It's a widely accepted truth that, in business, cryptocurrency – and more specifically, Bitcoin – is here to stay. An increasing number of consumers are adopting digital currencies, more organisations are installing Bitcoin-friendly infrastructures, and even central banks are on the brink of launching their own digital currencies. The future of cryptocurrency is undoubtedly now the present, and this is having a tangible effect on business.
It's not just multinational behemoths that are at the forefront of this digital revolution, either. Many small businesses are wondering how these changes are going to affect their capabilities, as well as the broader marketplace in which they operate. Many are also curious about what exactly the benefits of using bitcoin and its sister virtual currencies are, and how they can be leveraged to pad their bottom line.
The Impact of Bitcoin in Business
If you are one of these business owners, and you're looking for answers, then you're in luck; we have compiled a list of nine ways bitcoin is affecting business in 2020 and beyond, for better and for worse.
1. Higher Transaction Fees
When bitcoin started becoming ubiquitous in the marketplace, one of its main benefits was the low cost of transactions. This has seemingly reversed in the last couple of years, however, with the average cost of sending transactions on the bitcoin network surging by more than 2,000% this year.
The main reason for this rise is high network congestion on the blockchain, although, that said, what you pay is based on how much data you send. Either way, the average bitcoin transaction fee climbed to as high as $6.64 in May 2020, so if you are considering adopting a digital currency to appeal to new customers, you might face ballooning costs.
2. Quicker Receipt of Payments – Especially for Cross-Border Transactions
Although transaction costs have surged over the last few years, bitcoin transactions are essentially instantaneous. But while this is common in today's marketplace, what makes it truly astounding is how easier it can be for international exchanges. Whether you are a customer or a supplier engaging in cross-border buying and selling, you will find that it is a lot quicker to settle transactions than it was years ago.
3. Access to New Customers
Let's be honest: peer-to-peer digital currency possesses a loyal userbase. This has been the case for years, and if users find a merchant accepting bitcoin, they will gravitate to that business. In other words, you might tap into a new clientele that you would have otherwise not been able to, whether domestically or internationally. If accepting a new type of payment scheme can attract customers, then why wait to adopt the bitcoin ecosystem?
Indeed, bitcoin alone accounts for around $6bn of all online transactions every day, and we may only be getting started: analysts project this figure to grow at a compound annual growth rate of 54% up to 2025.
4. Brand Awareness
When bitcoin first gained momentum several years ago, there was a consdirable amount of buzz every time a company announced that it would accept the virtual currency. From Subway restaurants, to Overstock, to KFC Canada: bitcoin can drum up brand awareness once it becomes integrated into your overall business model.
Indeed, even if it is a temporary marketing scheme, accepting bitcoin can make waves. Whether it is a sign on a shop window, a press release, or digital promotions: there are plenty of ways to inform the public that you are a “bitcoiner”.
5. Smart Strong Contracts
Smart strong contracts are imperative for cryptocurrency and the wider blockchain system on which it is built. They are essentially contracts between two (or more) parties that can be accessed at any point and cannot be modified; to this end, they are digitally signed and utilise logical systems.
These smart strong contracts are enacted when the terms and conditions are met (such as an agreed-upon good or service being delivered on a specified date). This is a beneficial component of the bitcoin world because companies no longer need the services of attorneys and notaries; it merely makes paying for goods and services less complicated and increases speed.
6. Bitcoin Payment Earnings
The days of bitcoin climbing $1,000 one minute, and then falling $3,000 the next are seemingly over, too. The cryptocurrency has ostensibly stabilised in the last couple of years, and this makes bitcoin even more attractive for both consumers and businesses. That said, bitcoin has been steadily appreciating, and this is good news for anyone who has been holding the virtual currency.
If you are a small business and you can accept bitcoin as a form of money, you could receive more value in the end, thanks to the power of deflation.
7. A Competitive Advantage
While the exact percentage of businesses accepting bitcoin is unknown, it is safe to say that, while growing, it is still a low figure. Is this a bad thing? Not quite.
A retailer that accepts bitcoin payments holds a competitive advantage over its rivals that do not. Indeed, one of the reasons why companies accept more than just cash for their goods and services is because they want to appeal to more shoppers. Even if bitcoin adds just a handful of patrons to your store – online or brick-and-mortar – that is a handful of customers that your competitor does not have.
Establishing a bitcoin framework within your private enterprise requires very little investment, too. Essentially, all you need is a terminal, a mobile application, and a wallet.
8. Irreversible Transactions
In many cases, smaller merchants have been the victim of customers reversing their payments through credit cards despite the product already being shipped. This hurts a company's bottom line since it is selling an item without getting paid for it, while it can also negatively affect your reputation with your bank.
This does not happen with bitcoin. Payments are 100% irreversible so that you cannot fall victim to a chargeback. This doesn't mean that customers lose out on their right to a refund, of course; if a product or service fails to satisfy the customer, then the situation can still be resolved amicably. However, it does mean that you avoid chargebacks, and do not have to go through the process of selling an item, processing the order, and shipping the product without getting anything in return.
9. Bitcoin ATMs
Studies have discovered that the installation of an ATM contributes to customers staying longer and spending more. Therefore, there is no reason why this cannot apply to bitcoin ATMs as well.
Indeed, according to Statista, bitcoin ATMs are only increasing, with a total of 7,700 terminals worldwide as of May 2020. In the US, there are nearly 6,000 locations, while in Canada, there are close to 800. Admittedly, many nations only have one at a time, but this could be the start of a bitcoin ATM prevalence, which would be positive news for brick-and-mortar outfits.
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Did you know that bitcoin is the world's sixth-largest currency in circulation? Were you aware that bitcoin transactions and unique accounts have spiked 60% per annum since 2015? Would you be surprised to know that the average daily trading of cryptocurrencies has eclipsed 1% of trading in foreign exchange markets? These are only some of the statistics, courtesy of SpringerLink, to give you a sense of just how bitcoin continues to grow.
No longer is bitcoin confined to illicit activities and dubious transactions in the deepest recess of the so-called dark web. Bitcoin is now involved in buying a sandwich, transferring money to a relative in trouble, or investing in your retirement. Therefore, it's worth asking yourself the question: is it time to make bitcoin a part of your business?
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