What is cryptocurrency?
Cryptocurrency is a digital currency that can be used as a global medium of exchange.
The first cryptocurrency, Bitcoin, was introduced in 2009 by an anonymous person or a group called Santoshi Nakamoto and now there are thousands of them
Cryptocurrencies work on a decentralized platform, with transactions recorded in a distributed ledger called a blockchain.
Although it had its highs and lows, the future looks bright for cryptocurrencies as its use is rapidly increasing and major companies are catching in on the trend.
Cryptocurrency allows companies and individuals to be their own banks and not rely on middlemen like they have to in traditional banking and finance.
Potential Challenges
Price Fluctuations
Cryptocurrency is influenced by factors such as the supply and demand of bitcoin in the market. Hence, if the supply of the bitcoin is more and demand is less, the value will decrease whereas where the demand of bitcoin is more and supply is less there will be an increase in the value of bitcoin.
Cryptocurrencies are highly speculative and due to its volatile nature, it can probably go against the businessmen who are accepting it.
Due to its volatile nature, it is still at its nascent stage to being adopted as mainstream currency but has a promising future for investment.
Lack of Regulation
Cryptocurrencies lack regulation and due to the nature of cryptocurrencies, they do not fall under the purview of law in most places in the world.
As cryptocurrencies are not legal tender and there is no clear legal framework for it, the government may take time to provide a regulatory framework for it.
Due to its non-regulated and, decentralized nature, the government around the world could also be against the full-fledged adoption of cryptocurrencies.
Should businesses accept cryptocurrency payments?
Global accessibility
One of the key benefits of cryptocurrencies is its global accessibility. due to minimum government intervention
With an internet connection, one can trade and access cryptocurrencies across the globe to purchase any product or do any cross-border payment.
Cryptocurrencies would also lower costs for merchants doing international payments that usually come with a high transaction fee, and also it will open the door for merchants to do the transactions with lightning speed, no paperwork and, a minimal fee.
Low transaction fee
Cryptocurrency being a decentralized platform, all the transactions are done at a low fee compared to the fee charged by the banks for cross border payments. Cryptocurrency charges dynamic fees based on the current network conditions and transaction size.
Users have an option to choose between priority fees and regular fees. Priority fee is charged for the users who want to book their payment within an hour whereas Regular fee is lower than priority fee and it takes more than an hour for the processing.
The rise in the acceptance of cryptocurrencies has allowed businesses around the globe to book their transaction at a very less cost.
Low risk of fraud
When users buy cryptocurrencies, there is a low risk of fraud as it is completely anonymous and no personal information is shared as compared to the bank where there is a profusion of public data available with the banks that often leads to data leakage.
In banks, there is always a risk involved as there are many instances in the past where the user’s confidential data has been compromised.
Due to the anonymity and no sharing of data in the blockchain, chances of fraud has been reduced significantly.
Should businesses accept cryptocurrency payments?
Since its inception, cryptocurrency has received a mixed response from the public. Some were ignorant about it, and some adopted it to make the best use of it. Businesses who are tech-savvy have welcomed the cryptocurrencies with open arms as it enables them to execute their transactions at a less cost, at an expeditious rate, and with fewer chances of fraud.
But if we talk about its acceptance, cryptocurrencies have been condemned by the government as it lacks regulation; however, it has received a good response from the businesses who are eager for the adoption but if some of the issues are addressed, it could be a breakthrough in the working of cryptocurrencies but that needs some calculative approach to make it popular, and user-friendly globally.
Written by Ankita Srivastava
Edited by Suranjan Das