Can You Run a Business With Only Cryptocurrency?
Cryptocurrencies like Bitcoin, Ethereum, and Litecoin have offered traders the volatility and opportunity they needed to see massive gains and returns. But when it comes to businesses, is cryptocurrency the ideal solution to use as a form of payment for products, services, and employee payroll? In this article, we’re going to take a closer look at some of the reasons why you may want to avoid using crypto to pay for these items and stick to traditional fiat currency instead.
You may end up losing a great deal of your investment in minutes.
Part of what makes cryptocurrency so great is the fact that you can realize massive gains in a matter of minutes. Of course, this also comes at the risk of losing all of your profits in a matter of minutes as well. For the individual simply betting on a digital currency, this is an acceptable risk. For a small business or large enterprise, however, this inherent volatility can be disastrous as all of your assets plunge when the crypto market isn’t performing as expected. After all, the last thing you want to do is lose all of your progress because the currency you hold has become highly devalued.
If your organization is interested in investing, you may be better off starting out with something simpler like Canadian stocks under $1. Penny stocks (which may cost anywhere from $1 to $5) are cheap stocks that have a smaller market cap and can be better for investors looking for alternatives to cryptocurrency. These stocks are still volatile, so it’s still important to invest wisely and realize that some of your profits may result in losses. No matter which companies you’re most interested in, these types of stocks may be listed on smaller exchanges as well as major exchanges like the TSX, NYSE, and NASDAQ. Just make sure you do your due diligence and understand the stock market before investing any of your organization’s money!
Paying for products and services can be a complicated process.
As a business, you likely pay for a host of solutions designed to streamline your business operations. However, doing so can be a complicated process. For example, let’s imagine that you’re looking to improve the efficiency of your contact center with call center management software. You’ve done your research on your chosen call center software, determined that it would enhance your customer service needs and performance (through omnichannel capabilities, new communication methods like live chat and SMS, and CRM integrations to keep your sales team and customer service agents aligned and productive), and are ready to invest in your call center.
The biggest barrier to paying with crypto is that many vendors themselves don’t accept crypto as a form of payment. In order to pay with crypto, you’d have to get a crypto debit card that your organization could use to instantly exchange your funds for cash and send the payment to the vendor. Even more problematic, exchanging crypto for goods or services incurs capital gains taxes, meaning that you have to pay taxes on the crypto you spend rather than just being able to spend it as you would cash. Put simply, trying to pay with crypto can be a major problem for most businesses.
Payroll becomes more complex than it already is when you use crypto.
Payroll is a complex process that is integral to any organization. Unfortunately, crypto only makes that process more difficult. As cryptocurrencies increase in value, so do transaction fees on the network, which means that you have to pay out more than you owe your employees to cover these fees. Even more, fees are incurred when the crypto reaches your employees’ wallet and they have to trade it for cash and withdraw it from their chosen exchange.
During the process, they can also end up losing the value of their initial payment or may not receive it at all if you send it to the wrong wallet address (crypto payments are non-reversible). When it comes to crypto, there are far too many issues to make it a viable payment method.
Crypto is great for investing to see profits and even as a payment method between individuals or individuals and small businesses. However, small businesses that try to run on crypto will only experience some of the major downsides to crypto as they try to navigate using these digital assets. Although crypto may be the future someday, it’s best to stick with cash for now!
Read Dive is a leading technology blog focusing on different domains like Blockchain, AI, Chatbot, Fintech, Health Tech, Software Development and Testing. For guest blogging, please feel free to contact at readdive@gmail.com.