If you’re wondering whether it’s wise to switch to crypto, you are not alone. Cryptocurrency is widely used for transactional, operational, and investment purposes worldwide, from small businesses to financial institutions. Let me help you understand the pros and cons of using cryptocurrency in your industry.
Pros of Using Cryptocurrency in Business
Scope to Reach New Markets
As crypto helps avoid currency exchange and the other fees that come with it, businesses can reach new demographics and gain international customers by adopting bitcoin or other forms of cryptocurrency. It gives potential customers the scope to see how you’re pricing things in a universal currency and aids in their decision-making process.
Lower Transaction Fees
Business owners often pay transaction fees when accepting credit card payments. According to the Canadian Federation of Independent Business, every credit card transaction has a minimum fee of 1.65%. However, when it comes to crypto transactions, there are no middlemen involved, which significantly reduces the transaction fee.
Fast & Secure Transactions
Since cryptocurrency uses encryption to verify transactions, it is very secure. Data transmission and transaction processes involve advanced coding, and blockchain technology protects your transactions from hackers. Crypto transactions are also a lot faster than other modes of receiving and processing payments in your business.
Eliminates the Need for Intermediaries
One of the significant pros of cryptocurrency is that it eliminates the need for banks and other intermediaries. Blockchain is designed to replace the central system with a decentralized ledger of chained records where everything is interconnected.
Cons of Using Cryptocurrency in Business
Price Volatility
The most significant drawback of using cryptocurrency is its price volatility, making the value very unpredictable. For instance, in the first two weeks of March 2020, Bitcoin lost 40% of its value. These extreme fluctuations in a short period make it risky for businesses to use cryptocurrencies.
It Can Be Difficult to Comprehend
Adapting cryptocurrency options on a large scale can be challenging because the subject can be hard to comprehend. The very idea of a decentralized financial system that is stored through blockchain can be difficult, especially if you’re not tech-savvy.
Scalability Issues
Though crypto transactions are fast at a smaller level, they might run into significant issues when rolling them out on a large scale. This makes it difficult for businesses to expand the usage of these digital currencies.
New Crypto Owners are Vulnerable to Security Risks
Cryptocurrencies may not have the disadvantages of central intermediaries, but they’re not entirely free from security issues. As a crypto owner, you could lose the private key that lets you access your coins—and with it, all your holdings. If you’re new to cryptocurrencies, you might need to keep an eye out for phishing, hacking, and other cyber security threats.
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