In July of last year, we wrote a post that gave an overview of cryptocurrency and how it works (we recommend you read that post before reading this one if you aren't familiar with cryptocurrency). In that article, we discussed El Salvador, the first nation-state to adopt Bitcoin as legal tender. Roughly seven months have passed since the El Salvadorian government began allowing payments in Bitcoin, and the results are, well, mixed.
NBC Nightly News recently ran a story about the progress of Bitcoin's implementation in El Salvador. It suggests that many El Salvadorian businesses have been slow to use Bitcoin due to problems with infrastructure and reliability. In one part of the segment, Gadi Schwartz, the journalist reporting on the issue, attempts to buy some items with Bitcoin at a supermarket, only to be stuck in line for ten minutes waiting for the transaction to process. As result of delays like this, many businesses have foregone accepting Bitcoin. These issues may get resolved in the future, but for now, they highlight some of the pit falls of relying on cryptocurrency for everyday transactions.
If you're a Cincinnati business who's considered accepting cryptocurrency for business transactions, you aren't alone. Let's explore some of the things happening with cryptocurrency in the local area.
Although El Salvador is currently the only place to adopt crypto on a national level, individual businesses have been experimenting with it for a while. This includes several firms in Cincinnati. Wings & Rings began accepting Bitcoin for its franchise fees this year. The Northern Cincinnati Community Foundation now also accepts donations in the form of Bitcoin, which it then converts to cash and distributes to various community organizations in the area. In addition, Cincy Shirts in OTR now accepts a variety of cryptocurrencies, not just Bitcoin, for online orders.
That's not all. The state of Ohio is the first state in the US to accept business tax payments in Bitcoin (individuals cannot currently pay their taxes this way).
Should Your Business Accept Cryptocurrency?
That's a solid maybe. There are some downsides to accepting cryptocurrency as payment. Cryptocurrency is a relatively new phenomenon, so infrastructure surrounding it isn't nearly as well developed as older forms of electronic payment. In the past, this has left some payment platforms open to security breaches.
Moreover, some customer segments simply don't use crypto or have access to it. If you find that your customer base tends not to use crypto, it may not be worth the hassle.
Lastly, cryptocurrency, like stocks and other discrete financial assets, can have volatile swings in valuation as market conditions change. As such, we recommend you take a page from the Northern Cincinnati Foundation's playbook and immediately convert any payments you receive into cash. This can help insulate you from sudden, unexpected market swings in cryptocurrencies' value.
There are several platforms available for businesses who want to start accepting cryptocurrency for business transactions. Titan Tech can help you run market analyses, vet different crypto payment programs, and establish sound infrastructure for accepting safe and secure payments. Contact them today to schedule your free consultation.
And join us next week for more tech news.