There’s no denying that cryptocurrencies are highly advantageous in more ways than one. They’re simple to use, and everyone can buy or sell them as long as they have access to the mobile phone.
So companies accept cryptos as payment; others handle a part of their payroll via crypto. Cryptos are quick, great for international transactions, and have low fees (due to them working on the DeFi principle and having no intermediaries involved).
Still, even despite these obvious advantages, somehow it seems like cryptos are still a long way from being fully adopted in the business world. Here are some of the challenges that will, hopefully, explain why this seems to be the case.
1. Managing volatility
Right off the bat, cryptocurrencies are far more volatile than their fiat counterparts. So, let’s say you agree to pay your employees or vendors in crypto. How do you do it? Do you have a set cost in dollars and just pay them the equivalent in crypto?
Sure, this sounds like a problem, but it’s definitely not impossible to solve.
The key solution lies in proper communication. If you’re open about the advantages and disadvantages of trading in crypto, and you’re sure they’ve got the message, there’s nothing stopping you.
Now, don’t get us wrong, while BTC and ETH are the most stable of all cryptocurrencies, compared to fiat, they’re still quite volatile. There are two main reasons why your employees or vendors would accept payments in crypto. The first one is the fact that the transfer is simpler and harder to trace.
The second reason is the potential behind that transaction. Accepting a payment in one of the coins that are highly positioned on a curated list (by top experts in the field) has the potential to outgrow its initial value in just a few weeks. The recipient can keep some and sell the rest, thus setting up their “paycheck portfolio” each month. For a lot of people, this would be easier (psychologically) than having to actually buy crypto.
2. Security issues
Thanks to the blockchain, crypto trading is a lot safer than ever before. The problem is that when there’s a scam, there’s no cashback. With cryptocurrencies, when money exchanges hands the deal is done and it’s, for the most part, irreversible. In fact, it’s this lack of reversibility that causes the biggest problem when it comes to adopting crypto.
You see, this raises a huge question regarding customer protection laws. How can you protect your customers if you can’t protect their funds?
One massive challenge that you have to keep in mind is friendly fraud. Due to the irreversibility of cryptocurrencies, businesses are concerned with the ramifications of being exploited by their less conscientious customers.
A lot of people use cryptocurrencies for anonymity, which is why anti-money laundering organizations have such a hard time tracking all of this. With cryptocurrencies, you have a much harder time getting to know your customers.
This last part is another compelling reason for this anti-crypto sentiment in some of these larger enterprises. Namely, customer data is invaluable, and while some customers want anonymity, it isn’t always in the company’s best interest. So, if they don’t add crypto to the potential list of available payment options, they expect the customers to opt for a method with higher transparency.
3. Education and awareness
With fiat currencies, there’s really not that much to understand in order to use them. More often than not, you don’t even have to choose which currency you’ll do business in. A lot of countries have a law mandating that transactions are done in local currencies, and if you have international partners the transactions are done in one of a few major currencies (but usually USD).
With fiat currencies, you don’t have to know anything in order to use them. You don’t have to interpret map charts or even track massive political occurrences. All that the majority of people do is look up the current value of the currency in question and be done with it. If they’re doing this on a regular basis, they can spot some patterns or even enter a historical chart to see what’s been going on lately.
With cryptocurrencies, you have to pay more attention to rules, regulations, and emerging technologies.
The fact remains that cryptocurrencies are universally available and quite easy to use, but this doesn’t look so from an outsider’s perspective. This means that a lot of your clients may also feel reluctance toward adopting this new asset/payment method out of fear that they’ll have too much to learn in order to use it effectively.
Again, this is a myth. Same as you don’t have to know all the parts in your car in order to drive, you don’t have to understand crypto in order to use it. Still, it’s better and safer for everyone if you do (in both of these scenarios).
4. Widespread merchant acceptance
Unlike fiat currencies, there’s no law that will make businesses accept cryptocurrencies. This is still on a voluntary basis, which means that the number of vendors who accept crypto payments and the number of users who can pay in crypto might still be completely random.
Now, to be fair, with more and more people recognizing the advantages of paying (and getting paid in crypto), the number of users is bound to go up. Still, the advantages of early adoption (while present) aren’t nearly as great as some would want you to believe.
The solution to this problem is quite simple. You just accept crypto since it doesn’t cost you extra to just add one more payment method. You don’t have to make doing business with you crypto-exclusive; this is something that no one is doing.
5. Uncertainty surrounding regulation
There are only two things that are certain regarding crypto regulation. First, for the most part, cryptocurrencies are still unregulated. Second, they won’t remain unregulated for long.
This is where all the uncertainty comes from. In a year or two, crypto regulation will be completely different from what it is today. It could be better or worse than you hope, but it will definitely be different. A lot of businesses just don’t feel comfortable taking such a risk.
This particular problem is something that will certainly be solved on its own. As soon as the regulation is there, the uncertainty will be gone (even if the regulation is not as favorable).
It’s also worth mentioning one thing – a lot of people use cryptocurrencies for the sake of anonymity. One thing that these rules and regulations will certainly require is higher transparency. In other words, anonymity will likely not be here for too long.
Neither of these challenges is as big of an obstacle as you think
The fact of the matter is that more and more companies are adopting crypto. The costs of crypto adoption are not high, and the benefits are numerous. Since it’s clearly cost-effective to adopt crypto, not a lot of businesses can afford to miss out on this opportunity. In other words, the question is when, not if.
