Cryptocurrency. Bitcoin. Blockchain.
These terms may just sound like the latest buzzwords. However, these forms of payment could be the future.
What first began in 2009, cryptocurrency has since grown into a billion-dollar industry. The market is expected to grow from USD 1.6 billion in 2021 to USD 2.2 billion in 2026, at a CAGR of 7.1%. This growth has left many businesses wondering whether they should consider accepting cryptocurrency.
Here's how this digital currency evolved and why it may be the payment method of the future.
The History of Crypto
What first began as an experiment has since snowballed into a global innovation phenomenon.
The concept of cryptocurrency first began in the late 1980s. People began to wonder if a currency could be decentralized, not being controlled by any government or bank.
The first block of Bitcoin was mined in January 2009 and had nearly no value for the first few months. By April 2010, the value of one Bitcoin was less than 14 cents. That same Bitcoin is now worth over USD 47,300 as of December 2021. Once the value of Bitcoin surged in late 2017, new blockchain projects began, including Ethereum. More recently, non-fungible tokens (NFTs) emerged.
Today, around 16,000 different cryptocurrencies are traded publicly.
If Crypto Is So Great, Why Isn't It Accepted By Stores Yet?
Although cryptocurrency is still new for most, the reality is that many stores already accept it.
Large corporations are taking the first steps to normalizing cryptocurrency, from Starbucks to select McDonald's locations, Nordstrom, and GameStop. Blockchain technology is still a niche market for now, but with the support of big-name businesses, cryptocurrency will likely move into the mainstream.
Yes, cryptocurrency is new and unique. However, businesses have been here before. The development of credit cards was scary for both companies and consumers. Not long ago, the same trend began once again with Apple Pay in 2014, followed by Android and Google Pay in 2015. Credit cards are now the most common type of payment method among consumers. Consumers also spent $91.7 billion using Apple Pay in 2021.
These examples show how important it is for businesses to accept new currencies. If they don't, they risk being left behind.
What Incentives Do Businesses Have for Accepting Cryptocurrency?
One of the most glaringly apparent benefits of cryptocurrency from a business standpoint is the low fees. Since crypto lacks a central intermediary, transaction fees are dramatically reduced. For example, businesses pay processing fees and other charges when accepting credit cards, plus 2-4% of the transaction total. In comparison, crypto payments are typically 1% or less. Fewer fees mean higher profit margins.
Another key benefit is a lower chance of fraud. While many are wary of crypto, it can be a safer option for businesses concerning chargebacks. Unlike credit cards, which fraudsters use to scam businesses via the chargeback function, payments cannot be reversed once made with cryptocurrency. This benefit also addresses a significant pain point for small businesses — payment disputes.
As cryptocurrency becomes more popular and commonplace, businesses that accept digital currencies can boost their reputations. Although larger brands will likely implement this payment option first, small businesses can benefit from increased exposure, implementing crypto into their marketing strategy.
Will Cryptocurrency Transform the Future of Business?
Heading into 2022, cryptocurrency should remain at the forefront of business owners' minds. The cryptocurrency industry was built on innovation and continues to show its value. For now, only time will tell what the future holds for cryptocurrency.
Yes, change can be frightening. However, businesses that evolve with the latest currencies will be the face of the future.