Cryptocurrencies are a hot topic right now. Bitcoin was worth $1,000 at the beginning of 2017. By the beginning of December, the currency had shot up to $10,000, making some investors very rich in the process. Other cryptocurrencies have shown similar steep trajectories in their value, but for the most part, Bitcoin, Ripple, Ethereum and others remain highly volatile.
Prices have crashed in recent days. Bitcoin prices have swung like a pendulum, dropping below $10,000 from a peak of nearly $20,000, before shooting back up to more than $12,000 as investors sought to gain from the sudden collapse in price. Ripple investors saw a similar pattern. Its value rose by 84% in 24-hours, before dropping sharply.
Much of the volatility has been fuelled by inexperienced investors who might have otherwise been trading on stocks or the forex markets seeking to make money by investing in cryptocurrencies. Cryptocurrencies have gone from being a mysterious payment option for criminals operating on the Dark Web to a mainstream currency ordinary people discuss over the breakfast table.
The benefits of cryptocurrencies can’t be ignored by mainstream businesses, so if you want to keep your loyal customers on board, it might be wise to offer cryptocurrencies as a payment option.
The Growth of Cryptocurrency
There are dozens of cryptocurrencies to choose from. Bitcoin, Ripple, Ethereum, Monero, and LiteCoin are some of the most popular and widely used. In the beginning, the most you could do with your bitcoin was use it to fund suspect transactions on the Dark Web. Today, bitcoin – and other cryptocurrencies – are used to buy and sell a great many mainstream things. You can pay for a hotel on Expedia, book your ticket on a Virgin Galactic flight into Space, or invest in property. You can even use bitcoin to pay for a pizza!
The Advantages of Offering Cryptocurrencies as a Payment Option
There are many advantages to accepting bitcoin and other cryptocurrencies. For starters, payments are confirmed within minutes, so you won’t have to wait several days for the money to hit your bank account. Cryptocurrencies like bitcoin are digital, so nothing physical changes hands. There are no chargebacks and no exchange rate risk.
Merchant POS Payment Solutions
Merchants can make use of bitcoin POS payment processing solutions that streamline cryptocurrency payments at the Point of Sale. The most popular ones include CoinBase, CoinKite, BitPay, and BIPS. You can also add bitcoin as a payment option to Stripe and Shopify. Fees vary but are generally around the 1% mark.
If you do decide to offer cryptocurrencies as a payment option, add an image to your e-store footer or place a sign in your store window. It’s the best way to attract a newer and younger demographic.
For all their controversy, cryptocurrencies are here to stay and many of the big financial institutions are ploughing considerable funds into researching the blockchain technology that underpins Bitcoin – and other similar cryptocurrencies. JP Morgan and Wells Fargo joined IBM, Cisco, Intel and other big names to form the Open Ledger project, an initiative that aims to distribute blockchain ledger technology.
If big-name financial institutions are sitting up and taking notice, can you afford to stay on the sidelines? Do this and you could be left behind by your competitors.
Dealing with the Risks of Cryptocurrencies
While there are many benefits of accepting cryptocurrencies, there also risks that you must prepare for as well. Here are a couple of the biggest concerns that businesses must address.
Dealing with the threat of fraudulent transactions
E-commerce fraud has been a problem since the beginning of the Internet. Unfortunately, bitcoin can increase the risk. Since bitcoin is a newer payment solution that is harder to authenticate, regulators are still debating the limits of merchants’ liability. In the future, it is likely that they will hold merchants responsible for failing to take adequate fraud prevention measures.
Mitigating the risk of cybersecurity losses
Companies of all sizes must be aware of the risks of cybersecurity fraud. Unfortunately, cryptocurrencies create a number of new risks that you must prepare for.
One issue is that insurers may be less likely to cover losses if bitcoins are stolen. They may feel that the risk is simply too high, which places the burden on you to ensure the currencies are properly protected.
Recovering stolen bitcoins will also be rather difficult, because it can be harder to trace the thieves. They may use a VPN and bitcoin tumbler to hide the trail of their fraud.
Don’t let these risks dissuade you though. Accepting cryptocurrencies can be a brilliant idea if you ensure your platform is sufficiently secured.
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