Things That Businesses Should Know Before Trading In Crypto
The use of cryptocurrency by businesses has risen over the last few years. Easy to use and low cost, it’s unsurprising that digital currency payment methods are becoming adopted by many organisations.
There are several benefits to both large and small businesses to trading in cryptocurrencies. In general, crypto is easier for firms to trade with internationally, is generally more secure than other payment methods, and is unrestricted by transaction charges and other fees.
It’s easy to see why many retailers are now offering their customers crypto digital payment options. Consumers generally favour cashless transactions, therefore offering the chance to pay in cryptocurrency gives them another choice.
But there are lots of things to consider when it comes to using crypto within your organisation. Regardless of whether you’re a small business or a multinational operation, there are several things you should know before trading in cryptocurrency.
It’s very secure
The safety and security of the blockchain for cryptocurrency are often cited as a major factor as to why many businesses consider offering crypto as a payment method. Furthermore, as more businesses use cryptocurrency, it’s reasonable to assume that blockchain safety features will continue to evolve and improve.
Moreover, businesses can help to reduce fraud by adopting cryptocurrency payment methods. Unlike ‘charge-back’ transfers used by credit card firms, when a crypto transaction has been authorised, it cannot be reversed. This helps to prevent fraud, account tampering, and other criminal misuses. Cryptocurrency blockchains are further protected from fraud due to the strong encryption features employed within.
You have to plan for it
Whilst businesses who recommend using crypto as a means of payment do so because of its swift and easy transactions, you still need to plan ahead if you intend to use it for your business. Before trading in cryptocurrency, you must have some kind of plan. If you’re thinking of investing in a digital coin, make a trading plan and research it as much as possible. Weigh up all the potential risks and benefits before staking your money.
Consider joining an online community dedicated to cryptocurrency. There is no shortage of these forums, many of which are extremely active 24/7. Joining a community of crypto enthusiasts will keep you informed about all the latest news and discussions surrounding the crypto market.
Know your customer – or KYC – procedures, which your business will likely have already adopted should also be applied to your organisation’s approach to using cryptocurrency. Try to adopt a KYC crypto strategy that will help your business to protect customer assets, reduce fraud, prevent hacking, and restore any compromised accounts.
It isn’t legal tender
At present, cryptocurrency is not legal tender in the UK or USA. Cryptocurrency can be defined as fiat money because it cannot be converted into any valuable commodity, hence why it is not legal tender in most countries. This throws up issues if anything goes wrong with your crypto investment because there’s no legal protection to fall back on.
Also, crypto is still a relatively new area for most people and there are many uncertainties surrounding it. It’s, therefore, possible that some of your customers might not be too keen to engage with you in using it.
It isn’t regulated
Since it is not legal tender in most economies, it should come as no surprise that cryptocurrency is currently unregulated. However, being unrestricted by any centralised authority could actually work to your advantage as a business. Cryptocurrency is not subject to interest rates, exchange rates, transaction fees, or any other charges or levies imposed by a particular country or state.
While the UK and USA have looked at proposing legislation towards regulating digital currency, it still remains an area of uncertainty. It’s also worth noting that China, the world’s single largest market for cryptocurrency, has outlawed its use entirely.
You should use an exchange to trade it
Cryptocurrencies are bought and sold via crypto exchanges. These are online trading platforms that function a bit like stockbrokers in that they equip users with all the necessary tools in order to trade crypto coins. But as the crypto market has grown, so too have the number of platforms and apps intended to trade it on. There are now a multitude of crypto exchanges on the market; the best ones of which will be user-friendly, trustworthy, have low fees, and robust security features. Before choosing a platform, you should do your research. The platform should be trusted within the industry and have a good reputation. Read up on any user reviews and search for any mentions of your chosen platform in the media.
It’s still uncertain
As a fairly new realm, the cryptocurrency market poses many uncertainties. Its performance in the stock market can be volatile and it is therefore considered to be a risk for investors. Furthermore, it lacks any significant performance track record to predict how it will function in future. Even Bitcoin, the oldest and most familiar of the cryptocurrencies, has only been around for just over a decade and, despite showing a promising start for investors, has proven to be volatile in recent years.
Undoubtedly, there are many ways that trading in cryptocurrency can enrich your business. Make sure you’re fully informed though before deciding to trade in digital currency; that way your business will really benefit.