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Cryptocurrency, also known as crypto or a fiat currency, is a digital or virtual currency (or money) that uses a decentralized system and cryptography to verify and record transactions. Unlike traditional currencies like the U.S. dollar or the euro, cryptocurrencies aren’t regulated by a central issuing authority like a government or a bank.
Many cryptocurrencies, like Bitcoin, Ethereum, Tether, or Litecoin, are extremely popular with investors, mostly because they’re extremely easy to invest in and there tend to be few or lower fees associated with it. In the past, cryptocurrencies have had a reputation for being shady because of their lack of regulatory oversight. But in the past few years, they’ve gained in popularity and have started to have an improvement in their reputation. In fact, the country of El Salvador recently opted to use popular crypto Bitcoin as legal tender, becoming the first nation in the world to do so and adding
As we mentioned before, cryptocurrency has had a somewhat shady reputation, due in part to its use in black market online transactions as a preferred method of payment, because it can be less traceable than traditional bank currencies due to its encryption. But investors started seeing crypto as an interesting option several years ago, especially as more exchanges became public companies and the currencies started to do well in trading.
Blockchain technology, which is an important aspect of cryptocurrency, has also sprung up as a legitimate industry in the past few years. The blockchain management industry is leading to more digital currencies, including stablecoins and cryptocurrencies.
Since 2020, more and more businesses are accepting cryptocurrency as payment, and there have even been Bitcoin ATMs available in major cities. More brokers are offering crypto trading options on their platforms, adding legitimacy to the currency. There are also more crypto wallets available to help make payments easier, and mainstream payment apps like Google Pay or Apple Pay allow you to use Bitcoin to pay for transactions.
Now, cryptocurrency for small business is becoming an increasingly important part of the crypto ecosystem.
As a small business owner, you may be wondering how cryptocurrency can help your business. Crypto can help all businesses (and economies in general) by providing a real-time, low-cost option for payments across borders, time zones, and currencies. Overall, crypto is leading to more competition in financial services and markets. The increasing development of these alternative currencies may also push governments to get involved and create their own central bank digital currencies (CBDCs), which could help with volatility and provide greater access to everyday consumers, as well as investors.
What this means for you as a small business owner is that you can use crypto for transfers overseas or even locally with fewer fees, because there’s no need to do currency exchanges. You can also accept or pay for items in real-time, instantly, regardless of where you or your customer happen to be. You can also use crypto for more complex business transactions like conditional payments or escrow, if you happen to be in real estate.
Here are five reasons you might consider accepting cryptocurrency payments for your small business:
In order to accept Bitcoin and other cryptocurrencies, you need to have a fundamental understanding of how blockchain transactions work. A crypto transaction is made up of the following four key elements:
First, you’ll need to create a cryptocurrency digital wallet. Like other digital wallets, this device (“cold storage”) or program (“hot storage” on your mobile phone or computer desktop) keeps track of your digital assets, such as the keys you and others need to buy Bitcoin or other crypto and how much of it you have. It also provides a digital signature to authorize every transaction.
Many crypto exchanges will provide their own digital wallet for customers to use. Using a mobile app or program on your own computer can give you more control over security, as long as you’re vigilant about hackers. Whatever type of wallet you use, it’s important that you safeguard the private key that comes with your digital wallet, the same way you wouldn’t let your credit card fall into the wrong hands.
Some popular digital wallets include:
Paypal, Apple Pay, and Google Pay are also starting to offer crypto payment options as part of their digital wallets. If you already use them to accept payment or pay for services, you may find it easy to use them as your crypto wallet, too. In fact, many crypto wallets are also offering debit cards to allow you to access your crypto funds like you would a regular bank account.
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Once you’ve got your digital wallet, you’ll have a unique address where others can send or request cryptocurrency payments. From there, you will be able to follow the following steps in crypto transactions:
The benefits of cryptocurrency can seem pretty clear, but there are cons to using crypto, too.
Pros
Cons
Digital payments are quickly becoming the norm for retailers, especially e-commerce and online businesses. Most businesses accept credit cards and debit cards, but crypto currency is becoming increasingly popular as a payment option. So what’s the difference between accepting credit cards and accepting crypto?
Given the limitations of cryptocurrency with regard to how many places accept it, most retailers, e-commerce stores, or other providers will probably want to accept both credit cards and cryptocurrency, at least for the time being.
Thanks to the increasing popularity of crypto currencies, some credit card companies have started to offer rewards in the form of crypto. Like with a regular rewards credit card that may offer you points, cash back, or other perks, these credit cards offer cryptocurrency rewards. They’re issued by the major credit card companies (Visa, Mastercard, etc.) and are therefore accepted wherever those cards can be used. But instead of getting double points on dining out or airline miles on gas, you’d get an addition to your cryptocurrency digital wallet when you use the card.
While wide adoption of cryptocurrency as a standard payment option is still in the works, many companies who are tired of high credit card fees or who do business internationally may want to look into it now. Startups and entrepreneurs who have a highly technical clientele may also benefit from offering crypto as a payment method.
If you’re looking for small business loans, business credit cards, or even how to establish business credit, Nav is here to help. Sign up for a free account today and see your financing options.
This article was originally written on July 29, 2022.
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Kat Cox
As a digital marketing writer for Nav, Kat Cox works to provide answers to the questions small business owners have about how to set up, run, or fund their businesses. When she’s not writing blogs, articles, short fiction, or (kind of bad) French poetry, Kat can be found lacing up her tennis shoes for a run or walk with her pup or scouting for the best karaoke spot in Austin, Texas.
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