When cryptocurrencies first started making headlines after the launch of Bitcoin in 2009, many businesses wrote off the digital currency as a reliable payment option due to its almost constant fluctuations in value and a lack of trust in the new form of currency. Fast forward to 2020, and market experts are now recommending Bitcoin as a “safe-haven” investment option.
However, before going out to make cryptocurrencies a part of their business, there are some important facts that business owners need to know about this digital currency.
What are Cryptocurrencies?
Starting with the basics, business owners need to understand what cryptocurrencies are. Also known as virtual or digital currencies, cryptocurrencies are a type of unregulated currency that is based on a system of trust rather than on objects with any intrinsic value. What this means is that the value of cryptocurrency is based solely on what users of the currency are willing to pay for it.
Disadvantages of Using Cryptocurrencies
Thanks to cryptocurrencies being relatively new to the market, there are a host of challenges that cryptocurrency users must be aware of.
One of the biggest drawbacks to digital currencies as a whole is that many countries do not consider cryptocurrencies as a legal tender. This means that while users can buy and trade in cryptocurrencies in places such as Canada, the government cannot force companies and businesses to accept cryptocurrency for financial transactions. This has resulted in a lower adoption rate of digital currencies across the world and limits on the ways users can spend their cryptocurrency.
In addition to digital currencies not being accepted by many businesses, the other main drawback of cryptocurrencies is due to their volatility. The price of cryptocurrencies is notoriously unpredictable, and the price of the digital tokens can easily fluctuate by thousands of dollars over a few short days. While investors may be able to handle this kind of volatility, many small and medium businesses cannot afford the risk of using digital currencies that may depreciate by thousands of dollars almost overnight.
Advantages of Using Cryptocurrencies
While there are several disadvantages to using cryptocurrencies, digital currencies offer several benefits over traditional currencies. The main drawcard is that cryptocurrency transactions offer users complete anonymity. In an age where online security is a major concern, anonymous transactions that do not attach personal information to activities can help curb identity theft and fraud.
The other main advantage of using cryptocurrencies is cheaper transaction fees. Because cryptocurrencies are exchanged over the internet, and the transactions do not require authorization from banks, the associated fees associated with making cryptocurrency payments are typically a portion of what they would be compared to a transaction between different banks. This is especially helpful to businesses who operate in different countries who, in the past, would have limited options should they want to send money across the world for supplier payments etc.
Finally, the main reason to use digital currency over traditional currency is that fraud is almost impossible when it comes to cryptocurrency payments. Digital currencies cannot be counterfeited, and businesses never need to worry about transaction reversal fraud due to the way cryptocurrency transactions are processed through the blockchain.
Where Can Businesses Buy Cryptocurrency?
Cryptocurrencies can be bought and exchanged through online exchanges such as Bitstamp, Coinbase, Cash App, and others.
It must be noted that cryptocurrency exchanges are frequently the target of hackers looking to infiltrate the digital currency market, so users should always do their research before deciding on which exchange to use. For users looking to buy bitcoin Canada – CryptoVantage can advise on the most reputable places to buy, store, and exchange cryptocurrencies for users based in Canada and the United States.
Governments across the world have started to take note of the popularity of cryptocurrencies as well as how they can benefit the business sector. As more regulations are laid down, businesses should find it easier and easier to embrace digital currencies to make them work for them.