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Monday, 11 December 2017 10:50

How can Cryptocurrency Affect Businesses? Featured

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Though there are still speculations on the impact of cryptocurrency on businesses due to its myriad of positive and negative effects, what we can surmise and affirm is that it can no longer be business as usual. However, whether businesses will be affected positively or negatively can be gauged from their decision to accept it as legal tender in their day to day transactions. As we speak, global e-franchises like Microsoft and Amazon already accept Bitcoin, the most widely utilized cryptocurrency today.  This innovation ensures zero processing fees, high transaction speeds, all transactions are absolute and additional payment options for consumers. On the downside, it still remains unregulated and prone to price volatility.

To begin with, by getting rid of the third parties that take their cuts upon facilitating payments, cryptocurrency guarantees zero processing fees. Case in point, we will no longer need to pay the 2%-3% that credit card companies typically charge when small businesses accept credit. Granted, there are merchants who charge a monthly fee of about $30 and an additional 1% if a client needs priority transaction posting or processing.

Moreover, no longer will it take up to 3 days before your paycheck gets the green light. It takes miners an average of 10 minutes to approve and facilitate a payment between two wallets. Some like Ethereum and Litecoin take as little as ten seconds. However, while the merchants don’t need a lot of time, transactions that involve the business’ bank account may need around 3 days.

Another advantage is that all cryptocurrency payments are final unlike what the credit cards have to offer. Therefore, a consumer cannot negate or refute a sale. The peril of chargebacks and other losses are removed from the merchant’s burden and they can focus on return policies that they are better able to control. Added to these rewards is minimizing customer fraud when people use fake bills or credit cards.

Lastly, consumers get to enjoy more payment options. The more the merrier, right? For example, consumers use up to 5 payment options on average. By accepting cryptocurrency, they open their doors to more customers.

On the other hand, high price volatility and absence of regulations make it a less ideal investment. The bad news is that both the currency and overall industry are volatile. A good example is when Ethereum dropped to $0.10 from $319 per coin within seconds after undergoing a flat crash on the GDAX exchange.

The coins are highly unregulated as well. There is still no clear guideline from governments or central banks that are yet to come up with a framework for taxation.

Overall, cryptocurrency is a revolutionary technology which is bound to disrupt the money world. Nevertheless, its volatile nature and high deregulations makes it a very risky investment for businesses.

 

Read 148 times Last modified on Monday, 11 December 2017 11:02

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