The world has embraced cryptocurrency with both arms and the applications of cryptocurrency are being used to shape the future of finance. Most cryptocurrencies are being conceived with a goal in mind. However, crypto is also being used to trade and make a profit. The possibilities are endless and cryptocurrencies seem to be the building blocks of the future. Different cryptos have seen an upward movement lately of which interestingly the Xrp price in INR touched 159 rupees in 2021, it is one of the most popular cryptocurrencies being used at the moment, not just ripple but cryptocurrencies like dogecoin, litecoin, ethereum have gain momentum. This led to a lot of investors to accumulate cryptos. With this popularity in view, a lot of companies have started accepting payments in crypto. This new era of digital currency has been welcomed in India as well. There are a few businesses that have adopted this mode of payment. This has opened up a new basis for discussion. What are the pros and cons of using crypto for business and will it continue in the future?
Let us take a look at the advantages and the disadvantages to better understand the position of cryptocurrency being used for business.
Advantages of cryptocurrency for business
- Low transaction fees: Every business owner struggles with maintaining the profit and cutting down on overhead expenses. The reduction in transaction fees is a great advantage, especially for e-commerce. Generally, the transaction fees are up to 4%, whereas with crypto it can be anything between 0.10% to 1.5%.
- Removes intermediaries: The use of crypto renders the third party required for payment redundant. Blockchains are set to achieve this by providing faster options of payments across the border and replacing the current system with cryptocurrencies.
- Chargeback fraud can be reduced – One of the most infuriating instances as a business owner is when someone commits chargeback fraud. This is when the customer has received the items but they call the bank and reverse the charge by saying they haven’t received it. This is not possible in the case of cryptocurrency.
- More options for payment – One of the top reasons why a sale falls through is the lack of payment options. By making digital currency a viable option, you are opening up your business to a bigger market. The conversion rate and the user engagement rates are bound to soar if you adopt crypto as payment. You can expect considerable growth of your company due to this and it shows that you are open to the newer and better systems and are ready to embrace change.
- More secure and faster – The speed of transactions is much higher in cryptocurrencies. The omission of intermediaries ensures that it is much more secure than any other mode of payment.
Disadvantages of cryptocurrency for business
- Volatility – Cryptocurrencies are highly volatile. The value can be further influenced by other factors like news, partnerships, and so on. Then there is the issue of the actual value of the payment. Let’s take the example of Ripple itself, if you are paying in Xrp today for an item, the Inr to Ripple value can change tomorrow and you may have gotten overpaid or underpaid. It can lead to considerable losses.
- It is not the preferred payment method – Even though crypto is popular amongst millennials, not everyone is comfortable with or has adopted crypto. So, despite there being a provision, not many people would be inclined to use this option.
- Complex set-up process – Crypto pays off in the long run but the initial set-up can be time-consuming and requires a lot of effort. In comparison, to other transaction channels, crypto requires more effort.
- Wallets are your responsibility – In case you forget the password, delete your wallet or you get hacked, then the responsibility is solely on you. There is a chance these things might happen by accident and you will have to pay dearly.
- Vulnerable to scams – Cryptocurrency is a newer and developing technology. A lot of people take advantage of this and resort to fraud. You could fall prey to hackers, fake currencies, and scam-crypto users leading to heavy losses.
Using cryptocurrency clearly has its advantages as well as disadvantages. One of the other disadvantages is that it is still unregulated in India and there is no central body governing the usage and laying down laws. The ambiguity and absence of any authority raise concerns, especially for business owners. The best way to consider which path to take is to consider what is best for you as well as your business and evaluate what precautions you can take to avoid any unfortunate incidents. After all, crypto is shaping the future and who wants to be on the wrong side of history?