Running an e-commerce store gives you plenty of options that brick-and-mortar businesses don’t have.
One advantage is that you’ll be in an excellent position to accept digital money — otherwise known as cryptocurrency.
Cryptos have been in the news a lot lately, due to high demand for tokens like Bitcoin and Ethereum.
However, investors aren’t the only ones who can stand to benefit from this technology, and many online businesses have begun to consider accepting various cryptocurrencies as payment for goods and services. Should your business be one of them? Keep reading and find out.
Note: since writing this article, an Ethereum framework for the web called Web3.js has surfaced. This is not Web3.com.au.
How Cryptocurrency Works: a Quick Overview
If you’re thinking about letting your customers pay you in cryptos, you’ll have to know something about how they work.
Almost all cryptocurrencies use a technology called blockchain, which functions as a secure digital record of the transactions made with a given token.
However, unlike other digital records (which are normally stored in a single location), blockchain sends multiple copies of the record to different devices in a wide network whenever a new transaction is logged.
By doing so, it makes transactions almost impossible to falsify. Any attempt to forge a transaction or alter the record illegitimately would be easily disproved by numerous copies of the original.
Advantages to Accepting Cryptos
Blockchain makes cryptocurrency transactions extraordinarily secure for consumers and merchants alike.
There are no risks like credit card fraud to worry about, and you won’t have to worry about misplacing physical money. You also might not have to worry about issuing refunds or accepting returns from customers.
That’s because many cryptocurrencies offer their users partial (or even total) anonymity.
Bitcoin, for example, requires users to have a “Bitcoin address”— but this address need not be connected to their physical residence or even their real name.
Many people prefer using cryptos because the potential for anonymity helps them protect their personal information — but you also can’t issue a refund to a customer when there’s no way of knowing who they are.
To sum up, the advantages to accepting cryptos include:
- Secure transaction records
- Protection from fraud
- No need to issue refunds
Disadvantages to Accepting Cryptos
Cryptocurrencies come with numerous benefits for businesses, but they can also come with a few risks.
One major risk or accepting payment in cryptos is that their value can change drastically and without warning. Even widely used tokens like Bitcoin can be subject to dramatic market fluctuations, but smaller tokens are particularly volatile.
In fact, groups of investors may even coordinate their efforts to purchase a token at the same time, so that they can artificially inflate its value and lure in other investors.
However, as they begin to sell their tokens to these investors, the token’s value will decrease — leaving the eventual holders with an investment that has very little value.
These “pump-and-dump” schemes most commonly occur with new or lesser known tokens, because their small user base makes it easier to move the value of the token with a smaller group of participants.
Crypto value can also be affected by laws in various countries that affect the ease of token mining or distribution.
The disadvantages of accepting cryptos at your business may include:
- Uncertain or unstable value of the tokens you collect
- The potential for the laws in your area to change and limit the use of cryptos
How to Accept Cryptocurrency if You Choose to Do So
If you do choose to accept cryptocurrencies at your e-commerce business, you should have a way to convert them into more stable currency quickly.
Using a crypto-friendly currency conversion platform such as Uphold can allow you to change your Bitcoin, Ethereum, Litecoin or Dash into various standard currencies, including US Dollars.
You can even convert it into precious metals such as gold or platinum (if you’re feeling extra conventional). Using a simple online tool makes the process of converting tokens you receive from customers into “regular” money without spending significant time or effort.
Accepting cryptocurrency has its risks, but it can also provide you with incredible opportunities to make money in new and exciting ways.
Make sure you’re supporting yourself with the right tools and knowledge if you decide to start taking tokens, and enjoy doing business in the way of the future!