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Should Your Business Accept Cryptocurrencies?
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Should Your Business Accept Cryptocurrencies?

Bitcoin is the latest investing craze, building a buzz from practically nothing to industry recognition over the course of a few years. At the same time, it’s still a bit of a mystery to a lot of people. The idea of a cryptocurrency — a purely digital form of currency that exists without being attached to nation states or a centralized bank — seems to have poked through into the mainstream, enough that people at the very least know that it’s money exchanged on the internet.

Because of that, some cryptocurrencies have moved out of niche usages into small businesses potential. Is this something that your business should look into?

Like all new technologies, it’s exciting to be on the cutting edge. However, cryptocurrencies are a brave new world. But in the digital realm, risks are heightened by a combination of speed and anonymity. Let’s take a closer look.

The Disadvantages of Cryptocurrency

Using cryptocurrencies is fairly simple; companies like CoinPayments offer a number of methods to accept cryptocurrencies beyond bitcoin. However, even with a vendor like this, there are still many volatile elements to any cryptocurrency, including:

Regulation: For almost any type of investment in the United States (stocks, real estate, etc.) there is a level of regulation that ensures market stability and consumer protection. Even when there is a seeming loophole with catastrophic consequences (e.g., the subprime mortgage crisis from a decade ago), regulations tend to push forward to ensure those abuses can’t happen again. Cryptocurrencies aren’t very regulated, though there will be more discussion of this at the upcoming G20 summit. In the United States, the Treasury Department and the SEC view it as a security (tradeable financial asset) rather than legal tender. This is different from startups issuing Initial Coin Offerings (ICOs), which is a token that represents a stake in a company rather than a digital currency.

Stigma: Bitcoin has been involved in some pretty high-profile controversies. This is to be expected given the overall decentralized nature of the beast, as well as the fact that it exchanges anywhere in the world — including in areas with looser laws that allow unscrupulous people to thrive. This creates two problems. First, the stigma of cybercrime haunts the overall cryptocurrency industry. With damages up to $60 million per crime, there’s a reason why those doubts exist. Second, due to a lack of clear and thorough regulation, scammers have tried to make money off of other people’s uses of bitcoin (e.g., Jason R. Klein pled guilty in 2017 to running an illegal bitcoin exchange). There’s simply a fear of getting caught up in something that hides behind the digital wall.

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