EBOOK HEREAs Bitcoin’s dramatic increase to over $50,000 a coin sparked a massive explosion in digital currencies and pervasive curiosity in blockchain-based technology, cryptocurrency exploded into the mainstream. Bitcoin’s price has remained been increasing and interest in cryptocurrencies has remained high, creating small business risks.
Is bitcoin, on the other hand, appropriate for small businesses? Before declaring that you would support bitcoin, there are some severe concerns to remember – both technological and realistic.
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Accepting Cryptocurrencies Comes with Certain Risks
Barriers in Terms of Technology
Accepting cryptocurrencies necessitates developing a digital wallet on a cryptocurrency platform, which can be technically challenging for small business owners who are inexperienced with the software. Cryptocurrency is a highly information-dense environment with a steep learning curve, challenging to navigate while still running a company.
“As things stand now, small companies, in particular, will have a hard time accepting cryptocurrencies,” said Serge Beck, CEO of the blockchain platform organization Optherium. “Even though technological barriers aren’t present, the uncertainty of crypto values deters entrepreneurs from investing in digital currencies.”
Optherium, which is set to introduce its initial coin offering (ICO) in June, has already developed a forum to address these issues. The Optherium B2C website, as it is known, allows customers to transact in their favourite cryptocurrency, whereas sellers will adopt any money, digital or fiat, they like.
“What Optherium’s B2C network does is it enables buyers to pay in any currency they choose, and sellers to support any currency,” Beck said. “At first, we’ll embrace 50 cryptocurrencies and a broad range of fiat currencies, allowing us to execute 100,000 transactions per second in near-real-time.”
While Optherium has its cryptocurrency, it is not required to use the network. Keepers of Optherium’s token, on the other hand, will benefit from much lower fees while transacting on the website.
The Volatility of Digital Currencies
The most danger associated with digital currency is market instability, which renders their worth incredibly volatile. To give you an example, when Bitcoin was first released in 2009, it was worth pennies, but by December 2017, it was worth $19,172 per coin. One Bitcoin is already valued at around $7,000 in the current market.
Areiel Wolanow, the managing partner of consultancy company FinServ Experts, said, “You would have to create some agreement for converting your cryptocurrencies back into your currencies of record.” “Since cryptocurrencies are so risky, you’ll want to do something rapidly and daily.”
Small companies may protect themselves from this instability by using a merchant processing provider like Bit Pay or Coinbase, which instantly converts digital money into cash. Payments for cryptocurrencies are rendered in near real-time for the actual value of the coin through these platforms. According to Wolanow, the only rationale for a company to hang onto cryptocurrencies is a risky gamble yet playing with its revenue stream.
The Safety of Digital Currencies
The currency is not entirely safe about the fact that cryptocurrency purchases remove cyber threats such as stolen credit card numbers. There is currently no way to deter cybercriminals from gaining access to users’ wallets fully. Unlike paper money such as the US dollar and the Euro, virtual currencies are not supported or protected, making them especially risky.
Any blockchain businesses, on the other hand, are trying to improve this. For example, Coinbase stores fewer than 2% of its customers’ digital currencies digitally and ultimately insures damages in the case of a data breach. Both fiat currency held on Coinbase is certified by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, much as traditional banks.
These safeguards do not extend if your wallet is compromised; it is also your duty to secure your private account, so you can be assured that your assets are protected if the business is hacked.
You will improve the security of your accounts by enabling multifactor authentication, securing and maintaining your secret keys, and backing up your data regularly. In addition, businesses are focusing on strategies to address wallet protection.
According to Beck, Optherium uses a biometric authentication tool to allow wallet entry, which detects a person depending on their facial structure, significantly minimizing the potential of a criminal to rob someone’s belongings effectively. Users may also use this tool to restore access to their wallet if they lose it.
Uncertainty Over Regulations
Another disadvantage to embracing blockchain being that the legal environment is likely to shift in the foreseeable future. Lawmakers are already drafting the rules that will regulate it. Regulations would almost certainly change after they are in effect, requiring company owners to remain adaptable.
“Since cryptocurrencies are so young, there’s a lot of doubt on how the government can iron out the kinks in its enforcement,” Poelma said. “By the time you learn this, new legislation might have been enacted. [Cryptocurrency] would not be widely embraced until companies are certain that they understand how to record profits and pay the appropriate taxes on cryptocurrency purchases.”
Any business owner who accepts bitcoin must be willing to adjust and respond to developments in the law as a consequence. As cryptocurrency acceptance grows and new challenges and complexities emerge, these developments are likely to continue soon.