Blockchain technology has introduced the new monetary exchange in the form of cryptocurrencies such as Bitcoin, Litecoin, Zcash etc… Several ICO, cryptocurrency and blockchain development companies are battling against each other to win the race and stand strong in crypto competition. Many more compaines have started paying attention towards dApps.
However, many business owners are unsure about these cryptocurrencies as how these currencies are going to affect in their various operations and revenues.
These cryptocurrencies can have any the dual impacts either positive impact or negative impact. However, the exact cause will be determined by the fact that whether we are accepting these cryptocurrencies or not.
According to the present scenario, major companies like Microsoft, Amazon and some other top brands have started accepting payments in the form of Bitcoin.
And this has led to encouragement of the small and medium business owners so that they can also do the same. However, it is quite necessary to understand the impact of both positive and negative possibilities on the business.
Impacts of cryptocurrencies – how businesses use them?
Positive impacts of cryptocurrencies
Well, as compared to the conventional payment method via credit cards, wire transfers, cryptocurrencies like Bitcoin provide quicker and less expensive ways to accept the payment by the customers. These transactions that are occurring provides more power to the retailers as compare to the consumers.
– Each transition is final
These cryptocurrencies such as Bitcoin, they follow the blockchain technology which ensures the authenticity as it blocks the transaction. No alteration can be made in the transactions that are done through these cryptocurrencies thus each and every transaction is final.
This technology provides no way to the consumer by which they can bargain over the charges and this also helps the retailers by providing better control over their return policies. Also, this technology will prevent any type of fraud that can occur through fake credit cards.
– No processing fees
Whenever we go for a digital payment it charges some processing fee. This occurs due to the presence of an intermediary that is present for the regulation of the payment and takes the charge. Well this can be avoided in the case of cryptocurrencies as there is no intermediary. It is decentralized so there is no charges for the transactions. Thus, is helps in saving unnecessary expenditures and transaction fees.
Earning can be done even by exchanging the bitcoins with the local currency which will be a buy and sell policy. The exchange will buy cryptocurrency at selling price from you and will then sell it to some other at buy price. What you earn with this can be estimated by taking out the difference between the buy price and the sell price.
– Provides more options to the consumers
Acceptance of cryptocurrency will provide the customer more payment options which will improve the buying experience of the customer. In a survey it was observed that customers use as many as 5 options to initiate payment. With the acceptance of the cryptocurrency it is likely to attract more customers towards you.
– High speed transaction
The payment speed is quite fast for cryptocurrencies. As for the Bitcoin it takes 10 minutes maximum for the completion of the payment. There are also other cryptocurrencies like Bitcoin, Ethereum and Litecoin which verify the transaction in just 20 seconds. Thus, the currency will take no longer than 20 seconds to get deposited into the accounts. These transactions are much faster than credit cards which takes 2-3 days to clear.
– No third party involvement
One of the another major advantage is there is no third party involved in it. It is only between the source and the recipient which makes the transactions secured and much more friendly to the users.
– Good investment opportunities
Cryptocurrencies have a lot of practical uses and can be used to preserve and increase the financial holdings whether be an individual or an company. Many countries are into the legalisation of the cryptocurrencies. Thus, they are gaining quick momentum and can be the best big thing to invest upon in the near future.
Negative impacts of cryptocurrencies
Along with various advantages it got some drawbacks too. There are various in which the cryptocurrency can have negative impact upon the business.
– Unregulated currency
Although it is a decentralized currency, but it got no authority which turns its major advantage into its biggest drawback. There is high risk regarding cryptocurrencies as they are currently highly unregulated. There is a state of confusion also regarding the currency from government side as government is unsure about implementation of taxes on the currency also it is unclear whether cryptocurrency should be treated as cash or as a property.
– Not legitimate in several countries
The currency is not legal in many countries. One of the largest users of the currency China banned the currency due to the security reasons. There might be changes in tax environment over time thus the changing regulations must be checked out frequently for usage of the cryptocurrency.
– High price volatility
This is one of the major aspects which can have affect on the revenues of business. It not only effects the volatility but the entire industry.
As it was observed, the value of Ethereum crashed from $319 to $0.10 per coin in just a second.
Most of business owners convert coins to cash so that they can avoid such situations. This flash crash can badly affect the business and may cause massive losses as these flash crashes can happen in a matter of a second.
Thus, cryptocurrencies should be considered more in B2C business and less in B2B.
This is because while consumers are using cryptocurrencies more and more, many businesses are less willing to pay their B2B partners in cryptocurrencies. However, for any business it is good to accept all type of payments. So, by now, you would have got an idea about how blockchain development companies and businesses make the most out of cryptocurrencies. Do you think there can be any more ways they use digital currencies? Do drop in your thoughts, we would love to hear from you!
Sonal Mehta is a Content Lead at SoluLab, a leading Blockchain development company in USA and Canada, started by ex-vice president of Goldman Sachs and ex-principal software architect of Citrix. SoluLab Inc provides full spectrum, 360-degree services to enterprises, startups and entrepreneurs helping turn their dreams into awesome software products.