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Small businesses face a litany of obstacles that they must negotiate to prosper. Every market will have its own unique challenges that entrepreneurs and business owners must overcome. However, there are certain practices that can be applied across all sectors.
This article will explore why embracing cryptocurrencies can help small businesses and the benefits it can offer.
Cryptocurrencies
A cryptocurrency is a type of digital currency that is decentralized and uses blockchain technology. It is an alternative to traditional currencies and banking systems.
The best-known cryptocurrency is Bitcoin (BTC) and it was the first to enter the market in early 2009. Since then, a number of other cryptocurrencies have enjoyed success, including Ether (ETH), Tether (USDT), Binance Coin (BNB), and XRP.
Like traditional currency, the value of cryptocurrency can fluctuate, and the highest value of BTC was $68,789.63 on November 10, 2021. The current value of Bitcoin at the time of writing is around $25,805.00.
The opportunity to invest in crypto is appealing to many because of the potential to make a lot of money. Thousands of new cryptocurrencies are launched every year and savvy investors will sift through the best prospects.
With so many exciting new tokens launched every year, small businesses have the potential to benefit from the rising value of new crypto or stick with more established options.
Small Business Cryptocurrency Benefits
Many experts, including economist Robert Shiller who won the Nobel Prize, predicted that cryptocurrencies would not last. It was believed that the early success of cryptocurrencies was nothing more than an experimental phase that benefited from going viral.
Almost fifteen years later, cryptocurrencies are still going strong. As of late 2022, an estimated 2,352 businesses in the U.S. accepted BTC as a payment method. As well as businesses accepting cryptocurrency directly, the U.S. is also home to more than 34,000 cryptocurrency ATMs that allow users to trade crypto and withdraw cash.
As new users continue to explore cryptocurrencies, small businesses can capitalize on this market in a number of ways.
Low Transaction Fees
The decentralization of currency helps small businesses minimize transactional expenses. Accepting credit and debit cards will incur processing fees which can amount to as much as 2-4% of the total transaction and charges of $0.25.
When you consider how many transactions a small business must carry out to remain profitable, this can add up to a lot over the course of a year.
Cryptocurrencies significantly reduce these outgoings and a similar transaction can take place for as little as 1% of its value.
Quick Transaction Speeds
Some traditional banking methods can take days for transactions to be processed. Crypto offers a much quicker alternative that benefits small businesses with less liquidity and credit options than bigger businesses have.
Robust Security
Following security best practices is essential for all businesses that operate online and cryptocurrency can offer additional ways for businesses to protect themselves.
While it is still possible for hackers to attempt to break into digital wallets, it offers many more barriers and is not as commonplace as other types of financial cybercrime.
Payments are also final, which means that fraudulent claims are not possible after a transaction takes place.
Financial schemes and bank failures have the potential to drain the assets of a company. Cryptocurrency protects against this and displays the benefits of a diverse financial portfolio.
Access to a Growing Market
Embracing new technologies can allow businesses to keep up with new trends and reach a whole new customer base. Showing customers that you are willing to embrace new technology can help attract new customers and project a good public image.
As the crypto market grows, so does the amount of people looking for inclusive businesses that allow them to spend digital assets. Allowing customers the opportunity to use crypto provides a great level of convenience as they won’t have to trade their assets to traditional currencies first.
Cryptocurrencies also promote financial inclusion and can help people without access to traditional banking methods.
Simplified International Transactions
Globalization has been boosted by convenient internet access, and many companies conduct their businesses across a number of borders. Using a decentralized currency simplifies this task and minimizes expenses associated with currency exchange services.
The ability to trade quickly and easily with customers in other countries is a great selling point that can open up a small business market on a global scale.
Potential Selling Point
As well as appealing to international customers, accepting cryptocurrency can be used to promote small businesses as being tech-savvy and forward-thinking. Any opportunity to promote the benefits of using a small business should be utilized and this will give customers a positive impression and help to set companies apart from their competitors.
Tokenization and Micropayments
Depending on the small business sector, the opportunity to tokenize assets and accept microtransactions can open up potential new revenue streams.
This type of monetization is best suited to online gaming and digital content industries.
Cryptocurrency Considerations
While the adoption of a cryptocurrency model has undoubted benefits for small businesses, there are also some considerations. One of the biggest barriers to small businesses looking to explore cryptocurrency is the technical aspect.
A good understanding of the crypto market will help businesses understand the challenges they may face. One of these is the volatility of the market and how the value of certain currencies could drop after being used as payment.
The opposite is also true and businesses could also find themselves in possession of a currency that is rising in value.
Security protocols must still be adhered to and explored to ensure the business is prepared for potential cybercrime attacks.
Businesses must also be prepared for regulation changes as cryptocurrency grows in popularity. Many governments are in the process of implementing a regulatory framework at present. These frameworks are likely to be fluid and move with industry developments.
Conclusion
As long as small businesses do their due diligence, cryptocurrencies have the potential to take them to the next level and reach new markets.
The opportunity to capitalize on every potential sale is important to all small businesses and having a variety of payment methods will cater to customer needs.
As a developing industry, preparing a business for potential developments safeguards it against changes in market trends.
At worst, a business may have a payment option that isn’t utilized very often. At best, a business will attract new customers, minimize transaction charges, and be prepared for the future of online commerce.
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The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur.
