchased, because the blockchain is the actual coin, much like having cash in your hands. Those coins may fluctuate in value, since they are still seeing a large amount of speculation on the investment market, but they are owned by the people who possess them.
It is worth noting, of course, that governments which already restrict internet access (like China) can and have worked to shut down ICOs (initial coin offerings) and peer-to-peer trading of altcoins. Other governments like Russia and the United States are talking about increasing regulations on these cryptocurrencies. Going forward, there may be more restrictions on coin ownership; those who choose to invest their business’s wealth in this manner should be aware of changing legal implications.
Can’t Be Taken By Governments
Bitcoin enthusiasts often point at 2013, when the government of Cypress decided that in order to stabilize their own budgets, they would repossess some of the investments made by businesses and individuals throughout the country. The very nature of Bitcoin makes that impossible; without both the private and public keys to accounts, there is no way to access a Bitcoin account.
This can be considered a more secure way, therefore, for businesses to hold their wealth.
While Bitcoin exchanges and investments hold the potential for scammers, businesses accepting Bitcoins are generally fairly free from fraud. While the currency is all-digital, from creation through payment, it is also remarkably similar to cash. Customers can’t dispute the payment to keep the credit card company from releasing funds, and Bitcoins can’t be counterfeited.
If companies are accepting altcoins in order to turn them into dollars or another fiat currency, they will need to be more cautious and careful, but if they also have suppliers that they can pay in coins, their system is likely to carry very little if any fraud risk.
Bitcoin can ultimately be purchased by anyone who has an internet connection and a fiat currency to trade for the digital coins. In many countries where the fiat currency is notoriously unstable, residents are becoming more and more interested in alt coins.
If a business works with a lot of overseas suppliers and customers, using Bitcoins and other cryptocurrencies may reduce the fees that companies pay to banks for converting money from one fiat currency into another. For banks that rarely deal with international customers, this may not matter, but for those which regularly conduct transactions overseas, this change has the potential to dramatically change profit margins.
Even when used domestically, cryptocurrencies have lower overall fees than other digital funding sources. Many brick and mortar stores are familiar with the numerous credit card fees charged, even on very small purchases. When accepting or sending Bitcoins and other altcoins, there are no transaction fees; the currency is very much like cash in this way.
That said, converting the currency into a fiat currency can absolutely have fees; so can a digital wallet that holds your coins.
New Market Niches
It’s not every day that a company gets the chance to connect with an entirely new niche in their market. Bitcoins have not yet seen widespread adoption, so companies that accept them are more likely to get business from those who want to use them as their primary currency. While investing in Bitcoins can be risky due to price fluctuations, developing regulations, and more, companies that take the risk on the new currency may see unprecedented benefits.
If digital currency can make the leap from niche to generally accepted, companies that are ready to meet that shopping need will have an advantage over the competition. But Bitcoin still has a lot of kinks to work out; companies need to weigh the potential gains over the risks and make the right decision for their business.