Following the accelerated development of the crypto industry and the increasing legitimacy of decentralized assets in recent years, a growing number of businesses across different industries and sectors have started adopting crypto for various purposes – ranging from means of payment to store of value or reward mechanism.
As a result, popular digital currencies positioned at the top in the crypto charts, such as Bitcoin and Ethereum, are now commonly found on businesses’ balance sheets. Statistics estimate that approximately 18,000 companies from all over the world accept crypto as a payment method, including well-known brands such as Subway, Starbucks, and BMW, and many more will likely join them soon.
Many entrepreneurs and business owners who haven’t incorporated digital currencies into their operations and services are naturally wondering about the reasons driving companies to embrace these assets that until not so long ago were regarded as a fringe technology, and were harshly criticized for their shortcomings.
Learning about the advantages and risks that crypto might provide in a business setting should help you figure out whether you should align with the trend or sit this one out.
Convenient Transactions
One of the main reasons businesses have started taking an interest in crypto as a payment solution is the convenience it provides when it comes to transactions. Unlike conventional banking systems that are structured around an intricate network of financial mechanisms, regulations and intermediaries, crypto operates through blockchain technology and doesn’t rely on the centralized control of banks and other financial institutions to function.
With digital currencies being based on a peer-to-peer system, transfers are usually processed instantly or within a few minutes. The lack of intermediaries also results in much lower fees than with credit cards or other payment systems.
Easier International Trades
Despite increasing globalization, businesses continue to face challenges when selling their products/services internationally because of the fluctuating exchange rates and the various regulations governing international trade.
Crypto offers a viable alternative in this respect, being better suited for cross-border transactions than fiat money due to its borderless nature, fast processing times and cost-effective fees. By supporting payments in crypto, businesses get to move funds across borders with greater ease and save a lot of money that they can use elsewhere.
Attracting New Customers
The number of crypto holders around the world keeps increasing, with the latest data indicating a 34% growth in the global cryptocurrency user base from 2023 to 2024. This means there are now 562 million people in the world who own at least one type of crypto.
Integrating crypto as a payment option would make businesses more attractive to this growing demographic, helping them reach new customers. Crypto enthusiasts as well as unbanked individuals who don’t have access to conventional financial services are more likely to choose a merchant that accepts crypto over one that doesn’t. Besides, consumers generally appreciate brands that provide multiple payment options and give them the freedom of choice instead of restricting them to fiat payments.
Early Mover Advantage
Although the use of crypto in the business environments is on the rise, we’re still far away from mass adoption. Digital currencies are still a relatively new technology and many companies remain reluctant to embracing it. This means that enterprises that are willing to take the leap early on can use crypto as a differentiator to gain an advantage over their competitors.
In today’s hectic business landscape, where brands often fight over the same target audience, every aspect or move that can help them stand out from the rest is more than welcome. Early crypto adopters are generally seen as more innovative, tech-forward, and customer-centric, aspects that are bound to attract media coverage and industry recognition.
Enhanced Privacy for Customers
With data collection being a hot topic of debate these days, customers are becoming more aware of how their personal information is handled by the companies they interact with and value their privacy more than ever. This concern also extends to financial transactions. While universally accepted, fiat transactions are linked to personal data, so banks and other intermediaries always know what their customers do with their money, meaning transactions can easily be traced back to the person making them.
In crypto’s case, the blockchain that supports them only gives users the possibility to verify transactions, without disclosing the personal data of the person conducting them. For customers seeking a higher level of privacy, crypto can be a very attractive solution.
Protection Against Fraudulent Chargebacks
Fraudulent chargebacks have long been a thorn in the side of vendors, especially those in the e-commerce industry. Businesses can lose a lot of money and face major operational disruptions because of this common practice. Fortunately, crypto can help address this challenge. Since crypto is secured by blockchain technology, all transactions are irreversible and cannot be modified once they are confirmed. This eliminates the risk of chargeback fraud, providing merchants with peace of mind in this respect.
Risks to be Aware of
Despite the many perks that crypto can bring to the table for businesses, there are also various risks and challenges that one shouldn’t overlook. For starters, the well-known volatility of digital currencies poses a major obstacle to their wider adoption. With prices swinging dramatically within days or even hours, it’s virtually impossible for companies to keep up with the fluctuations and set stable prices so they can maintain a profitable activity.
By removing intermediaries, the responsibility for managing crypto operations and therefore ensuring the security of crypto funds falls entirely on the merchant. Given that crypto is a novel technology, companies may find it difficult to understand how crypto accounts work and how to keep their holdings safe.
Then there’s also the issue of regulations, which are still being developed, causing confusion and uncertainty among users. Until more comprehensive frameworks emerge, companies will have a hard time navigating compliance requirements and understanding the tax implications regarding crypto.
Lynn Martelli is an editor at Readability. She received her MFA in Creative Writing from Antioch University and has worked as an editor for over 10 years. Lynn has edited a wide variety of books, including fiction, non-fiction, memoirs, and more. In her free time, Lynn enjoys reading, writing, and spending time with her family and friends.
