Cryptocurrency is quickly moving from the innovator stage of the innovation adoption lifecycle to the early adopter and early majority stages. As this shift happens, companies should be determining their own stance on accepting cryptocurrency as well as creating a plan for implementation. There are many benefits and risks associated with cryptocurrency and we hope to highlight some of those here.
First off, it might be helpful to give a quick background on what cryptocurrency is and the different types. Cryptocurrency is digital currency not backed by any government entity or financial institution, and also relies on blockchain technology to verify purchases and counteract fraudulent activities. There are over 4,000 different types of cryptocurrencies, but for companies looking to implement crypto for ecommerce, you should focus on some of the most popular ones including Bitcoin, Ethereum, and Bitcoin Cash. For users, cryptocurrency provides many benefits, mainly autonomy, anonymity, and accessibility. Autonomy from government regulation of financial institutions means that there is no approval needed to make transactions, no bank fees, and low transaction fees when making domestic or international purchases. Anonymity is kept as transactions are not personally identifiable. Lastly, crypto is very accessible since you only need an internet connection to start transacting. The biggest risks facing both users and companies looking to get involved is very high market volatility and general uncertainty of the future of cryptocurrency. For a more in depth course on everything cryptocurrency, try Saylor Academy’s free online course here.
As trust in cryptocurrencies grows, it will become a competitive advantage for companies to accept as a form of payment. The current benefits for a company to accept cryptocurrency are the low fees compared to credit card transactions, faster payments than credit cards, and the opportunity to attract a new audience. However, some companies are also realizing some negative PR impacts, such as environmental concerns, and have stopped accepting them as a payment method. As your company starts to discuss accepting cryptocurrency as a payment method, you should definitely think about all of the risks associated with it and get buy-in from all departments including legal, marketing, and finance. Only a small number of companies are accepting cryptocurrency as a form of payment right now, so for risk averse companies it is a good time to do competitive research and track which competitors are accepting and the way they are doing so in order to provide insight to your own company’s plan and timeline. One large ecommerce site that accepts crypto is Overstock, which could provide you with some initial insights.
The process of setting up cryptocurrency on your ecommerce site is actually pretty simple. First, you will need to choose which cryptocurrency you would like to accept. Then, you should set up a company digital wallet. This is where all of the currency will be held when a user makes a purchase from your website. Setting up a payment gateway is the next step and works similarly to current online payment software. Two of the most popular options are Anypay and Bitpay. Once the gateway and wallet are set up, you can add the payment option to current payment forms. Lastly, you will need to decide what currency you would like to receive the payment in. If your company would like to hold the transactions in cryptocurrency to start building your crypto savings or investments, you are done. If you would like to minimize risk in volatility, you can also implement a fiat-to-crypto exchange that will convert the cryptocurrency received into a fiat currency (US Dollars, Euro, etc.).
Accepting cryptocurrency can be a scary move for companies but could be a good way to differentiate yourself from competitors and get a head start on what could be the future of online payments. Determining the benefits and risks should be the first step in determining if this is the right move for your company.