How To Incorporate Cryptocurrency Into Your Business?
Cryptocurrencies have revolutionized the world of online payments and have become increasingly popular these days. Since many people wish to use cryptocurrencies to buy goods and services, incorporating cryptos into your business can give you an edge to increase your revenue. However, before you start accepting digital currencies, you must consider the associated costs and benefits carefully. In this piece, we discuss how to incorporate cryptocurrency into your business. To learn how to choose a good crypto exchange, you can find some useful resources on TradingDominance.
Before moving further, you must know that having an efficient, updated, and well secured online store is essential to expect fruitful results. It is equally important to cover basic legal formalities to avoid inconvenience in the future. Do not forget to host a well-structured detailed set of terms and conditions on your e-store. For example, a good set of terms and conditions involve explaining basic information to your customers well in advance, such as:
- Policies for refunds
- Process for filing dispute and subsequent resolutions
- Point of contact if something goes wrong with an order placement, etc.
Incorporating Cryptocurrency Into Your Business Website
Once you are ready to start accepting cryptocurrencies, follow the steps listed below:
1) Setup a Digital Wallet
To accept cryptocurrencies as a supported payment method, you need a digital wallet. You can start with some exclusive cryptocurrencies, such as Bitcoin, Ethereum, and Litecoin, or accept all of them. The important thing is to know what type of digital wallet might suit you best. Currently, there are two types of digital wallets to store cryptocurrencies.
I. Cold Wallets (Cold Storage Options)
A wallet with no internet connectivity is called a cold wallet. It is a physical storage device, such as an encrypted portable hard drive. Lately, users consider cold wallets as the safest wallets to store cryptocurrencies.
II. Hot Wallets
Hot Wallets are wallets offered online to store cryptocurrencies. Hot wallets are more common since they are available with almost every cryptocurrency exchange. However, they are more susceptible to hackers as compared to cold storage options.
Usually, users prefer cold wallets to store a large number of digital currencies. Not to mention, both wallets have their pros and cons. In the end, it depends on how comfortable you are with each of them. Also, make sure that the wallet you chose for your online store should support most of the cryptocurrencies.
Besides a private key to access your wallet, each wallet comes with a public address and a QR code. Customers can use either of them for making payments in cryptocurrencies directly to your business wallet. It is worth mentioning here that the security of your private key can be crucial. Having it compromised means losing access to your wallet. The worst part is that you may not be able to retrieve access to your cryptocurrencies ever again.
2) Integrating Digital Currencies Into Your Websites
You can incorporate cryptocurrencies into your business websites using different methods, including manual payment, accepting payments through a service provider, and enabling a button captioned as “Pay with crypto” on your business website.
Let’s have a quick look at each of the methods.
I. Manual Payments
Mention the public address of your digital wallet or insert a QR code on your website to enable customers to make payments manually.
II. Enable the “Pay With Crypto” Button On Your Business Website
It is best to enable a dedicated button on your website that customers may use to make payments in cryptocurrencies.
III. Use Third-Party Services
You also have the option of using third-party services to accept payments in cryptocurrencies. i-e; CoinJar, Coingate, CryptoWoo, etc. Although using a payment service provider offers a sign of relief, the associated cost should not be overlooked.
Benefits of Using Cryptocurrencies
Some of the benefits of using cryptocurrencies include:
- Decentralization: Cryptocurrencies are blockchain-based decentralized currencies. No central bank or government controls them. People can transact without paying any fees to third parties such as banks or other financial intermediaries.
- No Jurisdictional Restrictions: Cryptocurrencies do not fall under any jurisdictional limitations. You can transfer cryptocurrencies anywhere in the world as long as you can access the internet.
- Increase Market Exposure: Cryptocurrencies help consumers increase market exposure. Customers can buy expensive goods and services all around the world without having to worry about transactional formalities. On the other hand, traditional payment methods involve lengthy clearing processes with excessive fee implications.
- High-End Security: Since cryptocurrencies are stored in encrypted digital wallets, it is more difficult for intruders to get a hold of them.
- Instant Transfer Facility: Unlike traditional funds transfers, you can send or receive funds across the border instantly using cryptocurrencies.
Risks to Accept Cryptocurrency as a Supported Payment Method
I. Volatility Risk
Before making a final move, it is imperative to analyze the risk of incorporating cryptocurrencies into your business website. Cryptocurrencies can be highly volatile. For example, Bitcoin became known for having increased volatility. Bitcoin has a history of undergoing massive fluctuations many times in its value over just a couple of days. Usually, cryptocurrencies are known as long-term investments. It could take a few days to several years for a coin to recover its value. Therefore, you must be willing to wait in case the crypto loses its worth.
II. Tax Implications
It is vital to know tax implications before starting to accept cryptocurrencies. Many countries have different taxation rules concerning cryptocurrencies. In most jurisdictions, profitable crypto transactions fall under capital gains tax. You have to report your revenue to the concerned authorities if you accept cryptocurrencies as a payment method.
Alternatively, you can use the services of cryptocurrency payment processors. The payment processors automatically convert digital currencies into fiat currencies and transfer the funds to your bank accounts. Doing so can help you fix your tax cost. However, keeping your funds in cryptocurrency can affect your tax obligations. That mainly happens due to frequent shifts in the exchange rates of different digital currencies.
Undoubtedly, incorporating cryptocurrencies into your business can increase your profit-earning potential. However, the uncertain regulatory landscape makes them riskier as well. Since lawmakers are still drafting rules and regulations to govern cryptocurrencies, you must be willing to adapt to the changes that may come your way.
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