Should I be interested in Crypto as a small business?
Cryptocurrency has generated a major buzz in the financial world for the last few years, and lately, more attention has been brought to the role businesses can and should play in terms of investing in crypto. If you are considering working with crypto in your small business, let us help you break down the ins and outs of this hot topic.
What is Cryptocurrency?
Cryptocurrency as a concept was created in 2009, making the idea as a whole a very new one. There are currently over 13,000 different types of cryptocurrencies or cryptos, and each is an online form of payment for goods and services. However, cryptos must be purchased with traditional currency to then use on said goods and services, and the price of each can fluctuate just like in any other market, but only based on whether other buyers are paying more or less than you did.
Currently, there is no stabilizing force behind most cryptos to determine what a fair price is for them. This means that buyers have to have faith that there will be long-term interest in the crypto they bought, making them a volatile investment in the present. However, many tout the security of cryptos because of their use of blockchain technology which spreads across many computers and lowers the risk of the currency being compromised – a huge bonus. This security also makes cryptocurrency a safe way to move money online, especially without banks. Many are drawn to this decentralization as it means that banks have less say in the process and pricing, so value won’t inherently drop through inflation.
How can Cryptocurrency affect a small business?
What does all of that have to do with a small business owner, however? Many larger businesses are now taking stake in the world of crypto, whether by investing in it on behalf of the company as MicroStrategy did, or by creating their own NFTs or non-fungible tokens, individualized units of currency which appeal to much smaller groups. This doesn’t mean that there is no place for a small business though. Cryptocurrency exchanges now allow users to create business accounts which can allow the business to buy, sell and trade similarly to other financial markets and help businesses grow returns from funds they acquire through investment or if they accept crypto as payment.
Many small business owners are already doing this, or plan to in the future. Their reasons for accepting cryptocurrency payment vary, from believing it to be the currency of the future, hoping to cut out centralized banking, the ease of international use or the desire to bring in younger or new clients. Plus, the current U.S. tax laws surrounding crypto are fairly easy to understand. However, these incentives don’t exist without drawbacks. Some countries, like China, do not allow the use of cryptos, meaning that there are no global regulations for their use. Additionally, if you are planning to keep your cryptocurrency digital without converting them to the USD, you need to set up an e-wallet and manage it.
So is Cryptocurrency worth the interest of my small business?
The answer is maybe. If you are looking for a fast and safe way to allow customers to send you money online and/or much of your business is international, cryptocurrency could be a fantastic option for you. However, it is important to remember that there are not yet international regulations for the use of these currencies, and the volatility of cryptos could change at any time, so if you choose this path it is important to be watchful of the market.