Steemit Crypto Academy Contest / S2W2 – Cryptocurrency Adoption by @sammylove

Cryptocurrencies are undoubtedly one of the most significant inventions of our generation. For the first time, individuals can securely send value from one part of the world to another without relying on a centralized third party to verify the transactions.

In this Steemit post we will consider the following points:

The adoption of cryptocurrency in the financial market and how businesses can be boosted through cryptocurrency transactions.

My opinion on cryptocurrency being accepted globally for our day-to-day transactions

Whether the highly volatile nature of the crypto market is a concern to business owners.

Factors are currently limiting the adoption of cryptocurrency and how can this be solved.

The Pros and Cons of cryptocurrency adoption by business owners.

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Cryptocurrency adoption in the financial market and how businesses can benefit

Although cryptocurrencies may have initially been considered to be a threat to the global financial system, the past few years have seen these assets become increasingly integrated with the existing systems. For instance, it is now possible to directly purchase cryptocurrencies using your traditional bank account or debit cards.

In fact, popular banks in countries such as U.S. Bank in the United States and Commonwealth Bank in Australia are already offering direct crypto products to their customers. More recently, the U.S. Federal Reserve also included cryptocurrencies in survey research for the first time.

Another clear sign of crypto adoption in the financial market is the fact that many investors now allocate a portion of their investment portfolio to the cryptocurrency space. We’ll likely see increased crypto adoption in the financial market over the coming years.

How Businesses Can Be Boosted Through Cryptocurrency Adoption

A recent survey concluded that up to 90% of U.S. businesses that accept cryptocurrencies see revenue growth. Source

Here are some ways that businesses can be boosted through cryptocurrency adoption:

Exposure to a new category of customers.

Easier access to funds as crypto payments are immediately available to business owners, compared to other online transactions that might take a while to settle.

Efficient and cheap payment, especially for customers buying your goods from other countries.

Most average sale prices since most cryptocurrency users are also high-profile spenders and are likely to spend more on buying things than your regular customers.

Should Cryptocurrencies be accepted globally for day-to-day transactions?

I would say YES because it increases the number of payment options available to users. Additionally, it also allows for faster settlement compared to when you have to send money across borders using a traditional bank account.

If cryptocurrencies are accepted globally, then it also becomes easier for individuals to have access to money even when there’s government instability. We noticed this in the case where Ukraine had to start soliciting help through cryptocurrencies after the Russian invasion. It was simply the best and most efficient way to execute such a global fundraising effort.

Is the highly volatile nature of cryptocurrencies a concern to business owners?

The answer depends on if the business owners decide to directly handle the cryptocurrency payment or choose to use a payment conversion gateway. There are currently companies like BitPay that allows a business owner to receive payments in volatile cryptocurrencies and immediately convert them to cash to prevent any price drop.

Hence, the highly volatile nature of cryptocurrencies is not much of a concern for the business owner. Besides, the business can choose to accept only stable coins such as Tether (USDT) or Circle USD (USDC), thus eliminating the issue of price volatility.

Meanwhile, the volatile nature also presents an investment opportunity for businesses that are willing the stomach the risks of directly accepting and holding cryptocurrencies. If the business chooses to hold Bitcoin, for instance, they would profit immensely from future price growth and have further capital to invest in their business.

Factors affecting the adoption of cryptocurrency and how this can be solved

Some of the factors affecting cryptocurrency adoption include the following:

Lack of public awareness

Many business owners have little to no knowledge about cryptocurrencies and the immense value they can bring to their business.

Lack of clear regulation

In some countries, cryptocurrencies are either outrightly banned or there is no regulation for people using them. This makes it difficult for business owners to decide whether or not to accept cryptocurrencies.

Taxation

In some countries, spending cryptocurrency on purchases is a taxable event. This is a significant barrier as users would need to calculate taxes even for simple transactions such as buying coffee.
Of course, users have more flexibility with cash transactions and don’t want to go through such headaches simply to use crypto.

Steps to address these barriers

Public education about cryptocurrencies can help educate merchants on the benefits of adopting cryptocurrencies.

Government officials providing clear regulations around the use of cryptocurrencies will make adoption easier for merchants that eventually decide to accept it.

The creation of tax laws that make the use of cryptocurrencies for small transactions, perhaps below $100 would significantly increase the adoption of these assets. Notably, customers will no longer have to worry about paying taxes just for buying coffee.

Pros and Cons of Cryptocurrency Adoption By Businesses

Just like everything else in life, businesses that choose to accept cryptocurrencies enjoy advantages and disadvantages. Some of them that I can think of include the following:

Pros

Businesses that choose to accept cryptocurrencies attract more customers than those that do not.

It allows businesses to service cross-border customers seamlessly, as opposed to the complexities of setting up a traditional payment method.

These businesses can grow faster, especially if they choose to store a percentage of the received assets in Bitcoin for instance, and then the price goes up significantly.

True ownership of business assets, unlike money in the bank that could easily be seized or withheld from the business perhaps because of government regulation or other issues revolving around banking transactions.

Cons

Cryptocurrency transactions are irreversible, creating a challenge in handling customer chargebacks, and other issues that arise with failed product delivery, etc.

Businesses that choose to accept volatile cryptocurrencies run the risk of losing money if the price of the assets drops significantly.

The complex nature of cryptocurrencies means the merchant might make certain mistakes (e.g. pasting an incorrect address), resulting in a permanent loss of funds.

Businesses that choose to accept cryptocurrencies also immediately become a target for hackers, creating an additional security expense for the company.

Conclusion

Cryptocurrencies can bring a lot of good to the financial markets, as well as help business owners unlock access to a new category of customers.

However, there are still certain barriers hindering the mainstream adoption of these assets. Over time, we’ll likely see these barriers lowered especially with more public education and clear regulation. Cryptocurrencies have come to stay and will be a big part of the future financial system.